Trade Updates for Week of January 10, 2024

UNITED STATES COURT OF INTERNATIONAL TRADE

Before the Court in CVB, Inc. v. United States and Brooklyn Bedding, LLC., et al., Court No. 21-288, Slip Op. 24-02 (January 8, 2024) was a motion to retract the Court’s public slip opinion and accord confidential treatment to alleged business proprietary information contained therein. This motion related to CVB, Inc. v. United States, 47 CIT _, 2023 Ct. Intl. Trade LEXIS 189, Slip Op. 2023-184, in which the court affirmed the United States International Trade Commission’s affirmative injury finding in its investigation of mattresses from Cambodia, China, Indonesia, Malaysia, Serbia, Thailand, Turkey, and Vietnam, which contained unredacted business proprietary information. For the following reasons, the Court denied the motion.

The Commission notified the Court it believed the public opinion contained unredacted business proprietary information and filed this joint motion which the Court denied. The Court analyzed the motion according to the USCIT Rule 5(g) standard which provides that “[a]ny paper containing confidential or business proprietary information must identify that information by enclosing it in brackets.” The rule serves to (1) protect confidential and business proprietary information by clearly identifying it for the parties and the Court, (2) promote transparency and public access to judicial records by requiring parties to designate precisely what information is confidential, and (3) promotes judicial efficiency by providing the Court with one record it examines to adjudicate the case. Bracketing, the Court said, allows it to look at one place to see the entire record the agency considered and know what portion of that record the parties claim is confidential without having to move back and forth between different sources. Furthermore, since the Court’s rules do not define what constitutes confidential or business proprietary information, the Court mentioned 19 U.S.C. § 1677f(b), which governs the Commission’s treatment of business proprietary information. Information submitted to the Commission “which is designated as proprietary by the person submitting the information shall not be disclosed to any person without the consent of the person submitting the information[.]” 19 U.S.C. §1677f(b)(1)(A). Information is neither confidential nor business proprietary if it is publicly available. See Food Mktg. Inst. v. Argus Leader Media, 139 S. Ct. 2356, 2363 (2019) (defining confidential information as information that is “private” or “secret”) (citing Webster’s Seventh New Collegiate Dictionary 174 (1963)); see also 19 U.S.C. § 1677f(b)(2) (the Commission can determine a party’s designation of information as proprietary is unwarranted based on the information’s “nature and extent … or its availability from public sources”). Cf. Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1002 (1984) (“Information that is public knowledge … cannot be a trade secret.”) (internal citations omitted). Merely claiming information is confidential does not make it so a party cannot designate everything confidential. The Court said that even when the parties agree to secrecy, courts are “duty-bound to protect public access to judicial proceedings and records.” Binh Hoa Le v. Exeter Fin. Corp., 990 F.3d 410, 417 (5th Cir. 2021). Where the parties lack any incentive to defend the public’s right of access, the Court must balance that right with the need for confidentiality. Id. at 419. Transparency — not secrecy — is the default rule. Id. at 417

In this case, the objected-to information fell into two broad categories: company names and numerical approximations. On the first category, the Court said that this information is not confidential because the Commission failed to abide by USCIT Rule 5(g) when designating information as confidential or business proprietary. On the second category, the Court said that Motion fails because the information is publicly available, the Court’s approximations do not “closely track” the Commission’s figures as the Motion to Retract suggests, or both. According to the Court, the Motion’s approach to redaction demonstrates the importance of properly designating information as confidential under USCIT Rule 5(g) and maintaining a consistent approach to what constitutes confidential or business proprietary information and suggested that in order for the Commission to encourage voluntary cooperation from companies and protect allegedly confidential information, it must abide by the appropriate legal standard found in the USCIT rules.

Trade Updates for Week of January 3, 2024

UNITED STATES COURT OF INTERNATIONAL TRADE

Before the Court in Jilin Bright Future Chem. Co., v. United States, Court No. 22-00336, Slip Op. 23-189 (December 21, 2023) was a challenge to the final results of the U.S. Department of Commerce in the fourteenth administrative review of the antidumping duty order on certain activated carbon from the People’s Republic of China (“China”) for the period of review (“POR”) April 1, 2020, through March 31, 2021. See Certain Activated Carbon From the People’s Republic of China, 87 Fed. Reg. 67,671. The challenge was aimed at Commerce’s selection of surrogate values for bituminous coal and coal tar pitch. However, the Court ultimately sustained Commerce’s final results.

In June 2021, Jilin Bright was selected, along with Daton Juqiang Activated Carbon Co., Ltd. (“DJAC”) as the mandatory respondents to the fourteenth administrative review of the antidumping duty order on certain activated carbon from China. On May 6, 2022, Commerce preliminarily determined that certain activated carbon from China was sold at less than fair value in the United States during the POR. Certain Activated Carbon From the People’s Republic of China, 87 Fed. Reg. 27,094. Commerce preliminarily selected Malaysia as the primary surrogate country, valuing bituminous coal using Malaysian import data under Harmonized Tariff Schedule (“HTS”) 2701.12 and coal tar pitch using Malaysian import data under HTS 2706.

With respect to its bituminous coal valuation, Commerce also requested that the parties supply information about the calculation of gross calorific value to aid its determination as to whether respondents’ inputs meet the requirements of bituminous coal under HTS 2701.12.

The issue turned on Jilin Bright’s challenges to these two preliminary surrogate values, and subsequently to the Final Results. First, Jilin Bright disputed the surrogate value for bituminous coal, arguing that because of heat value, the coal it used falls under HTS 2701.19, “other coal,” rather than HTS 2701.12, “bituminous coal.” Second, relying on the Global Coal Tar and Coal Tar Pitch Report (“UMR Coal Tar Report”)5 as a benchmark, Jilin Bright argued that Malaysian import data under HTS 2706 for coal tar pitch was anomalous. In the alternative, Jilin Bright proposed that Commerce use data for Russian imports under HTS 2706 as the surrogate value for coal tar pitch. However, for the Final Results, Commerce selected a formula to convert the heat value of Jilin Bright’s bituminous coal and, based on that conversion, rejected Jilin Bright’s argument that such coal did not meet the standards for HTS 2701.12. Commerce also continued to value coal tar pitch using the Malaysian import data under HTS 2706 because the UMR Coal Tar Report did not include an adequate explanation of the methodology used to obtain and report the data therein. As to the Final Results, Jilin Bright argued that Commerce’s surrogate value selections for bituminous coal and coal tar pitch are not supported by substantial evidence.

The court reviewed the challenge pursuant to section 516A(a)(2)(B)(iii) of the Tariff Act of 1930, as amended, 19 U.S.C. § 1516a(a)(2)(B)(iii) and 28 U.S.C. § 1581(c). The standard for assessing substantial evidence “. . . is not whether the information Commerce used was the best available, but rather whether a reasonable mind could conclude that Commerce chose the best available information.” Jiaxing Brother Fastener Co. v. United States, 822 F.3d 1289, 1300–01 (Fed. Cir. 2016) (citation omitted). Substantial evidence requires Commerce to “explain the basis for its decisions,” and “the path of Commerce’s decision must be reasonably discernable.” NMB Sing. Ltd. v. United States, 557 F.3d 1316, 1319 (Fed. Cir. 2009). The court will uphold an agency determination that is supported by substantial evidence and otherwise in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i). “Substantial evidence . . . means such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Consol. Edison Co. v. NLRB, 305 U.S. 197, 217 (1938).

As to the bituminous coal, the Court concluded that Jilin Bright was required to raise its arguments to the agency in the first instance. The Court found the record to clearly establish that Jilin Bright, as much as the petitioners and DJAC, had notice of this issue but failed to contest the conversion formula before Commerce. It therefore, declined to review the challenge now. As to the benchmark data, the Court reinstated that Commerce will compare potential surrogate values against appropriate benchmark data for “a product whose price roughly correlates with the price of an input assigned a surrogate value.” Blue Field, 37 CIT at 1622, 949 F. Supp. 2d at 1317. When using import prices as a surrogate value, Commerce will exclude from its surrogate value calculation imports from nonmarket economy countries and from countries providing export subsidies or found to have engaged in dumping. See, e.g., 19 U.S.C. § 1677b(c)(5); Fresh Garlic Prods. Ass’n v. United States, 39 CIT __, __, 121 F. Supp. 3d 1313, 1318 (2015). The court concluded that Plaintiff failed to persuade the court that it should impose an additional burden on the agency to disaggregate its selected surrogate value data and test it against data from noncomparable or nonproducing countries. Lastly, as to the valuation of coal tar pitch, the Court was also unpersuaded by the argument that Russian impot data should be used as the surrogate value. The Court said concluded that Commerce reasonably determined to rely on Malaysian import data under HTS 2706 to value coal tar pitch, and its decision to reject Plaintiff’s arguments against such reliance was based on substantial evidence.

Trade Updates for Week of December 13, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Before the Court in Trina Solar (Changzhou) Science & Technology Co., Ltd., et al. v. United States (defendant) and American Alliance for Solar Manufacturing (defendant-intervenor), Court No. 23-00219, Slip Op. 23-174 (December 12, 2023) was a consent motion to remand to the United States Department of Commerce. All parties in the case consented to the motion and the court remanded with additional guidance as welcomed by the Government.

The case turned on a sole issue concerning the ocean freight benchmark for calculation of a subsidy based on less than adequate remuneration (“LTAR”). The court ordered that upon remand, Commerce should consider the court’s ruling in Risen Energy Co. v. United States, Slip Op. 23-48, 2023 WL 2890019 (CIT Apr. 11, 2023), 570 F. Supp. 3d 1369, 1372 (CIT 2022).  In that opinion, the court found that the remand results had set standards not appropriately applied to that particular factual record. As to the land value and ocean freight, Commerce in that case had not properly considered the quality of data sets it had averaged. The court concluded that defects in data sets were not cured by averaging with better data and remanded to commerce for further determination consisted with that opinion.

In this case, the court ordered Commerce to also consider the statutory preference for a broadly based ocean freight rate for an LTAR benchmark. In the case that other facts outweigh that interest here and compel the use of a single rate source, the court ordered that Commerce explain with as much numerical evidence as possible why that is appropriate. Lastly, the court said that Commerce should use a multiple route data base with such adjustments as are necessary and possible in the absence of its ability to concretely explain a strong reason for a single rate source.

Trade Updates for Week of November 15, 2023

United States Court of Appeals for the Federal Circuit

Before the Court of Appeals for the Federal Circuit in Solar Energy Industries Association, et. al. v. United States, et. al., Case 22-1392 (November 13, 2023) was the government’s appeal of the Court of International Trade’s (“CIT”) prior judgment in favor of plaintiff importers. At issue was Presidential Proclamation 10101 which modified safeguard duties on solar panels which had been implemented in Proclamation 9693. Proclamation 10101 withdrew the prior safeguard exclusion on bifacial solar panels, thereby again re-imposing the duties on the bifacial panels. For the following reasons the Federal Circuit concluded Proclamation 10101 was valid and reversed the judgment of the trade court.

Section 201 of the Trade Act of 1974, codified at 19 U.S.C. § 2251, provides the President of the United States with the power to impose “safeguards” (also referred to as “safeguard measures”) that protect domestic industries from serious injury caused by imports. Once a particular safeguard is in place, Section 2254 governs efforts to change the existing measure. While subparagraph (b)(1)(B) permits the President to “reduc[e], modif[y], or terminat[e]” a safeguard when the domestic industry has made a positive adjustment to import competition, subparagraph A more narrowly describes the President’s power as extending only to a “reduction, or termination” (and not also a “modification”) of an existing safeguard where domestic industry has not made such an adjustment.

The issue in this case turned on analyzing statutory language to determine if the Proclamation 10101 was invalid. On January 23, 2018, President Trump issued Proclamation 9693, which imposed duties on imports of certain quantities of Crystalline Silicon Photovoltaic (CSPV) solar panels for a period of four years, beginning at 30% ad valorem in the safeguard’s first year and phasing down to 25%, 20%, and 15% in the ensuing years. Proclamation 9693 further delegated to the USTR authority to grant “exclusion of a particular product from the safeguard measure.” Id. at 3543. Acting under this authority, in June 2019 the USTR granted an exclusion for solar panels consisting of bifacial solar cells. This exclusion had the effect of not imposing the new tariffs on bifacial solar panels. However, just months later, in October 2019, the USTR withdrew the exclusion, re-imposing the duties on these same bifacial products.

Litigation brought by consumers, purchasers, and importers of bifacial solar panels resulted in the October 2019 withdrawal of the exclusion never becoming effective. Thereafter, in April 2020, the USTR again withdrew the exclusion, seeking thereby to impose the duties on bifacial products. After more litigation, the trade court enjoined the April 2020 withdrawal.

In March 2020, the International Trade Commission, pursuant to 19 U.S.C. § 2254(a)(4) and in response to the USTR’s request, determined that the “exclusion for imports of bifacial modules . . . is likely to have significant effects on prices and trade in both modules and cells,” having the effect of limiting the positive impact of the safeguard adopted in Proclamation 9693.

In response, the President, through the USTR, received a petition, consisting of three letters, from representatives of a majority of the bifacial solar panel domestic industry requesting, among other things, that the President (1) withdraw the bifacial exclusion and (2) slow down the rate of reduction of the safeguard duty for the remainder of the scheduled term. Then, on October 16, 2020, the President issued Proclamation 10101 which modified safeguards that had been implemented in Proclamation 9693, including by withdrawing the exclusion of bifacial solar panels, thereby again re-imposing the duties on these panels.

Plaintiffs-Appellees filed suit at the trade court challenging Proclamation 10101’s modifications to the safeguards imposed by Proclamation 9693. The trade court granted summary judgment to Appellees and set aside the modifications contained in Proclamation 10101. The trade court reasoned that Section 2254(b)(1)(B) “permits only trade-liberalizing modifications to existing safeguard measures,” yet “Proclamation 10101’s withdrawal of the exclusion of bifacial solar panels and increase of the safeguard duties on CSPV modules” were trade-restrictive. The government appealed to challenge the trade court’s holding that the President clearly misconstrued Section 2254(b)(1)(B) when he interpreted it as permitting trade-restrictive modifications to safeguard measures.

The Federal Circuit held the President did not clearly misconstrue Section 2254(b)(1)(B). Its review began by looking at the language of the statute and considered a statutory silence in whether “modify” includes trade-restrictive changes or is limited to trade-liberalizing alterations concluded that the silence favors the government’s view. Second, the Circuit Court considered that the Trade Act has its own general definition of “modification.” It provides: “[t]he term ‘modification’, as applied to any duty or other import restriction, includes the elimination of any duty or other import restriction.” Id. § 2481(6). It concluded this is an open-ended definition and does not exclude anything, including further restrictions.

In conclusion, the Federal Circuit held that because the President’s interpretation of 19 U.S.C. § 2254(b)(1)(B) as permitting trade-restricting modifications is not a clear misconstruction, and because the President did not violate the procedural requirements of the statute, Proclamation 10101 is not invalid and the trade court’s judgment should be reversed.

Trade Updates for Week of November 1, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-146

Before the Court in Southern Cross Seafoods, LLC v. United States and National Marine Fisheries Service, Court No. 22-00299, Slip Op. 23-146 (October 5, 2023) was Plaintiff’s motion to supplement the administrative record for certain document categories that plaintiff alleges are missing from the administrative record. The issue turned on whether the absence of certain documents from the administrative record rendered the administrative record before the court incomplete. The Government opposed plaintiff’s motion because the National Marine Fisheries Service (“NMFS”) did not directly or indirectly rely on the categories of documents requested by plaintiff, the documents requested were not in possession of NMFS and they were pre-decisional or privileged and not properly part of the administrative record.

Plaintiff’s motion proceeded defendants’ motion to dismiss plaintiff’s complaint concerning the denial of its preapproval application for imports of Patagonian toothfish harvested from the Food and Agricultural Organization of the United Nations Statistical Subarea 48.3 in the South Georgia fishery in the Atlantic Ocean north of Antarctica. Plaintiff sought declaratory judgment against the agency’s denial of future applications for preapproval of its imports of toothfish from this region due to a lack of a conservation measure in force for the Convention on the Conservation of Antarctic Marine Living Resource. Plaintiff also challenged the actions of the NMFS under the Administrative Procedure Act (“APA”), 5 U.S.C. §706(2). In their motion to dismiss, defendants argued that plaintiff’s action did not arise out of a law providing for an “embargo” or other “quantitative restriction” under 28 U.S.C. §1581(i) and that, the Court lacks subject matter jurisdiction because the district courts have exclusive jurisdiction pursuant to 16 U.S.C. §2440.

The court’s review of the supplementation of the record was pursuant to the Administrative Procedure Act, 5 U.S.C. §706 which states that a court “review[s] the whole record or those parts of it cited by a party . . . .” The “whole record” for an APA action under 5 U.S.C. §706 has been defined by the Supreme court as “the full administrative record that was before the Secretary at the time he made his decision.” Id. at 3-4. . This includes “all materials that might have influenced the agency’s decision. . . .” Id. at 4. Moreover, the U.S. Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) has identified three narrow instances in which supplementation of an administrative record may be appropriate before reaching the merits of an APA challenge to agency action: “(1) if the agency ‘deliberately or negligently excluded documents that may have been adverse to its decision,’ (2) if background information was needed ‘to determine whether the agency considered all the relevant factors,’ or (3) if the ‘agency failed to explain administrative action so as to frustrate judicial review[.]’” Id.

The CIT’s standard for this motion to complete the administrative record was that “a party must do more than simply allege that the record is incomplete. Rather, a party must provide the [c]ourt with reasonable, non-speculative grounds to believe that materials considered in the decision-making process are not included in the record.” Id. at 6.

Plaintiff’s position was that the court should order defendants to complete the record the administrative record did not include certain documents that directly or indirectly needed to be considered by NMFS decision makers when it decided to deny Southern Cross’s application for pre-approval to import frozen toothfish. Plaintiff asserted that the supplemental requested documents referenced by documents already included in the administrative record and thus the NMFS considered them directly or indirectly by the NMFS in its decision. On the other hand, defendants argued that plaintiff’s position would create a situation in which an administrative record would never be considered complete. Defendants argued that they included documents that formed part of the administrative record and that all other documents requested by plaintiff were either (1) documents not directly or indirectly relied on by NMFS in its decision making, (2) documents not in possession of NMFS, or (3) pre-decisional or privileged documents that would not properly form part of the administrative record.

For each of the document categories (six categories in total), the court examined whether plaintiff established “reasonable, non-speculative grounds to believe that materials considered in the decision-making process [were] not included in the record.” Id. at 8. In its conclusion, the court denied plaintiff’s motion to supplement the record as to five of the six categories of documents offered by plaintiff and ordered defendants to file an explanation of their position concerning Document Category 2.

The court denied plaintiff’s motion with respect to Document Category 1, which consisted of one single document requested by plaintiff, because the court deemed this document to be satisfied by defendants’ response to plaintiff’s motion to supplement. Document Categories 3, 4, and 6 related to a letter of December 17, 2021 from Alexa Cole of NOAA to Constance Arvis of the U.S. Department of State, stating that “NMFS has determined that the importation of [toothfish from subarea 48.3] . . . would be prohibited . . . until such time that CCAMLR adopts a conservation measure to set catch limits for that area.” Id. at 11-12. Category 3 included the documents or notes leading up to the email from Alex Cole to Constance Arvis, which which plaintiff alleged to be directly or indirectly considered by NMFS decision makers in its denial of Southern Cross’s application. Document Category 4, consisting of “any communications between the State Department, the NMFS, and other CCAMLR member Commissioners informing them of the NMFS decision to prohibit the importation of toothfish caught in Subarea 48.3. Category 5, concerned “initial exchanges between representatives of the State Department and other delegations (namely the European Union and the U.K.) regarding fishing in Subarea 48.3, which defendants alleged they had no possession over. Lastly, Category 6 consisted of communications from non-governmental organizations and other governments regarding whether the importation of tooth fish from Subarea 48.3.

In sum, the court concluded that defendants’ supplemental attachments in the form of the Declaration of Janet Coit and documents attached as supplements to the administrative record fulfill plaintiff’s motion to supplement the administrative record with respect to Document Categories 1 and 6; that Defendants provided adequate explanation for the absence of documents in the administrative record comprising Categories 3 through 5; and that Plaintiff has not demonstrated that the agency acted in bad faith and plaintiff has not demonstrated improper behavior in the agency’s compilation of an administrative record.

Document Category 2 consisted of two types of documents: (1) any information or supporting communications to indicate how the NMFS obtained the outside legal opinions included in the administrative record” and (2) “any information or supporting communications identifying who authored the legal opinion titled ‘Legal Opinion in relation to the toothfish fishing licenses granted by the Government of South Georgia for the 2022 season in the 48.3 area of CCMALR.’” With respect to the first type, defendants argued that such legal opinions were unsolicited and thus no reasonable basis existed to conclude that those were relied upon by NMFS decision makers making these documents improper for the administrative record. With respect to the second type defendants submit an additional document consistent with plaintiff’s request. The court found that defendants had not sufficiently explained the inconsistency of the NMFS having in fact included the Legal Opinion at issue in the administrative record while alleging that it did not consider directly or indirectly any outside legal opinions in rendering its decision. Additionally, the court found defendants have not sufficiently explained why the “unsolicited” nature of the external legal opinions necessarily equated to NMFS disregarding the unsolicited legal opinions in its decision making. Thus, the court ordered defendants to explain the inconsistencies.

Slip Op. 23-156

Before the Court in Am. Mfrs. of Multilayered Wood Flooring v. United States, Court No. 20-03948, Slip Op. 23-156 (October 30, 2023) was United State Department of Commerce’s final results of redetermination pursuant to the court’s remand order. Plaintiff American Manufacturers of Multilayered Wood Flooring and Defendant-Intervenor Jiangsu Guyu International Trading Co., Ltd. (the only mandatory respondent that was a party to this action) each filed comments indicating that they do not contest the Final Results of Redetermination Pursuant to Court Remand (ECF No. 81-1). No other party filed comments and the judgment was entered sustaining the remand results.

Previously, Plaintiff challenged Commerce’s selection of the surrogate value for glue, as well as its calculation of the surrogate financial ratio for manufacturing overhead and the surrogate hourly labor value in the final results of the seventh administrative review of the antidumping duty order on multilayered wood flooring from China. The court found that Commerce’s selection of the surrogate value for the glue input was supported by substantial evidence. However, it also found that neither the calculation of the surrogate financial ratio for manufacturing overhead nor the calculation of the surrogate hourly labor value was supported by substantial evidence. The court further found that Commerce had failed to explain the source of the numbers used to calculate the hourly labor value and “did not provide a reasonable explanation, supported by substantial evidence, for rejecting Plaintiff’s proposed data.” Id. at 4.

For the manufacturing overhead ratio, the Court also previously found that Commerce had not explained why it did not place in the numerator the whole amount of indirect production expenses identified in the surrogate financial statement. The Court remanded for Commerce to either place this whole amount in the numerator or explain why it chose not to do so, and, if Commerce chose the latter option, to “state why other categories of overhead normally placed in the numerator were not placed in the numerator here.” Id. 3. The court had also remanded for Commerce to “reconsider the Labor Rate Policy’s use in this case,” and, if it continued to use it, to “explain its source and the reason why it is reasonable to use it here, including how it would be more specific for use in Romania than the source provided by Plaintiff.” Id. at 4.

On August 24, 2023, Commerce issued its Remand Results wherein it recalculated the manufacturing overhead ratio using the amount for indirect production expenses identified in the surrogate financial statement in the numerator of the ratio. However, concluding that this amount included energy costs, Commerce subtracted energy costs from the indirect production expenses and placed them in the denominator, which included direct expenses, i.e., materials, labor, and energy. To substantiate the source of the numbers used in its Labor Rate Policy, Commerce placed on the record data from the International Labor Organization (“ILO”) based on which Commerce concluded that there are 24 working days per month, 8 hours per day, and 5.5 days per week for workers in ILO member nations, including the surrogate country, Romania. To calculate the surrogate hourly labor value, Commerce used ILO data that Plaintiff placed on the record reflecting the hours actually worked per week in Romania, from which it calculated an amount for the hours actually worked per month. Commerce divided the undisputed monthly average net earnings in Romania for employees that manufacture wood products by the hours worked per month to reach the surrogate hourly labor value.

The Court sustained Commerce remand determinations. Pursuant to 19 U.S.C. §1516a(b)(1)(B)(i), unless Commerce’s determination is “unsupported by substantial evidence on the record, or otherwise not in accordance with law,” a court will uphold the administrative decision. Here, the CIT found that Commerce’s calculation of the manufacturing overhead ratio complies with the Court’s remand order because it used the amount for indirect production expenses in the numerator of the ratio and stated its reasons for subtracting energy costs from this amount and placing them in the denominator. Judge Eaton, citing Dorbest Ltd. v. United States, 30 CIT 1671, 1715 n.36, 462 F. Supp. 2d 1262, 1301 n.36 (2006), concluded that this calculation was reasonable because energy costs are normally included in the denominator.

Moreover, he concluded that Commerce reasonably used the Romanian ILO data to calculate the surrogate hourly labor value because this data reflects hours actually worked in the surrogate country. Commerce substantiated the source of the numbers contained in its Labor Rate Policy by placing on the record the ILO data and demonstrating how it calculated each of the numbers.

Therefore, the Court found that Commerce’s uncontested Remand Results comply with the court’s remand order and are supported by substantial evidence and entered judgment accordingly.

Trade Updates for Week of September 27, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-139

Before the Court in Second Nature Designs Ltd., v. United States, Court No. 17-00271, Slip Op. 23-139 (September 21, 2023) were cross motions for summary judgment concerning the classification of imported various decorative items of plant parts under Harmonized Tariff Schedule of the United States (“HTSUS”) subheading 0604.90.60, carrying a duty rate of 7% ad valorem. Plaintiff argued that the subject merchandise should instead be classified under HTSUS subheading 0604.90.30 free of duty. The court agreed with Second Nature’s preferred classifications for certain categories of the decorative items involving dried and curled articles and agreed with the Government’s preferred classification with respect to other categories of articles constituting artificial flowers or fruit. The court granted in part and denied in part both Plaintiff’s Motion for Summary Judgment and Defendant’s Cross-Motion for Summary Judgment, finding that factual issues persisted as to the remainder of the categories of the subject merchandise.

Contrary to Custom’s arguments, the Court held that duty free treatment under HTSUS subheading 0604.90.30 for “dried or bleached” botanicals was appropriate for all glittered or dyed dried botanicals, as well as cane circle and case spring botanicals. The Government argued “that because the items are dyed or glittered or further decorated with artificial snow, they are not merely ‘dried or bleached’ products as defined under subheading 0604.90.30.” Id. at 19. The Court said that “the only inquiry of this eo nomine designation is whether or not the item has been dried.” Id. at 20. As such, the Court found that these glittered and dyed items were classifiable under heading 0604.90.30, duty free.

With respect to other items like cane circles and cane spring botanicals, the Court rejected Custom’s suggested classification under HTSUS heading 4602 for “Basketwork, wickerwork and other articles, made directly to shape from plaiting materials or made up from articles of heading 4601; articles of loofah,” with a duty rate of 6.6%, calling the government’s reading of 4602 “overbroad” as applied to the subject merchandise. The Court agreed with Plaintiff’s argument that curling dried botanicals is not similar to articles of “basketwork, wickerwork” because these articles lack interlacing, weaving, or other similar methods. These items were classified under heading 0604.90.30, duty free.

On the other hand, the Court held botanical items resembling fruits and flowers are classifiable, as Customs suggested, under HTSUS subheading 6702.90.65 as artificial fruit or flowers because “it matters not whether [the merchandise] is made from bits and pieces of natural plants. . . . There is no ambiguity in the term artificial flowers.” Id. at 31-32. Artificial fruit or flowers may be “regarded as leaves, stems, flowers, or fruits produced not by nature, but by the hand of man.” Id.

Factual disputes remained and the classification of certain products could not be resolved in summary judgment. Customs contends that Kambu balls and Christmas Tree products should be classified under HTSUS subheading 4602.19.45 as “Basketwork, wickerwork and other articles, made directly to shape from plaiting materials or made up from articles of heading 4601; articles of loofah: Other: Other: of Willow or Wood: Other,” with a duty rate of 6.6%. Plaintiff argued that these products were classifiable under HTSUS subheading 0604 or, alternatively, in subheadings 4602.19.60 and 4602.19.35, all of which are entitled to duty free treatment. The classification issue here turns on whether the products are wickerwork. The Court said that because “whether the items within Category Four and Category Five are composed of twigs and the like, or whether they are made of strips, filaments, and the like” was in dispute and further proceedings will be required for these products.

Material issues of fact also exist with regard to the classification of bouquets and similar articles containing mixed botanicals. The issue here turns on the parties’ interpretation of the “physical characteristics of the bouquets.” Id. 37. The Court provided insight on the legal issue of the bouquets classification asserting, contrary to Customs’ argument, that an essential character analysis is not necessary for the classification of these products. The Court said that pursuant to GRI 1, the Government’s argument that “Note 2 to Chapter 6 must be read together with GRI 3” which provides for the essential character test, runs counter to the well-recognized rule that the GRIs apply in numerical order; the interpretation of chapter notes is paramount when evaluating classification under GRI 1.” Id. at 35. A GRI 1 analysis will include Note 2’s instruction that “bouquets, floral baskets, wreaths and similar articles made wholly or partly of goods of that kind, account not being taken of accessories of other materials.” Despite the fact that further proceedings will be required for Plaintiff to obtain a favorable classification under HTSUS subheading 0604.90.30.

Trade Updates for Week of September 13, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-129

Before the Court in AM/NS Calvert LLC v. United States, Court No. 21-00005, California Steel Industries, Inc. v. United States, Court No. 21-00015, and Valbruna Slate Stainless Steel, Inc. v. United States, Court No. 21-00027, Slip Op. 23-129 (September 6, 2023) were three importers’ actions seeking court-ordered refunds of Section 232 duties. Plaintiffs brought Administrative Procedure Act (“APA”) challenges to the Department of Commerce’s refusal to exclude certain steel products from national security tariffs. The government moved for voluntary remand without confessing error, representing that Commerce’s reconsideration might afford Plaintiffs the relief sought and make adjudication of their APA challenges unnecessary.

However, plaintiffs objected to the remand because recent litigation demonstrated the government’s position that no relief is available as a matter of law for entries that have finally liquidated. Plaintiffs contended that remand would, therefore, be pointless as to most of the entries at issue which so liquidated after Commerce denied their exclusion requests. In turn, the government argued that the instant cases are largely moot because the Court lacked the authority to order relquidation as to such entries as a matter of law or at least on the facts at issue and argued that the Court could not offer any practical relief to Plaintiffs as to their finally liquidated entries.

The Court denied Defendant’s motion to dismiss Plaintiffs’ claims for injunctive relief as to finally liquidated entries for lack of subject-matter jurisdiction, holding that the CIT is not deprived of its constitutional jurisdiction over claims to order reliquidation as to finally liquidated entries pursuant to the APA. Furthermore, because the government’s argument that relief is unavailable as to finally liquidated entries implicates the merits, the Court addressed Defendant’s motion to dismiss for failure to state a claim under USCIT R. 12(c), which the Court treated as partial summary judgement motions. (The parties relied on undisputed admissions outside the pleadings that some or all of Plaintiff’s entries at issue have finally liquidated in each of these cases.) The government contended that the Court lacked authority to order Commerce to instruct Customs to reliquidate entries in all cases brought under the Court’s residual 1581(i) jurisdiction. The Court held that equitable relief is available under the APA in all 1581(i) cases.

However, it specified that such relief is not available as of right, instead, such relief is subject to ordinary equitable principles. As a result, it held that Plaintiffs in the instant case properly invoked 1581(i) jurisdiction, necessarily meaning that no other statute is “addressed to the type of grievance” they assert and therefore, Plaintiffs do state a claim under the APA for injunctive relief requiring reliquidation, subject to ordinary equitable principles, which principles the Court considers at length in its opinion.

As such, the Court denied Defendant’s motions to dismiss Plaintiff’s claim for injunctive relief as to finally liquidated entries for lack of jurisdiction, denied Defendant’s motions for partial summary judgment as to those claims, and, considering remand to an agency an exercise of the court’s equitable powers, it granted Defendant’s motions for voluntary remand subject to certain conditions.

Trade Updates for Week of August 9, 2023

United States Court of Appeals for the Federal Circuit

Case No. 22-1226

Before the Federal Circuit in Royal Brush Manufacturing, Inc. v. United States, Court No. 2022-1226 (August 4, 2023), was appellant Royal Brush Manufacturing’s (“Royal Brush”) appeal from a final decision of the CIT sustaining Customs determination finding that Royal Brush was transshipping pencils from China. Royal Brush challenged under the due process clause of the Constitution the process employed by CBP which led to the determination which the CIT sustained. For the following reasons the Court remanded the case back to the CIT.

The court reviewed Royal Brush’s argument that CBP relied on the redacted information in the Attaché Report and Verification Report, which deprived it of due process under the Fifth Amendment of the Constitution. The court noted an immutable principle of due process is “where governmental action seriously injures an individual, and the reasonableness of this action depends on the fact findings, the evidence used to prove the [g]overnment’s case must be disclosed to the individual so that he has an opportunity to show that it is untrue.” The court was unaware of any other courts holding that business information is exempt from disclosure to regulated parties in administrative proceedings brought against them. The government’s refusal to provide confidential business information is unpersuasive and any information that needs to be redacted can be done through a protective order. The court found that CBP relied on the confidential information and photographs to support that Royal Brush was “evading duties by transshipping Chinese pencils through the Philippines.” The court noted that Royal Brush did not get access to the confidential information, because on remand from the CIT, CBP input “number” or “no” to replace the redacted information. As for the redacted photographs, CBP argued that based on “observations and photographs, [it] unequivocally demonstrates repackaging of Chinese pencils into boxes labeled as made in the Philippines and destined for the United States.” Royal Brush did not get access to the photos, but received a broad description of what the photo showed. The court held that “CBP relied on factual information that was not provided to Royal Brush to determine that Royal Brush had evaded duties. This … is a clear violation of due process.” The court further discussed that CBP has the “authority to utilize protective orders in appropriate circumstances” and the Trade Secrets Act will bar the information from being released. CBP can narrowly release information and photographs to Royal Brush without “comprom[ising] the trade secrets.”

As such, the Federal Circuit remanded this case to the CIT with further “instructions that CBP provide Royal Brush with the redacted information and give it opportunity for rebuttal.”

Case No. 22-1832

Before the Federal Circuit in United States v. Katana Racing, Inc., DBA Wheel & Tire Distributors, Case No.: 2022-1832 was the Government’s appeal of the Court of International Trade’s (“CIT”) dismissal of its action against appellee Katana Racing for unpaid customs duties and “fees pursuant to Tariff Act of 1930, 19 U.S.C. § 1592(d).” At the CIT Katana filed a motion to dismiss arguing three main points, (1) “the government’s complaint should be dismissed for failure to state a claim because Customs never found a violation of 19 U.S.C. §1592(c)”, (2) “the complaint should be dismissed under CIT Rule 12(b)(6) because Customs was required to exhaust the administrative procedures set forth in 19 U.S.C. § 1592(b) before it could determine a violation of § 1592(a) occurred”, and (3) “the government’s suit was untimely and should be dismissed under CIT Rule 12(b)(1) because Katana revoked its final waiver of the statute of limitations.” The CIT affirmed Katana’s argument and dismissed the suit. However, For the following reasons, the Federal Circuit reversed and remanded this case to the CIT for further proceedings.

The Court of Appeals for the Federal Circuit noted that “the statute of limitations under 19 U.S.C. § 1621 is not a jurisdictional time limit.” But rather, “an affirmative defense that can be waived … either by not raising it or by agreeing before trial not to assert it.” The court relied on the precedent in United States v. Inn Foods, Inc., 383 F. 3d 1319, 1322 ,“a statute of limitations waiver is a consensual extension of the limitations period and serves to preclude the defendant from raising the statute of limitations as an affirmative defense.” This court held that “the CIT erred in dismissing the government’s suit for lack of jurisdiction under CIT Rule 12(b)(1)”. The court outlined permissible and impermissible arguments on remand (1) Katana will be permitted to raise an affirmative defense that the third statute of limitations waiver was void, (2) any and all defenses to the government’s claim for unpaid duties. But, (3) Katana cannot argue that “Customs was required by statute to follow the penalty assessment procedures in 19 U.S.C. § 1592(b).” The court said that administrative procedures were not statutorily required since a penalty was not assessed here. However, according to 19 C.F.R. § 162.79b, written notice to the person for the liability for the actual loss of duties, taxes, and fees or actual loss of revenue is sufficient. The case was reversed and remanded to the CIT for further proceedings.

Trade Updates for Week of July 12, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-96

Before the Court in Greenfirst Forest Products v. United States, Court No. 22-97, Slip Op. 23-96 (July 6, 2023), is the “U.S. Department of Commerce’s (“Commerce”) remand redetermination pursuant to the Court’s order in GreenFirst Forest Prods. v. United States, 603 F. Supp 3d 1368 (Ct. Int’l Trade 2022) (“GreenFirst I”) remanding Commerce’s refusal to conduct a changed circumstances review (“CCR”) for further explanation or reconsideration.”

On remand, GreenFirst argues that when Commerce denied its CCR request for a second time it did not adequately explain its denial, as requested by the court. For the following reasons the Court remanded Commerce’s determination for further explanation or reconsideration.

The court’s holding in GreenFirst I, explained that the “purpose of a CVD CCR is to determine whether a successor company is the same entity as a predecessor company for subsidization purposes.” This court was unsatisfied with Commerce’s remand because it did not address the reasons “why this practice was not applied to a non-examined company” as posed in GreenFirst I. The court stated that Commerce did not offer any rationale about how its previous practice and reliance on Pasta from Turkey applied to this case. The court noted that (1) Commerce does not explain how or why their determination in Pasta from Turkey is reasonable, (2) “the [r]espondent in Pasta from Turkey was individually examined in prior administrative review”, and (3) “Commerce used that determination to decide whether it was appropriate to affirm a cash deposit rate that was calculated during a previous time.”

In the case at issue, the company that GreenFirst acquired, before the acquisition was given an average rate of non-selected companies, not an individualized rate. Second, since Commerce did not explicitly state the reasoning for Pasta from Turkey was limited to situations where Commerce individually examined a company, it should be applicable in other circumstances. The court contended that, regardless of whether the reasoning in Pasta from Turkey can be applied to other circumstances, Commerce has yet to explain its reasoning behind the present case. The court has not received a clear explanation as to why Commerce thinks why is it inappropriate “successor-in-interest company to inherit a non-selected rate from a non-individually examined company unless the successor-in- interest company is essentially the same as the non-individually examined company previously assigned that rate.” This court concluded that on remand Commerce must reconsider or further explain how “its determination from Pasta from Turkey applies when a predecessor company was not individually examined.”

Trade Updates for Week of June 28,2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-92

Before the court in Sea Shepherd New Zealand v. United States, Court No. 20-112, Slip Op. 23-92 (June 21, 2023) was the Defendant’s motion to dismiss the third count in Plaintiffs’ complaint which alleged that the Department of Commerce acted arbitrarily, capriciously, and otherwise not in accordance with law in issuing to New Zealand’s West Coast North Island inshore trawl and set net fisheries findings of comparability with U.S. standards. The Government argued that the comparability findings expired as of January 1, 2023 and there was “no case or controversy.” However, Plaintiffs argued their complaint was not moot because the challenge was capable of repetition, yet evading review. As an initial matter, the court found that Plaintiffs’ request for injunctive relief in Count III was moot. However, for the following reasons the Court denied the Government’s motion to dismiss Plaintiffs’ request for declaratory relief.

Plaintiffs asked the court to declare the “issuance of comparability findings to New Zealand was arbitrary and capricious, an abuse of discretion, or otherwise not in accordance with law.” The court noted that the “capable of repetition, yet evading review” exception to mootness applied only when “(1) there [is] reasonable expectation that the same complaining party [will] be subject to the same action again and (2) the challenged action [is] in its duration too short to be fully litigated prior to cessation or expiration.” The Court found that three of the four reasons plaintiffs objected to the Government’s finding as arbitrary and capricious were moot as of January 1, 2023. However, the Court did find that certain aspects of Plaintiffs’ fourth objection, remain live. Plaintiffs argued that the Government position on import regulation does not require consideration of historical rates of marine mammal population decline in awarding comparability findings. Plaintiffs’ stance is that the Import Rules state that it will “consider the extent to which the harvesting nation has successfully implemented measures to reduce incidental mortality and serious injury to each marine mammal stock below the by catch limit.” The court concluded that it is likely that the agency will rely on prior successful legal interpretations of applications. This made the objection “capable of repetition”.

Evading review, historically points to evading Supreme Court review. Other courts have held that two years is too short to complete judicial review. The court recognized that New Zealand’s now-expired comparability findings were in place for over two years. This court held that four years is “too short for full litigation prior to their expiration.” Although this case has been in front of this court for three years, it is “too short of a period to reach the Federal Circuit … [or] the Supreme Court … for judicial review to conclude.” As such, the court found that Plaintiffs satisfied both requirements and their third count of their Complaint was not moot.

Trade Updates for Week of June 21, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-91

Before the Court in Skyview Cabinet USA, Inc., v. United States, Court No. 22-08, Slip Op. No. 23-91 (June 20, 2023) was plaintiff, Skyview Cabinet Inc.’s (“Skyview”), motion for judgment on the agency record challenging U.S. Customs and Border Protection’s (“CBP or Customs”) determination that the company was evading the antidumping and countervailing duty orders on wooden cabinets and vanities from China. “Plaintiff alleges the following errors: (1) Customs failed to support its finding that the subject imports were ‘covered merchandise’ at the time of entry; (2) Customs unlawfully applied adverse inferences against Skyview; (3) Customs failed to confer with Commerce in making its country-of-origin assessment, contrary to its statutory obligation to do so; (4) Customs unlawfully shifted the burden of proof onto Skyview; (5) Customs violated Skyview’s due process rights by not giving Skyview access to certain confidential information; and (6) Customs unlawfully considered hearsay;” and (7) that Customs determination was not based on substantial evidence. For the following reasons the Court denied Skyview’s motion.

The court found that Skyview misinterpreted the substantial evidence standard by ignoring that “the possibility of drawing two inconsistent conclusions from the evidence does not preclude the agency’s finding from being supporting by substantial evidence.” Customs evaluated both claims, one from MasterBrand and the other from Skyview, and found that MasterBrand had more credible and reliable evidence. Skyview’s evidence had many discrepancies, omissions, and inconsistencies even with the extensions for evidence from CBP. Skyview failed to dispute MasterBrand’s evidence which claimed Skyview’s goods were rerouted through a third party, designated as Malaysian goods to evade duties for goods that originated in China.

Skyview next argued that Customs application of adverse inferences against it was arbitrary and capricious because it was a third party manufacturer failed to respond to Customs’ request for information. The court was not persuaded by Skyview’s argument that it was impacted through collateral measures. Skyview did not provide persuasive case law nor did

Skyview point to anything on the record which showed it was adversely affected by the diverse inference against the third party. Skyview also did not state why Customs should rescind their adverse inferences against the third party.

The Court next examined Skyview’s claims that Customs was statutorily required to refer the matter to Commerce for a consultation on the goods country of origin. The court noted that according to language of 19 U.S.C. § 1517(b)(4)(A)(i), “Customs “shall … refer the matter to [Commerce] to determine whether the merchandise is covered merchandise” when Customs “is unable to determine whether the merchandise at issue is covered merchandise.” The court found there is no dispute about whether the wooden vanities and cabinets are of the type that would be subject to the antidumping and countervailing duty orders. As such, Skyview’s argument was meritless.

The Court next considered Skyview’s burden shifting argument that Customs’ determination must be reversed because under the statute, the agency “was required to verify the facts presented by both Skyview and Masterbrand.” The Court noted that after Customs gets a plausible allegation of evasion of customs duties, Customs can initiate an investigation and decide based on substantial evidence. The standard of substantial evidence requires the agency to consider the record as a whole and make a decision based on the “evidence as a reasonable mind might accept as adequate to support a conclusion.” The court said that Customs did not shift the burden to Skyview, but rather Customs determination was based substantial evidence to support an evasion claim.

The Court next considered Skyview’s “constitutional challenge under the Due Process Clause to the procedures Customs employed in this investigation.” Customs redacted photos and videos from the third party manufacturer visit and turned it over to Skyview. Skyview contends that “CBP deprived Skyview of the opportunity to review, evaluate, and comment on business confidential data and, consequently, a fair opportunity to defend itself.” “An agency has violated a party’s due process rights by inhibiting the party’s ability to present its case or respond to evidence being used against it.” The Court held that Skyview did not sufficiently prove this standard. Customs provided detailed summaries of the redacted video and photos with enough specificity. Skyview was also put on notice and had an opportunity to offer counterevidence. Skyview claims that they sent an individual to take videos and photographs, however, Customs and the court never received either. As such, Skyview’s due process challenge was denied.

Finally, Skyview argued that the evidence provided through a third-party investigator was hearsay and should not be considered by Customs. The court noted that hearsay is not prohibited in administrative proceedings, so long as it is reliable and probative. Customs ensured that their investigator’s reports were corroborated with credible research and disinterested parties. The court ultimately concluded that since hearsay evidence is permitted in administrative proceedings and Customs adequately explained why it considered the evidence credible, Skyview’s argument was without merit. As such, the court denied Skyview’s Motion for Judgment on the Agency Record.

Trade Updates for Week of June 14, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-90

Before the Court in Maple Leaf Marketing, Inc., v. United States, Court No. 20-03839, Slip Op. 23-90 (June 14, 2023) was Plaintiff Maple Leaf Marketing, Inc.’s (“Maple Leaf”) motion to dismiss Defendant U.S. Customs and Border Protection’s (“CBP”) counterclaim, and to redesignate the counterclaim as a defense pursuant to U.S. Court of International Trade Rule 8(d)(2). Plaintiff argued for the Court to dismiss and redesignate CBP’s counterclaim as a defense because CBP’s claim did not have statutory backing to establish a cause of action.

Defendant argued that a combination of 19 U.S.C. §§ 1202, 1503, 1505(b) & (c), 1514(a) and 28 U.S.C. §§ 1582(3), 1583, 2643(b) & (c) give it authority to assert a counterclaim and seek reliquidation under a different classification. The Court redesignated CBP’s counterclaim as a defense and denied Maple Leaf’s motion to dismiss as moot.

The Court discussed that Congress created remedies for CBP to classify, re-classify, and collect duties on goods imported into the United States. However, Congress has not authorized the United States to assert a counterclaim challenging CBP’s classification. In prior cases, the Court held that Defendant does not have a cause of action to assert a counterclaim against CBP. Defendant cited to 19 U.S.C. § 1202 to support their counterclaim argument, however, nothing in the statute indicated that it creates a cause of action where the United States can challenge CBP’s classification. Instead the statute governs CBP to collect duties “based on the correct classification of merchandise.” The Court noted that 19 U.S.C. § 1503, which does create a cause of action, but focuses on valuation instead of classification of imports and does not discuss authorization of a counterclaim. Next the Court discussed 19 U.S.C. § 1514(a), which states that liquidation is not final when an importer challenges CBP’s determinations and a timely protest suspends the finality of liquidation for all parties. But again, does not discuss the ability for the United States to assert a counterclaim challenging CBP’s classification.

Defendant argued that 28 U.S.C. §§ 1582-83 can be used for its counterclaim. However, the Court found that §1582 points to the CIT exclusive jurisdiction to recover customs duties and not a cause of action. §1583 gives the CIT jurisdiction over counterclaims, but does not create a cause of action. The Court noted that Defendant’s reference to these statutes only empower the court and not Defendant’s position. Defendant cited to 28 U.S.C. § 2643(b) &(c), which provide that the CIT may “order a retrial or rehearing for all purposes, or may order further administrative or adjudicative procedures as the Court considers necessary to enable it to reach the correct decision” and may “order any other form of relief that is appropriate in a civil action. Again, Defendant cited a statute that pointed to the powers of the CIT but not how it creates a cause of action for counterclaims.

The Court held that Defendant failed (1) to assert a valid statutory basis to support its cause of action and (2) failed to state a claim where relief could be granted. However, “the CIT Rule 8(d)(2) provide[d] that “[i]f a party mistakenly designates a defense as a counterclaim, or a counterclaim as a defense, the court must, if justice requires, treat the pleading as though it were correctly designated, and may impose terms for doing so.” Therefore, the Court redesignated Defendant’s counterclaim as a defense and denied Maple Leaf’s motion to dismiss the Defendant’s counterclaim as moot.

Trade Updates for Week of May 11, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-68

Before the Court in ME Global, Inc. v. United States, Court No. 19-179, Slip. Op. 23-68 (May 2, 2023) were the cross-motions for summary judgment of plaintiff and defendant concerning the proper classification of heat-treated forged steel rods from the People’s Republic of China (“China”), entered by Plaintiff on August 4, 2018. The heat-treated forged steel rods at issued are used to crush ore in mining and mineral extraction operations. As a result of manufacturing in China, the subject steel rods are comprised of a hard outer surface of martensite and a softer inner core of pearlite. The hardness of the outer martensite layer makes the rods suitable for breaking down ore and mineral structures, while the softness of the inner pearlite core provides ductility, which prevents the bars from breaking while being used in the mill. At the time of entry Customs classified the rods under HTSUS subheading 7228.30.80, HTSUS as “Other bars and rods, not further worked than hot-rolled, hot-drawn or extruded . . . Other,” which is subject to a Section national security tariff of 25% ad valorem. Plaintiff filed a protest of Customs’ classification of its steel rods, arguing that the subject rods do not fall within the scope of HTSUS heading 7228 because they have assumed the character of goods classified under HTSUS chapter 73, heading 7326, subheading 7326.11.00, covering “[o]ther articles of iron or steel: [f]orged or stamped, but not further worked: . . . [g]rinding balls and similar articles for mills,” which is not subject to a Section 232 tariff. The Government now argues, differently than its liquidation determination, that the rods should be classified under HTSUS chapter 72, heading 7228, subheading 7228.40.00, as “[o]ther bars and rods, not further worked than forged,” subject to the same amount of total duties. For the following reasons, the Court granted the Government’s motion for summary judgment and denied plaintiff’s motion.

“The General Rules of Interpretation (“GRIs”) govern classifications of imported goods under the HTSUS and are applied in numerical order.” Id. at 6. “Most classification disputes are resolved by the application of GRI 1.” Id. at 7. “Under GRI 1, the court determines the appropriate classification of merchandise ‘according to the terms of the headings and any relative section or chapter notes.’” Id. at 7. First the Court noted “the scope of HTSUS headings 7228 and 7326 cannot be expanded by reference to their respective subheadings, and that the subject rods’ ‘use’ as grinding rods is irrelevant to their classification.” Id. at 19. The Court noted that “HTSUS heading 7228 is an eo nomine provision covering ‘[o]ther bars and rods of other alloy steel.’” Id. at 23.The Court ultimately determined that “the subject rods satisfy the controlling HTSUS chapter 72 notes that define ‘[o]ther bars and rods of other alloy steel.’ Thus, pursuant to a GRI 1 analysis, the rods are classifiable under HTSUS heading 7228 because they are specifically described by the terms of HTSUS heading 7228.’” Id. The Court noted that “Plaintiff’s proposed heading HTSUS 7326— is a ‘basket provision’ … and that ‘”[c]lassification of imported merchandise in a basket provision is only appropriate if there is no tariff category that covers the merchandise more specifically.’” Id. at 24. Ultimately, the Court held that because “the court has determined that the rods are specifically covered by HTSUS heading 7228 … it follows that they cannot also be classified under HTSUS heading 7326—a basket provision.” Id. at 25. As such, the Court granted the Government’s motion for summary judgment and denied plaintiff’s motion.

Trade Updates for Week of April 19, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-47

Before the Court in Kierton USA v. United States, Court No. 21-00452, Slip Op. 23-47 (April 11, 2023) was plaintiff’s application for fees and other expenses pursuant to the Equal Access to Justice Act, alleging it incurred $479,299 in attorney fees and $7,899.31 in expenses, for a total of $487,198.31 as the prevailing party in its action against U.S. Customs and Border Protection. In the court’s previous opinion, it was held that Kierton’s possession and importation of marijuana paraphernalia was lawful and that CBP was wrong in using the Controlled Substances Act of 1970 to seize and exclude from entry fourteen of Kierton’s shipments of merchandise that could be used in the cannabis industry.

In the previous opinion, the court exercised jurisdiction over Kierton’s challenge to CBP denial of its protests pursuant to 28 U.S.C. § 1581(a) and retains jurisdiction to adjudicate on the issue concerning Kierton’s application for fees and expenses. Under the EAJA, an eligible party seeking an award of fees and other expenses must make a proper application to the court within thirty days of final judgment and it must have prevailed in court and allege that the United States’ position was not substantially justified. Under the EAJA, the court has the power to grant attorney fees and other expenses to the prevailing party in an action against the United States unless the government demonstrates, by a preponderance of the evidence, that the position it took in the action was substantially justified or that special circumstances exist making it unjust to grant the prevailing party fees and other expenses. In making its decision, the court is limited by the EAJA to review the record of the civil action for which fees and other expenses are sought and the agency’s action “upon which the civil action is based.” Alternatively, the court may find that special circumstances exist making it unjust to grant fees and other expenses to the prevailing party.

The court disagreed with plaintiff’s position that CBP’s actions were not substantially justified and that special circumstances existed making an award of attorney fees and expenses just. The court found that the government’s actions were substantially justified because its actions concerned a novel issue, of first impression, and the government had a reasonable basis in law and fact to litigate the issue. Both in its protest before the CBP and in this court, Keirton did not dispute that the subject merchandise could be used in the cannabis industry and stipulated that the subject merchandise met the definition of marijuana paraphernalia under federal law.

The parties only disputed whether Washington State’s repeal of its prohibition on marijuana paraphernalia met the exception in 21 U.S.C. § 863(f)(1) authorizing possession of marijuana paraphernalia under federal law. Whether Washington State “authorized” possession of marijuana paraphernalia within the meaning of the federal statute was a matter of first impression, which implicated an important question of federalism. At the time the government took its position in this case, no other court had held that Washington law authorized importation of marijuana paraphernalia under the exception to the federal prohibition on drug paraphernalia.

Although the Court of International Trade ultimately ruled on this issue in Eteros Technologies USA, Inc. v. United States, 592 F. Supp. 3d 1313 (Ct. Int’l Trade 2022), that September 21, 2022 ruling was issued only after the parties filed their motions for judgment.

An issue also concerned the fact that a Supreme Court case, Murphy v. NCAA, 138 S. Ct. 1461 (2018), had already discussed the interpretation of the word “authorized.” Kierton argued that this undermined the nature of the issue as one of first impression here or the reasonableness of the government in litigating the issue. The court, however, found that the issue here was nonetheless one of first impression because even though the Supreme Court discussed the interpretation of “authorized,” it never discussed § 863 nor the Washington statute. As it pertained to the reasonableness of the government, the court determined that though the government’s arguments were not ultimately persuasive when it argued that a repeal of prior law was insufficient “authorization” under § 863 by arguing that authorization under § 863 was limited to a narrow class of actions by local state or federal governments, that the neighboring provisions in § 863 and the Controlled Substances Act require “deliberate, affirmative approval for an individual or entity” to act, they were nevertheless reasonable arguments at the time they were advanced.

Trade Updates for Week of March 29, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op 23-42

Before the Court in Kent International, Inc. v. United States, Court No. 15-001135, Slip Op. 23-42 (March, 24, 2023) was Plaintiff’s motion for judgement challenging U.S. Customs and Border Protection’s denial of protests regarding the classification of Kent’s “WeeRide” child safety seat for bicycles under heading 8714 of the Harmonized Tariff Schedule of the United States. Plaintiff contended that Customs violated the treatment provision in § 1625(c), and that the subject merchandise is classifiable as “Seats . . . Other” under HTSUS. Kent argued that Customs established a treatment of classifying Kent’s child safety seats as seats under HTSUS heading 9401 by disregarding the contrary Customs Ruling on the same issue that had instead classified the subject merchandise under heading 8417. Kent maintained that heading 9401 treatment is reflected in the approval by Newark Customs of 14 protests covering 35 entries between August 2008 and October 2010, plus the PEAs covering nine other entries in November 2010. Kent contended that the approval of these protests and PEAs were the only actual determinations made by Customs on the classification of Kent’s merchandise between August and November. Further, Kent argued that no other decisions or actions were taken by Customs anywhere in the country regarding Kent’s child safety seats, nor were any other interpretive rulings or decisions made with respect to Plaintiff’s merchandise.

The issue turned on whether the two prongs of the 19 C.F.R. § 177.12(c)(1)(i) test Namely, whether there was (1) an actual determination made by a Customs official regarding the claimed treatment and (2) that the official had responsibility for the subject matter over which the determination was made. Defendant conceded that there were actual determinations made by responsible Customs officials regarding the subject merchandise. In turn, the court concluded that there is no dispute that actual determinations were made by a Customs officer with responsibility for the classification of the subject merchandise and the first two prongs of the §177.12(c)(1)(i) test were met.

The third prong of the test focuses on whether there are (1) substantially identical transactions for which there was a claimed treatment (2) on a national basis (3) over a 2-year period immediately preceding the claimed treatment. The parties did not dispute that the plaintiff’s imports involved substantially identical transactions, so the first element was satisfied. The parties diverged on the second and third elements, however. Citing Administrative Rulings, 67 Fed. Reg. at 53 and 494, the court indicated that the term national basis was inserted into the regulation to replace the phrase “a consistent pattern of decisions” as to liquidations of entries or reconciliations “to ensure that a treatment does not result from a geographically narrow application of a determination that is different from the action taken by Customs on that person’s substantially identical transactions at other locations. Kent’s position was that the national basis element does not require the treatment to have been previously accorded at more than one port, only that different ports may not take inconsistent actions, and that the prior Customs determinations consistently approved Plaintiff’s claims that the subject merchandise should be classified under heading 9401, duty free. On this point, Customs disagreed, maintaining that Plaintiff’s claimed treatment did not exist on a national basis and that the determinations made at the Port of Newark did not reflect Customs’ determinations on a national basis. Customs further argued that although the only actual determinations on Kent’s claims occurred between August 2008 and November 2010 at the port of Newark, this circumstance resulted from Kent’s request that Long Beach Customs suspend consideration Kent’s 2009 and 2010 protests. Customs posited that the § 177.12(c)(1)(ii) test requires the court to consider the fact that there were entries and protests regarding the subject merchandise at a port of entry other than Newark, such as Long Beach.

The court rejected defendants arguments that the informal contact between Long Beach Customs and Kent’s counsel in early 2011 regarding how the agency would rule in the future. Since no other port or office within the agency took a contrary position or action, the court agreed with plaintiff that the determinations by Newark Customs constitute an action as contemplated by the regulation and that Newark Customs determinations satisfied the rational basis element of the third prong treatment test.

Regarding the last element of the third prong of the test, defendant maintained that Kent first asserted a “claim of treatment” with respect to an entry made at the Port of Long Beach. The agency contended that the court must look to the two years immediately preceding the earliest entry at issue to determine if Customs consistently applied a classification determination on a national basis. Whereas, Kent argued that the claimed treatment in this matter arose from Customs’ protest approvals rather than how entries were initially classified. Kent maintained that, following the logic of American Fiber ___, the August 2008-November 2010 should be considered to be the relevant 2-year time frame for its claim of treatment. Following the guidance of American Fiber, the court agreed with plaintiff, and concluded that the existence of a treatment was established.

On the question of which of Kent’s entries may be entitled to the benefit of that treatment the court answered that Customs violated that treatment in issuing the 2015 Ruling without the notice and comment required by 19 U.S.C. § 1625(c). The court held the entries of child safety seats for bicycles that protested after the 2-year period of consistent Customs’ action were ones that qualified for relief under Kent’s claim of treatment.

Trade Updates for Week of March 22, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-36

Before the Court in BRAL Corporation v. United States, Court No. 20-00154, Slip Op. 23-36 (March, 20, 2023) were cross motions for summary judgement in an action contesting U.S. Customs and Border Protection’s (“CBP”) denial of two protests relating to twelve entries of plywood imported from the People’s Republic of China between 2017 and 2018, which were entered based on transaction value pursuant to 19 U.S.C. § 1401a(a)(1)(A). The denied protests alleged that the subject plywood imported from China had a latent defect that caused a melamine coating to separate from the subject plywood, warranting a reduced value due to defective merchandise pursuant to 19 C.F.R. § 158.12(a). In March 2020, CBP denied the protests requesting a reduction of the appraised value of the subject plywood to 18 percent of the original value under 19 C.F.R. § 158.12(a).

Plaintiff argues that it can satisfy each of the required elements for an allowance under 19 C.F.R. § 158.12(a). The U.S. Court of Appeals for the Federal Circuit (“CAFC”) has recognized that latent manufacturing defects can qualify as “’damage’ for purposes of the regulation.” Id. In order to claim an allowance under 19 C.F.R. § 158.12(a), “an importer must: (1) show that it contracted for ‘defect-free’ merchandise; (2) link the defective merchandise to specific entries; and (3) prove the amount of the allowance for each entry.” Id. Defendant contended that Plaintiff was unable to satisfy any of the requirements for an allowance.

First, defendant argued that defendant failed to provide any written contracts providing product specifications for the subject plywood. Plaintiff contended that though no written documents existed documenting a defect-free merchandise transaction, the Court could infer an implied contract did exist based on the fact that the plaintiff placed orders of the merchandise after running some tests on certain defect-free sample plywood. The court said that a genuine issue of material fact exists regarding whether there was a contract, implied or otherwise, for defect-free plywood and, thus, summary judgment is not warranted for either party on the first element.

Second, defendant argued that Plaintiff had not connected any of the alleged defects to the specific entries covered by Plaintiff’s protests because Plaintiff imported five shipments of plywood from China prior to the first entry covered by Plaintiff’s protests and, moreover, Plaintiff received two shipments after the first entry covered by Plaintiff’s protests that were not included in Plaintiff’s protests. Defendant argued that Plaintiff has provided no explanation as to why allowances under Section 158.12(a) were not sought for these entries if all entries were after May 2017 were presumed to be defective. However, whereas Plaintiff alleged that all of the imported merchandise was defective, defendant disagrees. As a result, the court determined that genuine issues of material fact exist as to whether all of the subject merchandise was defective.

Lastly, Defendant alleged that Plaintiff has not substantiated its claim of an 18 percent salvage value and argued that even if 18 percent were an appropriate salvage value, Plaintiff has not established that it should be applied to all of the imported plywood included in the subject entries. The Court observed that potentially contrary evidence was elicited during a deposition concerning the value of the plywood. The court determined that due to remaining issues of material fact as to the value of the subject plywood and whether an allowance should be applied to all subject merchandise, summary judgment was not appropriate for either Party on the third element.

The court ordered plaintiff’s motion and defendant’s cross motion for summary judgment denied, and set out to schedule a status conference with parties to discuss pre-trial matters.

Trade Updates for Week of March 8, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-28

Before the Court in Jilin Bright Future Chems. Co. v. United States, Court No. 22-00336, Slip Op. 23-28 (March 3, 2023) plaintiff-intervenors Ningxia Guanghua Cherishmet Activated Carbon Co., Ltd. and Datong Municipal Yunguang Activated Carbon Co., Ltd.’s partial consent motion for preliminary injunctions to enjoin defendant, the United States, from liquidating certain of its entries of activated carbon from the People’s Republic of China. Plaintiff-Intervenors sought to enjoin liquidation of all unliquidated entries of activated carbon that were exported by Plaintiff-Intervenors and entered into the United States during the period of review between April 1, 2020, and March 31, 2021, same which were subject to the U.S. Department of Commerce’s final determination in the fourteenth administrative review of the antidumping duty order on activated carbon from China. Defendant contended that Plaintiff-Intervenors’ motion should be denied because it seeks to expand the issues in this case, which an intervenor may not do.” Defendant further contended that the plain language of USCIT Rule 56.2(a), providing for statutory injunction of only “entries that are the subject of the action,” cannot apply to entries made by Plaintiff-Intervenors.

Based on the same line of thinking as many prior opinions, the court disagreed with Defendant and held that there is no indication that Plaintiff-Intervenors seek to introduce new substantive issues that were not raised in Jilin Bright’s complaint. Plaintiff-Intervenors explained that their position is entirely derivative of Jilin Bright’s, because Plaintiff-Intervenors’ antidumping duty separate rate is based entirely on Jilin Bright’s calculated rate, thus, Plaintiff-Intervenors only seek to “obtain any [antidumping duty] rate benefit obtained by [Jilin Bright].” The court further found that Plaintiff-Intervenors satisfied the requirements for a preliminary injunction because they will suffer irreparable harm absent injunctive relief because liquidation of their entries would bar them from obtaining the relief sought, a reduction of and refund of any overpayment of antidumping duties. The court also found that Plaintiff-Intervenors also showed a sufficient likelihood on the merits because Jilin Bright has raised issues which are “serious, substantial, difficult, and doubtful,” and their likelihood of success is tied to that of Jilin Bright’s success. Finally, the court found that the public interest is served by the grant of injunctive relief to ensure Commerce’s compliance with the law.

Trade Updates for Week of February 22, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-20

Before the Court in SGS Sports, Inc. v. United States, Court No. 18-00128, Slip Op. 23-20 (February 17, 2023) was defendant’s motion for a new trial rehearing or rehearing for Slip Op. 22-26. Defendant argued that the Court had failed to address its argument regarding the additional issue of whether there is a valid agreement under applicable Canadian corporate law. For the following reasons, the court granted defendant’s motion and issued an amended opinion addressing the additional issue of whether there was a valid agreement under applicable Canadian corporate law.

In Slip Op. 22-26, Plaintiff SGS Sports Inc. contested U.S. Customs and Border Protection’s denial of its administrative protests concerning swimwear and related accessories that it entered the United States in 2013 and 2014 under Harmonized Tariff Schedule (HTS) subheading 9801.00.20 duty-free, but which Customs reclassified and liquidated. A bench trial was conducted to determine if this subject merchandise was entitled to duty-free treatment under HTS subheading 9801.00.20, for which it was necessary to determine whether the Warehousing Agreement between SGS and 147483 Canada, Inc. constituted a lease or similar use agreement under subheading 9801.00.20 because this subheading provides for:

Articles, previously imported, with respect to which the duty was paid upon such previous importation . . . , if (1) reimported, without having been advanced in value or improved in condition by any process of manufacture or other means while abroad, after having been exported under lease or similar use agreements, and (2) reimported by or for the account of the person who imported it into, and exported it from, the United States.

The issue turned on Customs’ determination for reclassification of the subject merchandise. In denying SGS’ protests, Customs stated that the subject merchandise had not been properly exported under a lease or similar use agreement required under the duty-free subheading because “no bailment occurred.” In 2020, the parties filed cross-motions for summary judgment, the court denied plaintiff’s motion and granted defendant’s cross motion. But the court set aside its previous opinion and judgment when plaintiff filed a motion for rehearing. In a bifourcated trial, where phase one would resolve the issue of whether the Warehousing Agreement between SGS and 147483 Canada, Inc. is a lease or similar use agreement, and phase two would resolve remaining issues of this question, the court determined that a Warehousing Agreement existed. Evidence elicited at trial established that SGS Sport and 147483 Canada expressed mutual understanding that 147483 Canada would use the subject merchandise for the accomplishment of the purpose of action of providing warehousing and “pick and pack” services that satisfies the meaning of a similar use agreement under HTSUS subheading 9801.00.20.

In the instant opinion, the court amended its previous opinion by establishing the validity of the Warehousing Agreement under applicable Canadian corporate law. Though the government argued that the Warehousing Agreement is not a valid because SGS and Canada 147483 are a single entity that operate at the direction and sole discretion of one shareholder for the benefit of SGS, the court disagreed because the evidence was insufficient to pierce the corporate veil. Both entities were properly incorporated under Canada Business Corporations Act. Moreover, fraud, under Article 317 of the Civil Code of Quebec, was not satisfied because the government did not present sufficient evidence dishonesty or loss; nor was evidence presented to establish that SGS committed abuse of right, or contravention of a rule of public order as required under Canadian law to pierce the corporate veil. Therefore, the Court reiterated that the Warehousing Agreement is a lease or similar use agreement for purposes of HTSUS subheading 9801.00.20 and held that a trial should proceed under Phase Two of the Bifurcation Order to determine whether the subject entries qualify for duty-free treatment under HTSUS subheading 9801.00.20.

Trade Updates for Week of February 15, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-15

Before the Court in Hyundai Steel Co. v. United States, Court No. 21-00536, Slip Op. 23-15 (February 10, 2023) was Plaintiff’s motion for judgment challenging the U.S. Department of Commerce’s final results in the 2018 administrative review of the countervailing duty order on certain hot-rolled steel flat products from the Republic of Korea (“Korea”). The agency determined that the Government of Korea’s provision of port usage rights to Hyundai Steel constituted a countervailable benefit and that Hyundai Steel’s payment of reduced sewerage usage fees involved a financial contribution and a countervailable benefit. For the following reasons the Court remanded the final results.

The issue turned on the accuracy of Commerce’s determination that the free provision of port usage rights associated with the Port of Incheon Program conferred a benefit, and of the benefit and financial contribution determinations related to the Sewerage Usage Fees Program. Commerce calculated in the Final Results a final subsidy rate of 0.51% for Hyundai Steel. First, Commerce determined that Hyundai Steel received a countervailable subsidy through the Port Usage Rights Program because of the free provision of port usage rights associated with the Port of Incheon Program conferred a countervailable subsidy to Hyundai Steel. In determining that Hyundai Steel’s non-payment of port usage fees accorded a countervailable benefit, Commerce considered that the Government of Korea did not collect port usage fees from Hyundai Steel that it was entitled to collect as the owner of the port and that Hyundai Steel had the right to use the port without charge. Hyundai Steel challenged Commerce’s benefit determination arguing that Commerce should have applied its “excessive benefit” standard, by which Commerce would have determined that a benefit was not conferred. Moreover, plaintiff argued that Commerce’s benefit determination was not supported by substantial evidence and is not in accordance with the law because the port usage rights were provided as repayment of a debt as compensation for the taking of property when ownership was conferred to the Government of Korea under Korean law. The court distinguished this case from AK Steel Corp. v. United States, 192 F.3d 1367 (Fed. Cir. 1999), where the U.S. Court of Appeals for the Federal Circuit upheld Commerce’s benefit determination based on POSCO’s exemption from dockyard fees and held that Commerce’s determination was supported by substantial evidence, holding that the instant case differs from AK Steel Corp. in the evidence on the administrative record. The court remanded this determination, holding that the agency did not satisfy the statutorily defined components and therefore, Commerce’s determination that the provision of port usage rights constituted a benefit is not supported by substantial evidence. The statute provides that when Commerce reviews whether a benefit is conferred, “adequacy of remuneration is determined in relation to prevailing market conditions.” 19 U.S.C. § 1677(5)(E), (E)(iv). Yet, Commerce did not consider Hyundai Steel’s non-payment of port usage fees in terms of adequacy of remuneration, that Hyundai Steel uses the port to transport raw materials for steel production, and that the Government of Korea is not collecting fees that it is entitled to collect. Commerce considered that nothing on the record demonstrated that the main purpose of building the port was for the public good or any governmental functions.

Second, Commerce determined that Hyundai Steel’s reduced fees pursuant to the sewerage usage fees program constituted a countervailable subsidy. On this issue, Defendant requested a remand for Commerce to reconsider its determination in light of its better understanding of the program and the underlying Korean law that governs the reduction of sewerage usage fees, and Hyundai Steel supported this request for remand. The court ordered a partial remand by relying on SKF USA, Inc. v. United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001), where the U.S. Court of Appeals for the Federal Circuit recognized that the decision to remand is in the court’s discretion when an agency seeks a remand without confessing error in order to reconsider its previous position. The court determination related to the Sewerage Usage Fees Program stating that a remand will allow Commerce to cure its own mistakes and reconsider two substantive issues raised by Hyundai Steel, as well as preserve court resources.

Trade Updates for Week of February 8, 2023

UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 23-12

Before the Court in Columbia Aluminum Prods., LLC v. United States, Court No.19-185, Slip Op. 23-12 (February 6, 2022) was the motion of defendant-intervenor, Endura Products, Inc. (“Endura”), to stay litigation before the Court pending a conclusive decision in an appeal of this Court’s judgment in another proceeding. This litigation arose from determinations by Customs that certain assembled door thresholds imported from Vietnam by Columbia were evading antidumping and countervailing duty orders on certain aluminum extrusions from the People’s Republic of China. Endura bases its stay motion on its intention to appeal the judgment of this Court in Columbia Alum. Prods., LLC v. United States, 46 CIT __, Slip Op. No. 22-144 (Dec. 16, 2022). The judgment sustained a decision Commerce reached, upon remand and under protest, that certain door thresholds Columbia imported from China were not within the scope of the Orders. The Government consented to the motion, while plaintiffs opposed the stay, For the following reasons the Court denied Endura’s motion to stay.

The decision to stay proceedings is a matter for the court’s broad discretion and involves considerations of fairness to the litigants and judicial economy. Id. at 3. The Court said that a stay would not preserve resources because it “would allow the evasion determination against Columbia Aluminum to remain in place notwithstanding Commerce’[s] determining that Columbia Aluminum’s assembled thresholds are outside the scope of the Orders.” Id. at 4. This could result in “reputational harm on Columbia Aluminum and a financial harm given CBP’s suspension of liquidation preventing the release of customs bonds.” Id. The Court ultimately held that “Endura has not convinced the court that continuing to participate in this litigation … will cause it harm in any appreciable way that could justify interrupting these proceedings pending its pursuit of an appeal in related litigation.” Id. at 4-5. As such, the motion to stay was denied.