DOJ Files Section 301 'Anticipated Defenses' Layered With Fallback Arguments
The Office of the U.S. Trade Representative, acting at the “direction” of President Donald Trump, had the authority under the 1974 Trade Act to impose the lists 3 and 4A Section 301 tariffs on Chinese imports, argued a Department of Justice "master answer" filed March 12 in one among a series of “anticipated defenses” it plans to mount against the massive litigation inundating the U.S. Court of International Trade. The defenses were layered with a series of fallback arguments, some contradicting others. Lawyers asked about the filing said the tactic is common, based on the proven strategy that DOJ needs only one argument to stick.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
It was the government’s first public statement on the merits of the more than 3,500 cases filed since mid-September, all seeking to get the lists 3 and 4A rulemakings vacated and the tariffs refunded. DOJ squarely took on Akin Gump’s complaint in the first-filed HMTX case when it said “the burden or restriction on United States commerce of China’s acts, policies, and practices that were the subject of the Section 301 action continued to increase” after the lists 1 and 2 tariffs were imposed, including after the one-year investigation period expired. “The previous actions taken in response to the Section 301 investigation proved to no longer be appropriate, as the actions were not effective in eliminating the unfair trade practices that were the subject of that investigation.”
The Trade Act doesn’t limit USTR’s “modifications” authority “to merely delaying, tapering, or terminating an action,” DOJ said. Lawyers following the litigation said establishing the link between the Section 301 investigative report to lists 3 and 4A will be critical to DOJ’s defense.
DOJ said that a review of the president’s “discretionary decisions,” and USTR’s implementation of those decisions, raises a “non-justiciable, political question. Case law gives USTR “substantial deference” to interpret the Trade Act, and the court “should not interpose because there was no clear misconstruction of a governing statute, significant procedural violation, or action outside delegated authority,” it said.
On allegations that USTR ran afoul of the 1946 Administrative Procedure Act by running rulemakings that were sloppy and lacked transparency, USTR was acting “at the direction” of the president when it imposed lists 3 and 4A tariffs, and the president “is not subject to the APA,” DOJ said. “Even if the challenged actions could be considered actions of USTR” as a federal agency that must abide by the APA, they are “exempt” from the statute’s notice-and-comment rulemaking requirements “because they qualify for the foreign affairs function exception,” it said.
Akin Gump complained that USTR also breached the APA by giving insufficient opportunity for comment, and by failing to connect facts in the record “to the choices it made,” it said. “Despite receiving over 6,000 comments, USTR said absolutely nothing about how those comments shaped its final promulgation of List 3.” Though USTR never cited the APA’s foreign affairs exception in any of its tariff rulemakings, the DOJ answer said the exemption relieved the agency of the obligation to act more transparently.
Even if the court rejects the foreign affairs exception argument, “USTR’s actions in promulgating List 3 and List 4 complied with all statutory requirements, and they were not arbitrary and capricious, contrary to law, or in excess of statutory authority,” DOJ said. The defendants “reserve the right to raise additional defenses after the test cases have been chosen, including, but not limited to, all defenses related to jurisdiction and/or timeliness,” it said.
The deadline looms later this week for plaintiffs to recommend to the court which complaints should be picked as the test cases and who among the plaintiffs’ lawyers should sit on the steering committee. DOJ was silent in its filing whether it will stipulate support for plaintiffs’ request for “interim relief” if importers ultimately prevail over the government.
The relevant statute says the liquidation of an entry is final and binding on all parties, unless it's timely protested within 180 days of the liquidation. Akin Gump argued many plaintiffs are or will be seeking refunds of List 3 duties on entries that have been liquidated and are long past the protest deadline. It wants a DOJ stipulation that plaintiffs will get their refunds if successful, regardless of whether the entries have been liquidated or protested. Akin Gump lawyer Matthew Nicely said in response to the filing that "the government’s answer to plaintiffs’ complaints was as expected and we look forward to responding during the briefing phase of the litigation.”
Email ITTNews@warren-news.com for a copy of the filing.