CIT Holds Oral Argument on Whether to Order Reliquidation of Solar Panels
The Solar Energy Industries Association urged the Court of International Trade to not allow CBP to reliquidate entries of solar panels that were subject to a preliminary injunction from CIT, saying during oral arguments this week that there's not a strong enough reason to reverse CBP's inadvertent liquidation. The U.S. argued that a court order was needed to "effectuate" the court's suspension of liquidation and the U.S. Court of Appeals for the Federal Circuit's decision in the case (Solar Energy Industries Association v. United States, CIT #20-03941).
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The case was initially brought in 2021 to contest then-President Donald Trump's revocation of a tariff exclusion for bifacial solar panels. Judge Gary Katzmann suspended liquidation of the entries at issue in the case before finding that the exclusion revocation was not allowed under the relevant statute (see 2111160032). The Federal Circuit reversed that decision, sustaining the president's decision.
The U.S. then told the trade court that it inadvertently liquidated hundreds of entries in violation of the injunction, though it didn't provide a specific list of the entries at issue (see 2208120055). The present dispute emerged after the U.S. asked the court for an order leaving the many entries that were properly assessed the Section 201 duties undisturbed but ordering reliquidation of a "basket" of 174 entries that weren't hit with the tariffs.
Dan Witkowski, counsel for SEIA, opened the argument by emphasizing the need to maintain the "statutory scheme" set by Congress, which gives CBP 90 days to fix any mistakes in liquidation, particularly due to the lack of authority from the Federal Circuit on whether the trade court can order reliquidation. Witkowski added that if the court does have the power the government asks for, it shouldn't be used, since the balance of equities favor the importers.
He argued that the government "should have to make a strong showing that the equities are in its favor." The "best course of action" would be to let the small percentage of uncollected duties go, seeing as the U.S. has collected 99% of the duties at issue, Witkowski said.
Katzmann asked Witkowski if the equities would seemingly favor the government if the error was inadvertent, and the U.S. showed "diligence" by raising the issue with the parties once it discovered the error. To this, Witkowski urged the court not to overstate the level of diligence showed by the government, since hundreds of entries were liquidated since 2022, many of which included the Section 201 duties but for which the government is not seeking reliquidation.
While the U.S. told the parties about the errors for the entries on which duties weren't collected, it "didn’t tell the court or the parties about these additional liquidations, whether they were favorable to the importer or not favorable to the importer," Witkowski said. The "only sense" in which the government was diligent was that it reviewed all entries on the "eve of judgment," then brought them to the court's attention. "This is something CBP should have been doing all along," Witkowski said.
He added that if the court orders reliquidation, the importers could lose out on the right to challenge the reliquidations should there be any errors in them, seeing as the 90-day timeline to protest seemingly passed after the goods were liquidated the first time.
DOJ attorney Tara Hogan argued that the government would clearly view reliquidation as a new, protestable event, meaning the importers wouldn't lose out on the right to challenge any errors in the reliquidations. Hogan suggested that there "could be language crafted in the judgment that could address that concern." This isn't a situation where CBP is acting in a purely ministerial capacity, she added.
Katzmann asked Hogan if the government believes there's a role for the court here, seeing as the U.S. has suggested it could void the liquidations on its own where it has failed to follow a court's order. Hogan said the court has the role of "enforcer of its own orders," adding that CBP ordinarily would "unset" liquidations made in violation of court orders to bring itself in compliance with the orders. However, in this case, the government is seeking a court order allowing CBP to "do nothing" for the entries that liquidated with the duties and reliquidate the "one category of entries" at issue that didn't include the duties.
Hogan clarified that CBP cannot currently reliquidate the entries, though it views them as being "void and not a legal nullity." As a result, the agency could unset the liquidations to comply with the court's order, though this is "different than simply liquidating or reliquidating under CBP's own authority," she said.