CIT Says CBP Can't Unilaterally Reliquidate Entries Liquidated in Violation of Court Order
CBP cannot unilaterally decide to reliquidate entries that were erroneously liquidated while subject to a suspension order from the Court of International Trade, the trade court held on May 8. Judge Gary Katzmann said an "enjoined party is not empowered to choose and implement the remedy for its own violations of an injunction," writing that that power is the court's alone.
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Assessing CBP's erroneous liquidation of 174 solar panel entries without Section 201 safeguard duties in violation of the court's suspension order, Katzmann then declined to extend equitable relief to the government. The judge first affirmed the court's ability to offer equitable relief, then said the U.S. isn't entitled to court-ordered reliquidation due, in part, to the fact that the government "caused the very harm from which" it seeks equitable relief.
The case was initially brought in 2021 to contest then-President Donald Trump's revocation of a tariff exclusion for bifacial solar panels. 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 U.S. Court of Appeals for the Federal Circuit reversed that decision, sustaining the president's decision.
The U.S. then reported it inadvertently liquidated hundreds of entries subject to the suspension order. The government asked the court for an order leaving the entries properly assessed the Section 201 duties alone while ordering reliquiadtion of 174 entries that weren't hit with the tariffs (see 2208120055). During oral argument, the government said it believes CBP can reliquidate the entries itself, since they were liquidated in violation of a court order, but it sought the order anyway for clarity on the issue (see 2502130056).
The court first said CBP doesn't have the authority to reliquidate entries after 90 days post-liquidation, holding that such action requires a court order. An "enjoined agency certainly cannot choose a remedy that Congress has specifically taken out of the agency’s hands," the court said, citing the relevant authority as 19 U.S.C. § 1501, which limits voluntary government reliquidation to the 90-day period.
Katzmann said the court's role in this process is "essential. A liquidation being void for violating a court order "is not a legal Excalibur that lends its power to whoever first retrieves it" but rather is a "judicial remedy that voids a liquidation with retroactive effect," the judge said. If reliquidation is appropriate, it's a "matter for the court to consider" as part of its equitable powers, Katzmann held.
The judge said the situation didn't call for such equitable relief, which is available as an exception to the general rule that final liquidation is unreviewable. Katzmann said the Federal Circuit established in Agro Dutch Indus. v. U.S. that such equitable relief is available in "some circumstances."
In a footnote, the judge addressed the appellate court's recent holding in Target Corp. v. U.S., which said the trade court can't order reliquidation based on equitable considerations (see 2504210029). Katzmann characterized the Target decision as declining to extend Agro Dutch to "a scenario, inapplicable here," where the U.S. erroneously liquidated entries after a final judgment on the merits had been reached "in the absence of a preliminary injunction." The present case "more closely resembles Agro Dutch in that it involves the pre-judgment" liquidation after an injunction was issued, the judge said. The Federal Circuit in Cemex v. U.S. also distinguished the reliquidation of post-judgment liquidations from liquidations in violation of an injunction, the court noted.
Katzmann then said no equitable relief was to be afforded here, since CBP is seeking relief from harm it inflicted on itself and failed to show that the "inadvertent" liquidations happened "despite diligent efforts to comply" with the suspension order. The judge said, based on the government's representations to the court, the U.S. knew at the time of the unlawful liquidations that the suspension order existed and a "pattern of previous violations of the" order existed. "The court will not grant equitable relief on a showing of this nature," the court said.
The court added that "CBP bears the burden of strict compliance with all statutory and judicially-imposed requirements related to liquidation." While deciding not to establish exact ways for CBP to get equitable relief in situations akin to this one, Katzmann said it's enough to say that when the government erroneously liquidates "entries in violation of a court order" and then seeks to reliquidate them at a higher rate more than 90 days later, it "must do more than admit its mistakes to the court." At bottom, the U.S. "must affirmatively demonstrate a commitment to compliant liquidation in the first place." Since no such demonstration was made here, "equity will not avail Defendants."
(Solar Energy Industries Association v. United States, Slip Op. 25-57, CIT # 20-03941, dated 05/08/25; Judge: Gary Katzmann; Attorneys: Daniel Witkowski of Akin Gump for plaintiff Solar Energy Industries Association; John Brew of Crowell & Moring for plaintiff Invenergy Renewables; Christine Streatfeild of Baker McKenzie for plaintiff EDF Renewables; and Tara Hogan for defendant U.S. government)