Questions Abound After CIT, DC Court Split on IEEPA Tariffs Jurisdiction Issue

The jurisdiction question is central to the cases challenging IEEPA tariff action in U.S. district courts. The district court plaintiffs argued that CIT doesn't have exclusive jurisdiction over their cases, since Section 1581(i), the provision granting CIT exclusive jurisdiction, says only the trade court shall hear cases arising out of any law that provides for tariffs. The plaintiffs argued their cases arise out of IEEPA, and that IEEPA doesn't provide for tariffs.

The D.C. court agreed, rejecting the government's motion to transfer the case to CIT (see 2505290037). Judge Rudolph Contreras ruled that IEEPA doesn't allow the president to impose tariffs, grounding the decision in the statute's text, history and context. While the U.S. said all tariff cases, challenges and matters must go to CIT for the trade court to first decide whether it has jurisdiction, that isn't how CIT's "jurisdictional statute operates," the judge said.

"The statute is categorical: the jurisdictional hook is the nature of the statute that a case arises out of, not the character of a plaintiff’s claims," Contreras said. And when the merits and jurisdictional questions are "intertwined, like here, a court 'can decide all of the merits issues in resolving a jurisdictional question, or vice versa,'" the judge said.

CIT took a different approach, emphasizing the IEEPA tariffs' impact on the Harmonized Tariff Schedule (see 2505280068). Judges Gary Katzmann, Timothy Reif and Jane Restani said the IEEPA tariffs "made amendments" to the HTS, and that the HTS "is the law of the United States setting tariffs." Thus, the court held that for the purposes of Section 1581(i), a case "involving a challenge to a presidential action that imposes tariffs, duties, or other import restrictions is one that arises from a 'law providing for' those measures."

The trade bar and other attorneys approached the trade court's ruling on its own jurisdiction with hesitancy.

"I'm not sure that it's right," one trade attorney told us, questioning whether Chapter 99 of the HTS, through which the IEEPA tariffs were imposed, is specifically included in the statute enacting the HTS. The attorney said CIT's ruling creates a "chicken-and-egg issue," setting up the question of whether the dispute arises from the HTS, as amended by the executive orders, or arises from the EOs themselves as laws of the U.S.

"I definitely see a problem there with respect to the HTS being the hook," the attorney said.

Christopher Duncan, partner at Stein Shostak, told us that both courts "set forth a defensible basis for asserting jurisdiction and there is some inherent comfort, particularly for those relatively few of us in the trade law community, in allowing the CIT" to hear the case. However, Duncan said, he thinks Contreras has the right of it, since IEEPA "simply does not provide for tariffs," and Section 1581(i) refers to laws of Congress, like IEEPA, and not presidential action.

Lawrence Friedman, partner at Barnes Richardson, wondered if the Constitution's requirement that tariffs be applied uniformly will be invoked now that the D.C. court has also asserted jurisdiction in the matter. "It would appear to create a problem with respect to any other court trying to assert jurisdiction," he said. "Clearly, you would run up the appellate process because you’d have effectively a split and some appellate court would have to resolve that."

John Vecchione, senior litigation counsel for the New Civil Liberties Alliance and litigant in an IEEPA tariff case recently transferred from a Florida court to CIT, also said he disagreed with the trade court's ruling on its own jurisdiction. Vecchione said the lead IEEPA plaintiffs "didn't sue on" the HTS angle but rather "sued to prevent a change in it," adding that the case "doesn't arise from it."

Vecchione is confident the jurisdictional question will be settled by the Supreme Court, declaring that appellate courts "love jurisdiction more than anything." So if there's a circuit split on the jurisdiction question, and the case is brought by the Solicitor General of the U.S., the Supreme Court will be very likely to settle the matter, he said.

Another wrinkle in the jurisdictional case would arise if the Federal Circuit or the Supreme Court finds that IEEPA doesn't provide for tariffs but keeps the case at CIT. These appellate courts could hypothetically keep jurisdiction at the trade court by adopting the view that the case arises out of the HTS. Vecchione thought this may be threading a needle through "too thin a hole."

However, the judicial granting of IEEPA refunds is a different story. "It's pretty clear that the only Court which could grant a refund of duties is the CIT," said John Peterson, partner at Neville Peterson. While the Federal Circuit has temporarily stayed the trade court's ruling, which gave the government 10 days to effectuate the ruling, both Peterson and Duncan noted that the trade court didn't discuss how non-parties can get refunds. Both attorneys suggested that non-parties should file post-summary corrections for unliquidated entries and then protests for liquidated entries to prevent final liquidation and preserve refund claims.

Friedman speculated that the D.C. court's decision "may be more likely to start a flood of litigation because" the court's preliminary injunction against the tariffs "only goes to the individual named plaintiffs."