Section 321 Doesn't Bar President From Axing de Minimis Under IEEPA, US Tells CIT
The International Emergency Economic Powers Act lets the president suspend the de minimis threshold to respond to a national emergency notwithstanding Section 321's limits on eliminating or modifying the threshold, the U.S. argued. Urging the Court of International Trade to side with the government in importer Detroit Axle's suit against the elimination of the de minimis threshold on Chinese goods, the U.S. said the IEEPA's language lets the president void pre-existing privileges granted by other authorities, such as Section 321 (Axle of Dearborn, d/b/a Detroit Axle v. Dep't of Commerce, CIT # 25-00091).
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Filing its brief on June 20, the government also urged the trade court to dismiss two of Detroit Axle's claims alleging the agency actions implementing the elimination of the de minimis threshold for Chinese goods are arbitrary and capricious in violation of the Administrative Procedure Act. The U.S. said the agency actions are merely "ministerial" and solely implement a presidential directive, which is not reviewable under the APA.
Detroit Axle filed suit last month to challenge President Donald Trump's executive order eliminating the de minimis threshold for Chinese products as a violation of 19 U.S.C.1321, the de minimis statute commonly known as Section 321 (see 2505220063). The importer said that if Trump wanted to scrap the exemption, which was imposed to address Chinese inaction on the flow of fentanyl into the U.S., he had to do it through a notice-and-comment rulemaking.
In response, the U.S. said Section 321 "applies to ordinary customs administration under ordinary circumstances and confers discretionary power on the Treasury Secretary," while IEEPA is an "emergency statute" that lets the president "nullify" and "void" existing privileges granted by other authorities when needed to address a national emergency.
The government argued that IEEPA's "text, history, and purpose" confirm that it lets the president temporarily suspend the de minimis threshold during a national emergency. As with the U.S. defense of tariffs imposed under IEEPA, the government relied on the statute's grant of power letting the president "regulate ... importation." The brief said the "power to suspend the de minimis exception is consistent with the definition of 'regulate,' both now and when IEEPA was enacted."
In addition, the statute lets the president "nullify" or "void" "any ... right" or "privilege with respect to" covered property, the U.S. noted. "That language again expressly permits the President to override preexisting privileges, such as duty-free treatment granted by existing statutes and regulations."
And while Section 321 and IEEPA both address "privileges and tariffs," courts place a heavy burden on parties attempting to claim that these statutes can't live in harmony, the U.S. said. "That burden is not satisfied here," the government argued, claiming that Section 321 was passed to "streamline customs processing for low-value shipments" and not to "override or constrain the President's emergency powers under IEEPA."
The U.S. argued against the claim that Section 321 is the sole means of altering the de minimis exemption, since the statute's authorization of the treasury secretary to "prescribe exceptions to any exemption" through regulations doesn't "foreclose presidential action under IEEPA." Reading Section 321 as the sole means of altering the de minimis threshold "may be relevant to whether the Secretary can alter the exemption other than through regulations," but it doesn't affect the president's "different authority under IEEPA’s entirely different provisions," the brief said.
Even if Section 321 did require a regulation to alter the de minimis exemption, it wouldn't require notice-and-comment rulemaking, as Detroit Axle claims, the brief said. The alteration of the de minimis threshold here falls under the exception to such rulemaking, since it involves a "military or foreign affairs function of the United States," the government said.
The U.S. also sought to dismiss two of Detroit Axle's claims challenging agency action implementing the EO, arguing that presidential action can't be reviewed under the APA. Here, CBP and DHS "took only ministerial actions to implement the President’s decisions by posting notices, modifying the applicable HTSUS provisions, and collecting duties announced by the President," the U.S. said. As a result, the agencies' actions are outside the scope of APA review.
The government additionally argued against the importer's request for a preliminary injunction against the end of the de minimis threshold, claiming that the importer wouldn't likely succeed in its case, the company can get refunds if it prevails, and the equities favor the government.