J. Conrad LTD v. United States
| Decision Date | 01 June 2020 |
| Docket Number | Ct. No. 20-00052,Slip Op. 20-79, Ct. No. 20-00053 |
| Citation | 457 F.Supp.3d 1365 |
| Parties | J. CONRAD LTD, Plaintiff, v. UNITED STATES et al., Defendants. Metropolitan Staple Corp., Plaintiff, v. United States et al., Defendants. |
| Court | U.S. Court of International Trade |
Jeffrey Neeley, Husch Blackwell LLP of Washington, DC, argued for Plaintiffs, J. Conrad LTD and Metropolitan Staple Corp. With him on the briefs were Nithya Nagarajan, Stephen W. Brophy, Joseph S. Diedrich, and Julia B. Banegas.
Stephen Tosini, Senior Trial Counsel, and Kyle Beckrich , Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice of Washington, DC, argued for Defendants. With them on the briefs were Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant Director.
Before: Timothy C. Stanceu, Chief Judge, Jennifer Choe-Groves and M. Miller Baker, Judges
In these twin cases, two importers of steel nails seek temporary restraining orders and preliminary injunctions against implementation or further enforcement of Presidential Proclamation 9980, which imposes tariffs on certain imported steelderivative products, including steel nails, on national security grounds. The Court ordered consolidated briefing and heard argument for both cases together.
Based on our findings of fact and conclusions of law set out below, see USCIT R. 52(a)(2), we deny Plaintiffs’ motions for preliminary injunctions because they have failed to demonstrate a likelihood of irreparable harm absent such relief. Given Plaintiffs’ failure to carry their burden on this essential element, we need not address the other three elements required to grant preliminary injunctive relief. In view of our denial of Plaintiffs’ preliminary injunction motions, we deny Plaintiffs’ TRO motions as moot.
These cases involve a challenge to actions taken by the President of the United States pursuant to Section 232 of the Trade Expansion Act of 1962, codified as amended at 19 U.S.C. § 1862. As its heading indicates, Section 232 authorizes the President to take certain actions to reduce imports of goods to "[s]afeguard[ ] national security." 19 U.S.C. § 1862.
As relevant here, Section 232 directs that upon receipt of a request from the head of a department or agency, upon application of an interested party, or sua sponte , the Secretary of Commerce is to conduct an "appropriate investigation to determine the effects on the national security of imports of the article which is the subject of such request." 19 U.S.C. § 1862(b)(1)(A). The Secretary shall, "if it is appropriate and after reasonable notice, hold public hearings or otherwise afford interested parties an opportunity to present information and advice relevant to such investigation." Id. § 1862(b)(2)(A)(iii).
The statute provides that within 270 days of commencing the investigation, the Secretary shall submit a report to the President summarizing the investigation's findings and offering recommendations for action or inaction; in addition, if the Secretary concludes the subject article's imports are in quantities or under circumstances that "threaten to impair the national security," the report shall so state. Id. § 1862(b)(3)(A).
If the Secretary finds a threat to national security, the President then has 90 days from his receipt of the report to determine whether he "concurs" with the Secretary's finding. Id. § 1862(c)(1)(A)(i). If the President concurs, he is then to "determine the nature and duration of the action that, in the judgment of the President, must be taken to adjust the imports of the article and its derivatives so that such imports will not threaten to impair the national security." Id. § 1862(c)(1)(A)(ii). If the President elects to take such action, the statute provides he shall "implement" that action within 15 days after the day on which he decides to act. Id. § 1862(c)(1)(B).
A customs duty is a tariff or tax that may be imposed, in various circumstances and for various purposes, upon imported goods entering the United States.1 U.S. Customs and Border Protection ("Customs") is the agency that administers and enforces tariffs, including those at issue in these cases. Imported goods are subject to rates of duty, or are designated as free of duty, as set forth in the Harmonized Tariff Schedule of the United States. Most goods are subject to an "ad valorem" duty rate, which is a percentage of the merchandise's value.2 The cases before the Court, for example, involve a controversy over a 25 percent ad valorem duty on imported steel nails. Estimated duties and fees must be deposited upon entry. See 19 U.S.C. § 1505(a).
An importer's liability is not fixed until the entry is "liquidated," which refers to Customs's "final computation or ascertainment of duties" owed on an entry of merchandise. See 19 C.F.R. § 159.1 ; see also 19 U.S.C. § 1500. Following liquidation, Customs either collects any additional amounts due, with interest, if the importer's deposit was lower than the final assessment or refunds any excess deposit, with interest, if the deposit was higher than the final assessment. 19 U.S.C. § 1505(b).
In 2017, the Secretary of Commerce initiated a Section 232 investigation to determine the effects of steel imports on national security. See Notice Request for Public Comments and Public Hearing on Section 232 National Security Investigation of Imports of Steel , 82 Fed. Reg. 19,205 (Dep't Commerce Apr. 26, 2017). Following a period of investigation that included public hearings, the Secretary issued his report and recommendation to the President on January 11, 2018, within the statutory 270-day period.3
The Secretary found that steel is important to U.S. national security, supra note 3 at 2–3, that steel imports were of quantities that injured the domestic steel industry, id. at 3–4, that displacement of domestic steel due to excessive imports weakens the U.S. economy, id. at 4, and that global excess steel capacity further weakens the U.S. economy, id. at 4–5.
Based on those findings, the Secretary concluded that steel imports impaired national security for purposes of Section 232 and "that the only effective means of removing the threat of impairment is to reduce imports to a level that should, in combination with good management, enable U.S. steel mills to operate at 80 percent or more of their rated production capacity." Id. at 5. Accordingly, the Secretary recommended the President "take immediate action by adjusting the level of [steel] imports through quotas or tariffs ... to enable U.S. steel producers to operate at an 80 percent or better average capacity utilization rate based on available capacity in 2017 ...." Id. at 6.
On March 8, 2018, within 90 days of receiving the Secretary's report and recommendation, the President issued Proclamation 9705, in which he "concur[red] in the Secretary's finding that steel articles are being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States ...." Proclamation 9705 of March 8, 2018, Adjusting Imports of Steel into the United States , ¶ 5, 83 Fed. Reg. 11,625, 11,626 (Mar. 15, 2018).
Proclamation 9705 imposed a 25 percent ad valorem tariff on steel articles from all countries except Canada and Mexico, id. ¶ 8, 83 Fed. Reg. at 11,626, and, inter alia , directed the Secretary to "continue to monitor imports of steel articles" and advise the President whether any further action should be taken. Id. cl. (5)(b), 83 Fed. Reg. at 11,628.
On January 24, 2020, the President issued Proclamation 9980, which extended Proclamation 9705 ’s tariffs to apply to certain steel article derivatives not previously addressed by the Secretary's report and recommendation or by Proclamation 9705. See Proclamation 9980 of January 24, 2020, Adjusting Imports of Derivative Aluminum Articles and Derivative Steel Articles into the United States , 85 Fed. Reg. 5281 (Jan. 29, 2020).4
Id. ¶ 5, 85 Fed. Reg. at 5282.
Accordingly, Proclamation 9980 imposed an additional 25 percent ad valorem tariff on, inter alia , imported steel derivative articles (as defined in the proclamation's Annex II) with respect to goods entered for consumption, or withdrawn from warehouse for consumption, on or after February 8, 2020. Id. cl. 1, 85 Fed. Reg. at 5283. The proclamation exempted imports of steel derivative articles from six countries. Id. Steel derivative articles subject to Proclamation 9980 include, but are not limited to, steel nails. Id. Annex II ¶ 3(ii)(B), 85 Fed. Reg. at 5291.
Plaintiffs J. Conrad LTD and Metropolitan Staple Corp. filed these two cases on March 2, 2020. They are importers and nationwide distributors of fasteners, including steel nails, not encompassed by Proclamation 9705 but encompassed by Proclamation 9980. Affidavit of Mark Buedel, ECF 10-2, at 16;5 Affidavit of Howard Kastner, Court No. 20-53, ECF 8-2, at 16.
The defendants are the United States, the President, the U.S. Department of Commerce, the Secretary of Commerce, Customs, and the Acting Commissioner of Customs.
The substantively identical complaints allege that the Secretary violated the ...
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