Oman Fasteners, LLC v. United States

• Decision Date: 15 April 2022
• Docket Number: Slip Op. No. 22-35,Consol. Court No. 20-00037
• Parties: OMAN FASTENERS, LLC, et al., Plaintiffs, v. UNITED STATES, et al., Defendants.
• Court: U.S. Court of International Trade

567 F.Supp.3d 1364

OMAN FASTENERS, LLC, et al., Plaintiffs,

v.UNITED STATES, et al., Defendants.

Slip Op. No. 22-35

Consol. Court No. 20-00037

United States Court of International Trade.

April 15, 2022

Andrew Caridas, Perkins Coie, LLP, of Washington, D.C., for plaintiff Oman Fasteners, LLC. With him on the submissions were Michael P. House, Shuaiqi Yuan, Jon B. Jacobs, and Brenna D. Duncan.

Meen Geu Oh, Senior Trial Counsel, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendants. With him on the submissions were Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director.

Before: Jennifer Choe-Groves, Judge, M. Miller Baker, Judge, Timothy C. Stanceu, Judge

OPINION AND ORDER

Stanceu, Judge:

Plaintiff Oman Fasteners, LLC ("Oman Fasteners") and defendants jointly inform the court of their inability to reach agreement on the form in which measures may be taken to protect the revenue of the United States pending defendants’ appeal of our judgment in Oman Fasteners, LLC v. United States , 45 CIT ––––, 520 F. Supp. 3d 1332 (2021) ( "Oman Fasteners I "). The court orders plaintiff Oman Fasteners to make cash deposits on future entries of merchandise affected by this litigation, unless or until Oman Fasteners and defendants agree upon and implement bonding to secure potential government revenue, during the remainder of the stay pending defendants’ appeal of our prior judgment.

I. BACKGROUND

In PrimeSource Bldg. Prods., Inc. v. United States , 45 CIT ––––, 505 F. Supp. 3d 1352 (2021) (" PrimeSource "), we held that a proclamation issued by the President of the United States ("Proclamation 9980"), Adjusting Imports of Derivative Aluminum Articles and Derivative Steel Articles Into the United States , 85 Fed. Reg. 5,281 (Exec. Office of the President Jan. 29, 2020), in which the President imposed duties of 25% ad valorem on various imported products made of steel, including nails and other fasteners, was issued contrary to time limitations in Section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862 ("Section 232")¹ and therefore beyond the authority to adjust tariffs that Section 232 delegated to the President.

In Oman Fasteners I , we granted summary judgment in favor of Oman Fasteners, who brought a claim essentially identical to that asserted in the PrimeSource litigation. In the judgment, we ordered defendants to liquidate the entries affected by this litigation without assessment of the 25% ad valorem Section 232 duties, discontinue the then-existing obligation of plaintiffs to post bonding for such duties, and refund with interest any deposits of Section 232 duties that may have been made. Judgment 2 (June 10, 2021), ECF No. 108. Defendants filed a notice of appeal of our judgment. Notice of Appeal 4–5 (Aug. 7, 2021), ECF No. 110.

In Oman Fasteners, LLC v. United States , 45 CIT ––––, 542 F. Supp. 3d 1399 (2021) (" Oman Fasteners II "), upon defendants’ motion, we took several actions pending appeal. We stayed our order to liquidate the affected entries and refund with interest any deposits of Section 232 duties, enjoined the liquidation of the affected entries, and ordered defendants to confer with Oman Fasteners and co-plaintiffs Huttig Building Products, Inc. and Huttig, Inc. (collectively, "Huttig") "with the objective of reaching, and entering into, an agreement with Oman and an agreement with Huttig on monitoring and such bonding for entries of merchandise within the scope of Proclamation 9980 that have occurred, and will occur, on or after June 10, 2021 [the date of the entry of judgment], as is reasonably necessary to secure potential liability for duties and fees." Oman Fasteners II , 45 CIT at ––––, 542 F. Supp. 3d at 1409.

In taking the actions to allow defendants to protect potential revenue from Section 232 duties pending the appeal of our judgment in Oman Fasteners I , we stated that the opinion of the Court of Appeals for the Federal Circuit ("Court of Appeals") in Transpacific Steel LLC v. United States , 4 F.4th 1306 (Fed. Cir. 2021), "causes us to conclude that defendants have made a sufficiently strong showing that they will succeed on the merits on appeal." Oman Fasteners II , 45 CIT at ––––, 542 F. Supp. 3d at 1403. We concluded that defendants demonstrated, further, the likelihood of irreparable harm in the absence of the relief sought, explaining that the "harm is the loss of the authority, provided for by statute and routinely exercised by Customs [and Border Protection] in every import transaction, to require and maintain such bonding as it determines is reasonably necessary to protect the revenue of the United States." Id. , 45 CIT at ––––, 542 F. Supp. 3d at 1405–06. We also concluded that the remaining equitable factors, balancing of the hardships and the public interest, also favored allowing the government to exercise its authority to protect the revenue. Id. , 45 CIT at ––––, 542 F. Supp. 3d at 1407–08.

Plaintiffs and defendants reached agreement on bonding following our decision in Oman Fasteners II , and the special bonding arrangement for Section 232 duties continues to be in place for entries by Huttig. But as to entries by Oman Fasteners, the parties are no longer in agreement, and, according to defendants, the government's interest in potential Section 232 duties on Oman Fasteners's entries occurring after the end of February 2022 is not currently being protected by special bonding. Defs.’ Suppl. Notice Concerning the Parties’ Inability to Reach Agreement on Continuous Bonding, and Request for Continuous Bonding 1–2 (Mar. 18, 2022), ECF No. 129 ("Defs.’ Request"); see also Joint Notice Regarding Court's Order Concerning Monitoring and Continuous Bonding 1–3 (Jan. 5, 2022), ECF Nos. 127 (public), 128 (conf.) ("Joint Notice").²

Opposing renewed bonding or the deposit of cash deposits on its entries, Oman Fasteners has responded to defendants’ latest submission by proposing that the government's interest in potential Section 232 duties be protected by the deposit of estimated potential Section 232 duties into an escrow account, a proposal defendants oppose. Oman Fasteners’ Resp. to Defs.’ Suppl. Notice Regarding Bonding (Apr. 1, 2022), ECF Nos. 131 (conf.), 132 (public) ("Oman Fasteners's Resp."). The court issues this Opinion and Order to resolve the current dispute between Oman Fasteners and defendants and also to provide for protection of the revenue for Section 232 duties potentially owed on entries of merchandise by Oman Fasteners that are subject to Proclamation 9980.

II. DISCUSSION

The current dispute between Oman Fasteners and defendants is not over whether, but how, the government's interest in potential Section 232 duties should be protected. Oman Fasteners is opposed to the resumption of bonding for these potential duties, arguing that "liquidation of all of Oman Fasteners’ entries at issue in this case likely will not occur until years after Defendants’ appeal has concluded," Oman Fasteners's Resp. 3; see Joint Notice 4–5. Referring to lengthy suspensions of liquidation, Oman Fasteners explains that "the entries subject to the stay will coincide with the as-yet uninitiated seventh administrative review (covering entries between July 1, 2021 and June 30, 2022) and very likely eighth administrative review (covering entries between July 1, 2022 and June 30, 2023)" in Certain Steel Nails from the Sultanate of Oman , Inv. No. A-523–808 ("Oman Nails "). Oman Fasteners's Resp. 3.

Oman Fasteners also is opposed to the deposit of estimated Section 232 duties on its current and future entries, maintaining that "there is no guarantee that Oman Fasteners would be able to recoup these funds prior to liquidation of the entries," which delay, according to Oman Fasteners, would cause it unnecessary hardship. Joint Notice 5. It argues, further, that depositing estimated Section 232 duties, "even payment of contingent duties, may affect the dumping margin calculations in subsequent reviews" in that "this Court has held that Section 232 duties are deductible from export price in antidumping cases." Oman Fasteners's Resp. 4 (citing Borusan Mannesmann Boru Sanayi Ve Ticaret A.S. v. United States , 45 CIT ––––, ––––, 494 F. Supp. 3d. 1365, 1372–76 (2021) ).

Oman Fasteners "proposes securing the Government's revenue interest by establishing an escrow account, into which Oman Fasteners would deposit funds sufficient to cover all Section 232 duties that would be assessed on its entries of merchandise in the event that Defendants ultimately prevail on the merits of their...