Oman Fasteners, LLC v. United States
| Decision Date | 21 October 2022 |
| Docket Number | Slip Op. No. 22-119,Consol. Court No. 20-00037 |
| Citation | 599 F.Supp.3d 1350 |
| Parties | OMAN FASTENERS, LLC, et al., Plaintiffs, v. UNITED STATES, et al., Defendants. |
| Court | U.S. Court of International Trade |
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 submission was Brian M. Boynton, Principal Deputy Assistant Attorney General, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director.
Plaintiff Oman Fasteners, LLC ("Oman Fasteners" or "movant") seeks relief from defendants’ refusal to allow bonding in lieu of cash deposits for potential liability for duties under a Presidential Proclamation, Proclamation No. 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) (" Proclamation 9980"), which imposed duties on various imported products made of aluminum or steel, including steel fasteners. Granting Oman Fasteners's motion in part and denying it in part, we require defendants to exclude Oman Fasteners from a requirement to post cash deposits for potential duty liability under Proclamation 9980 until such time as defendants obtain a further order from this Court or Oman Fasteners voluntarily enters into an agreement with defendants that modifies the terms of this Opinion and Order.
In PrimeSource Bldg. Prods., Inc. v. United States , 45 CIT ––––, 505 F. Supp. 3d 1352 (2021) (" PrimeSource "), we invalidated Proclamation 9980. We held that Proclamation 9980, which 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, LLC v. United States , 45 CIT ––––, 520 F. Supp. 3d 1332 (2021) (" Oman Fasteners I "), we awarded plaintiffs summary judgment on 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% 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 1–2 (June 10, 2021), ECF No. 108.
In our October 15, 2021 Opinion and Order in Oman Fasteners, LLC v. United States , 45 CIT ––––, 542 F. Supp. 3d 1399 (2021) (" Oman Fasteners II "), we took several actions, on defendants’ motion, following their appeal of our judgment in Oman Fasteners I . 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 ("Customs" or "CBP")] 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, balance of the hardships and the public interest, also favored allowing the government to take steps to protect the potential revenue in the circumstance presented. Id. , 45 CIT at ––––, 542 F. Supp. 3d at 1407–08.
Following our decision in Oman Fasteners II , defendants reached agreements with Oman Fasteners and with the other plaintiffs in this case on enhanced bonding to provide security for potential Section 232 duties under Proclamation 9980. But earlier this year, the government informed the court that its interest in potential Section 232 duties on Oman Fasteners's entries occurring after the end of February 2022 was not currently being protected by movant's 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 ( ); see also Joint Notice Regarding Court's Order Concerning Monitoring and Continuous Bonding 1–3 (Jan. 5, 2022), ECF Nos. 127 (public), 128 (conf.).2 To resolve the dispute between Oman Fasteners and defendants, we issued, on April 15, 2022, an Opinion and Order in which we directed as follows:
Oman Fasteners, LLC v. United States , 46 CIT ––––, 567 F. Supp. 3d 1364, 1368–69 (2022) (" Oman Fasteners III ").
Now before the court is Oman Fasteners's Emergency Motion to Compel Defendants’ Compliance with the Court's April 15, 2022 Order (Sept. 19, 2022), ECF Nos. 136 (conf.), 137 (public) ("Pl.’s Mot."). Defendant filed a response in opposition on September 26, 2022. Defs.’ Resp. to Pl.’s Emergency Mot. to Compel Defs.’ Compliance with Court Order, ECF Nos. 145 (public), 146 (conf.) ( ). With leave of the court, Oman Fasteners filed a reply. Oman Fasteners's Reply in Supp. of Emergency Mot. to Compel Defs.’ Compliance with the Court's April 15, 2022 Order (Sept. 28, 2022), ECF Nos. 143 (conf.), 144 (public) ("Pl.’s Reply").
The following facts are taken from the parties’ recent submissions and are not in dispute unless otherwise noted.
Oman Fasteners began making cash deposits for its potential duty liability under Proclamation 9980 following the court's April 15, 2022 ruling in Oman Fasteners III . Pl.’s Mot. 6. The developments leading up to the current dispute between the parties began on August 5, 2022, when, according to movant, Customs informed Oman Fasteners that it considered Oman Fasteners's then-current continuous bond to have an insufficient limit of liability and that a new, higher bond must be put into place by September 5, 2022. Id. In responding, Oman Fasteners attempted to get Customs to agree to allow bonding that would provide security for, in addition to other potential duty liability, potential Section 232 duties under Proclamation 9980 : "Prompted by the need to increase its customs bond in any event, and in order to prevent material future harm from continued payment of cash deposits, Oman Fasteners decided to resume bonding of potential Section 232 liability." Id.
On Wednesday, August 17, 2022, movant's counsel sent an email message to counsel for defendants stating that Oman Fasteners "would like to resume bonding 232 entries pursuant to the CIT's April 15, 2022 order" and is "prepared to put up a ... continuous bond to secure the 232 liability, and to monitor our entries and terminate and replace that bond once it is exhausted." Pl.’s Mot., Ex. A at 3–4 (). The government's counsel responded expeditiously, on Friday, August 19, 2022, per the request of movant's counsel. In that response, also memorialized by email, defendant's counsel: (1) disclosed that he had consulted with Customs; (2) informed movant's counsel that Customs agreed to accept a bond in the amount proposed by Oman Fasteners; and (3) informed movant's counsel that, in light of the new bond, Oman Fasteners, effective August 25, 2022, would have an exclusion from...
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