VoestAlpine USA Corp. v. United States

• Decision Date: 17 May 2022
• Docket Number: Slip Op. 22-47,Consol. Court No. 20-03829,Court No. 21-00290
• Citation: 578 F.Supp.3d 1263
• Parties: VOESTALPINE USA CORP. and Bilstein Cold Rolled Steel LP, Plaintiffs, v. UNITED STATES, Defendant. VoestAlpine USA LLC and Bilstein Cold Rolled Steel LP, Plaintiffs, v. United States, Defendant.
• Court: U.S. Court of International Trade

578 F.Supp.3d 1263

VOESTALPINE USA CORP. and Bilstein Cold Rolled Steel LP, Plaintiffs,

v.UNITED STATES, Defendant.

VoestAlpine USA LLC and Bilstein Cold Rolled Steel LP, Plaintiffs,

v.United States, Defendant.

Slip Op. 22-47

Consol. Court No. 20-03829

Court No. 21-00290

United States Court of International Trade.

May 17, 2022

Lewis E. Leibowitz, The Law Office of Lewis E. Leibowitz, of Washington, D.C., argued for Plaintiffs.

Aimee Lee, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of New York, N.Y., argued for Defendant. With her on the briefs were Brian M. Boynton, Acting Assistant Attorney General, Jeanne E. Davidson, Director, Patricia M. McCarthy, Director, and Tara K. Hogan, Assistant Director. Of counsel on the briefs were Kenneth S. Kessler, Senior Counsel, Office of the Chief Counsel, Bureau of Industry and Security, U.S. Department of Commerce, of Washington, D.C., and Yelena Slepak, Senior Attorney, Office of the Assistant Chief Counsel, International Trade Litigation, U.S. Customs and Border Protection, of Washington, D.C.

OPINION AND ORDER

Barnett, Chief Judge:

Plaintiffs¹ in these companion cases filed complaints seeking reliquidation of several entries of steel merchandise exclusive of duties imposed pursuant to section 232 of the Trade Expansion Act of 1962, 19 U.S.C. § 1862 (2018).² Compl., ECF No. 1 (20-3829); Compl., ECF No. 2 (21-290).³ Plaintiffs based their requests for relief on the U.S. Department of Commerce ("Commerce") Bureau of Industry and Security's ("BIS") approval of exclusion requests, each containing the same invalid 10-digit subheading of the Harmonized Tariff Schedule of the United States ("HTSUS"). By the time Plaintiffs discovered the respective errors and obtained revised exclusions from BIS that were effective as of the date of the original requests, U.S. Customs and Border Protection ("Customs" or "CBP") had liquidated the entries at issue in each case and the liquidations had become final. Plaintiffs now seek court-ordered reliquidation to obtain a refund of section 232 duties paid in connection with the entries in each case.

Pending in Court No. 20-3829 is Plaintiffs’ motion for reconsideration of the court's opinion and judgment dismissing the action as moot and for leave to amend the complaint. Pls.’ Mot. for Relief from J., Recons. and Leave to Amend Consol. Compls. ("Pls.’ Mot. Recons. 20-3829"), ECF No. 28; Reply Br. of Pls. in Supp. of Mot. for Recons., Relief from J. and to Amend the Compl. ("Pls.’ Reply Recons. 20-3829"), ECF No. 30; see generally VoestAlpine USA Corp. v. United States ("VoestAlpine I "), 45 CIT ––––, 532 F. Supp. 3d 1379 (2021) (finding statutory subject matter jurisdiction pursuant to 28 U.S.C. § 1581(i) but dismissing Plaintiffs’ claim as moot).

Pending in Court No. 21-290 is the Government's motion to dismiss the action pursuant to U.S. Court of International Trade ("USCIT" or "CIT") Rules 12(b)(1) and 12(b)(6). Def.’s Mot. to Dismiss ("Def.’s Mot. Dismiss 21-290"), ECF No. 17; Def.’s Reply in Supp. of its Mot. to Dismiss, ECF No. 19. Also pending is Plaintiffs’ consent motion for leave to file a second amended complaint to remove one of the two entries in the action. Pls.’ Consent Mot. for Leave to Amend Compl. ("Pls.’ Consent Mot. Amend 21-290"), ECF No. 22.

The facts and legal issues underlying each case are similar in relevant respects and, thus, the court resolves the pending motions in a single opinion. For the reasons discussed herein, the court grants Plaintiffs’ motion for reconsideration, vacates its opinion in VoestAlpine I dismissing Court No. 20-3829 as moot, and denies the Government's motion to dismiss Court No. 21-290 for lack of subject matter jurisdiction. The court grants Plaintiffs’ consent motion for leave to file a second amended complaint in Court No. 21-290, but nevertheless grants the Government's motions to dismiss both Court Nos. 20-3829 and 21-290 for failure to state a claim upon which relief may be granted. The court denies Plaintiffs’ contested motion for leave to file a second amended complaint in Court No. 20-3829 because the amendment would be futile.

BACKGROUND

I. Section 232 Duties and the Exclusion Process

"Section 232 of the Trade Expansion Act of 1962 authorizes the President to restrict imports of goods to ‘[s]afeguard[ ] national security.’ " N. Am. Interpipe, Inc. v. United States , 45 CIT ––––, ––––, 519 F. Supp. 3d 1313, 1319 (2021) (alterations in original) (quoting 19 U.S.C. § 1862 ). Pursuant to that authority, on March 8, 2018, the President announced a 25 percent tariff on imports of certain steel products, effective March 23, 2018. See Proclamation 9705 of Mar. 8, 2018, cl. 1–2, 83 Fed. Reg. 11,625 (Mar. 15, 2018). Proclamation 9705 identified certain six-digit tariff provisions that would be subject to section 232 duties. Id. , cl. 1.⁴ In order to implement the increased duty rates, Proclamation 9705 modified subchapter III of chapter 99 of the HTSUS to add a new subheading, 9903.80.01, which provides for an additional 25 percent tariff on "all entries of iron or steel products from all countries, except products of Canada and of Mexico, classifiable in the headings or subheadings enumerated in this note." Id. , Annex (U.S. Note 16(a)).

Proclamation 9705 further authorized Commerce "to provide relief from the additional duties ... for any steel article determined not to be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality" and "to provide such relief based upon specific national security considerations." Id. , cl. 3. Commerce must convey all exclusion determinations "to [CBP] for implementation ... at the earliest possible opportunity." Id. , Annex (U.S. Note 16(c)). Importers are required to "report information concerning any applicable exclusion granted by Commerce in such form as CBP may require." Id. , Annex (U.S. Note 16(d)).

The President twice amended the exclusion information provided in clause three of Proclamation 9705. In Proclamation 9711, the President amended clause 3 to state that, "[f]or merchandise entered on or after the date the directly affected party submitted a request for exclusion, such relief shall be retroactive to the date the request for exclusion was posted for public comment." Proclamation 9711 of Mar. 22, 2018, cl. 7, 83 Fed. Reg. 13,361 (Mar. 28, 2018). In Proclamation 9777, the President amended clause three such that retroactive relief pursuant to a granted exclusion would extend to entries for "which liquidation is not final." Proclamation 9777 of Aug. 29, 2018, cl. 5, 83 Fed. Reg. 45,025 (Sept. 4, 2018).

In 2018, BIS amended 15 C.F.R. pt. 705 to include rules for the administration of the exclusion process. See generally Requirements for Submissions Requesting Exclusions From the Remedies Instituted in Presidential Proclamations Adjusting Imports of Steel Into the United States and Adjusting Imports of Aluminum Into the United States; and the Filing of Objs. to Submitted Exclusion Reqs. for Steel and Aluminum , 83 Fed. Reg. 12,106 (Dep't Commerce Mar. 19, 2018) (interim final rule); Submissions of Exclusion Reqs. and Objs. to Submitted Reqs. for Steel and Aluminum , 83 Fed. Reg. 46,026 (Dep't Commerce Sept. 11, 2018) (interim final rule); see also 15 C.F.R. pt. 705, Supp. 1 (eff. Sept. 11, 2018). The regulations that were in effect when the entries at issue were made state that exclusion requests must be filed by an individual or organization "using steel in business activities ... in the United States" and include "the submitter's name, date of submission, and the 10-digit [HTSUS] statistical reporting number." 15 C.F.R. pt. 705, Supp. 1(c)(1). Commerce's approval of an exclusion is limited to the product specified in the request and the "individual or organization that submitted the specific exclusion request, unless Commerce approves a broader application of the [exclusion]." Id. pt. 705, Supp. 1(c)(2). Companies may "submit[ ] a request for exclusion of a product even though an exclusion request submitted for that product by another requester or that requester was denied or is no longer valid." Id. Commerce must deny "[e]xclusion requests that do not satisfy the [specified reporting] requirements." Id. pt. 705, Supp. 1(h)(1)(i). With respect to refunds, the regulations state that "Commerce does not provide refunds on tariffs" and "[a]ny questions on the refund of duties should be directed to CBP." Id. pt. 705, Supp. 1(h)(2)(iii)(B)

Both Customs and Commerce issued guidance to importers seeking exclusions. Customs issued several Cargo Systems Messaging Service ("CSMS") messages on the proper submission of approved exclusions. On May 21, 2018, Customs issued guidance stating that "[e]xclusions granted by [Commerce] are retroactive on imports to the date the request for exclusion was posted for public comment at Regulations.gov." U.S. Customs and Border Prot., CSMS # 18-000352 - Submitting Imports of Products Excluded from Duties on Imports of Steel or Aluminum, https://content.govdelivery.com/accounts/USDHSCBP/bulletins/1f1986e (May 21, 2018, 8:41 AM) ("CSMS # 18-000352"). Thus, "[t]o request an administrative refund for previous imports of excluded products granted by [Commerce], importers may file a [post summary correction ("PSC")]." Id. If, however, "the entry has already liquidated, importers may protest the liquidation." Id. Subsequent CSMS messages reiterated that exclusions may be applied retroactively to unliquidated entries and to entries that have liquidated when the liquidation is nonfinal and the protest period has not expired. See U.S. Customs and Border Prot., CSMS # 42566154 – Section 232 and Section 301 – Extensions Reqs., PSCs, and Protest, https://content.govdelivery.com/accounts/USDHSCBP/bulletins/289820a (May 1, 2020, 5:05 PM); U.S. Customs and Border Prot., CSMS # 39633923 - UPDATE:

Submitting Imports of Products Excluded from Duties...