Attorneys Speculate on How CIT Will Handle IEEPA Refund Cases After SCOTUS Ruling

Administratively, the process for obtaining tariff refunds would start with filing a post-summary correction. Should the correction be denied, and the underlying entries liquidate, the next step would be to file a protest with CBP seeking the tariff refunds. Should that also be denied, the importer would then file suit at the Court of International Trade under Section 1581(a), which allows suits to contest protest denials.

The real question, though, is what happens to all the cases that were filed under Section 1581(i), the trade court's "residual" jurisdiction, though this avenue for relief will close the minute the Supreme Court strikes down the tariffs, given that administrative remedies are available, said John Peterson, partner at Neville Peterson.

Once the suit has been filed, the importer likely will file for a preliminary injunction against the liquidation of their entries. This is the path attorneys at Crowell & Moring are choosing. Crowell has largely led the charge on filing preemptive IEEPA tariff refund lawsuits and has sought to consolidate all cases they are bringing, with AGS Company Automotive Solutions v. CBP standing as the test case.

Last month, Crowell filed a motion for a preliminary injunction against liquidation of all affected entries, and the firm told CIT it's currently in talks with DOJ regarding a stipulation as to the motion. However, if the motion is granted and the Supreme Court strikes down the tariffs, what happens next is not so clear, various attorneys told us.

One attorney told us the trade court could keep liquidation of the affected entries suspended and maintain jurisdiction over the cases "pending further litigation on the scope of the remedy and/or a stipulation or process proposal by CBP as to how it will effectuate the Supreme Court's order."

This remedy could look like individual orders in the cases brought before the court, though Peterson is skeptical of this path, noting that in some of the cases, the court "does not have the particular entries before it in the cases currently being filed, and really wouldn't know what it was ordering." In addition, some companies may have other issues they want to protest other than the IEEPA tariffs, making individual orders far from the best path for relief.

Another option is for the trade court to oversee further litigation on relief that can impact all affected importers. CIT was willing to embrace this role when it vacated the IEEPA tariffs at issue in the lead V.O.S. Selections v. Trump case, enjoining enforcement of the tariffs as to all importers and not just the ones that were parties to the cases. One attorney said in light of CIT's original ruling, it's unlikely the trade court will be "so narrowly focused as to grant very specific relief in these relatively few cases and ignore the impact on other similarly situated importers."

Lawrence Friedman, partner at Barnes Richardson, said the trade court may follow the path it blazed in the Harbor Maintenance Tax and Section 301 litigation. In those cases, the court designated a lead case, put together a group of representative cases, then litigated all the issues related to remedies. The court "could take similar steps," and "take a group of cases that are representative and make a decision that creates a model for a refund process," Friedman said.

The easiest path for refunds, though, would see the government willing to quickly dispense with refunds, though there's an open question on whether this will be the case or if CBP will fight tooth and nail to hand out refunds. Friedman said if the Supreme Court decides the tariffs are unlawful, he doesn't think "Customs would liquidate entries after that point and impose the duties," adding that it would be "unprecedented" for the agency to do the opposite. "I find it very hard to believe that Customs will continue to collect and keep that money" after such a decision from the high court, he said.

However, if the government does fight to dole out refunds or continues to collect duties and dare companies to go to court, one trade attorney said it's possible that going to court now could be more efficient than waiting to exhaust the administrative options. In addition, some of the attorneys say filing cases now may be the only way to secure interest payments on refunds, though Friedman said he thinks CIT likely has the power to issue "equitable relief to make the parties whole that would include interest."