Dirty Deems Done Dirt Cheap
This case is very strange. It is also one of those interesting cases that involves the intersection of customs and trade law. Specifically, it involves Customs and Border Protection's treatment of entries subject to an antidumping duty order. As it happens, that treatment was wrong.
By way of background, the salient facts are that Alden Leeds was the importer of chemicals that were subject to an antidumping duty investigation. At the time of entry, the importer was required to make a cash deposit of almost 25%. Because the producer requested an administrative review of the deposit rate, Commerce instructed Customs to suspend liquidation of the entries. The review subsequently found an assessment rate of about 4%. That should have made for a hefty refund to Alden. Unfortunately, it did not.
Rather than withhold liquidation, Customs affirmatively posted an official bulletin notice stating that the entries had liquidated by operation of law (i.e., they were "deemed liquidated"). This is the first odd thing about these facts. A deemed liquidation occurs when the time for liquidation expires without any action by Customs. It is a non-sequitur to publish a notice of deemed liquidation. It appears that what Customs tried to do was publish a notice of liquidation. That, of course, should have been prohibited by the suspension instructions from Commerce. It appears that someone at Customs noticed the entries, investigated, wrongly determined that they had been deemed liquidated by operation of law, and decided to publish notice just to let the world know that fact.
When Commerce published the final results, Alden Leeds sought a refund. Customs' unfortunate response was that the entries liquidated. Because the importer did not file a timely protest, Customs believed that it had no means by which to refund the money. So sorry. Alden Leeds then had no where to turn but the Court of International Trade.
It is worth pausing here to consider the next odd part of this case. It is absolutely clear that Customs made a mistake in this case by liquidating the entries. It is also clear that the United States government does not have a right to the funds. Should the apparent lack of a legal avenue by which the importer can force Customs to refund the money really dictate the policy here? Why did no one in Customs say, "file a suit and we will settle for the full amount you are owed." Is there something that prevents Customs from acting like a reasonable commercial actor in this case? That is not a rhetorical question. If you know the answer, drop a comment below.
On the law, the problem for Alden Leeds is a prior case called Juice Farms which involves a similar unfortunate set of facts. In that case, the Court of Appeals for the Federal Circuit held that the improper liquidation should have been the subject of a protest and that a protest would have provided an adequate remedy. Because a protest was possible, the Court of International Trade did not have jurisdiction under 1581(i), the residual jurisdiction provision.
The CIT, however, distinguished Juice Farms, on the grounds that it involved affirmative rather than deemed liquidations. Oddly, in this case Customs posted a bulletin notice of liquidation, which sounds a lot more like an affirmative liquidation than a deemed liquidation. Furthermore, there is nothing different about the protestability of a normal versus a deemed liquidation. But, because this case involves supposed deemed liquidations, which require no action from Customs, the Court found Juice Farms to be inapplicable.
In the end, the Court made the point that the notice of liquidation was a legal nullity. Customs might just as easily posted a notice saying that I had won the Tour de France. Since the posting was in error and meaningless because of the official suspension of liquidation, there was no liquidation and I am not Lance Armstrong. Without a liquidation, filing a protest would be futile, making it a "manifestly inadequate" step. Thus, the Court held that no protest was required and the Court had (i) jurisdiction to decide the case.
This could easily have gone the other way on the basis of Juice Farms, and it might still. As a policy matter, one could argue that importers are supposed to monitor the status of their entries and that the protest process gives importers recourse. Extending this burden to include monitoring erroneous or illegal liquidations is not particularly far fetched. Further, there is a principle of law that estoppel does not run against the government. That means that parties cannot make a claim against the government (absent a statute permitting it) simply because the party relied on the representation of the government to its detriment. In this case, that would be relying on the statement from Commerce that Customs will not liquidate the entries. But that strikes me as bad policy. An importer should be able to accept that the relevant agencies are going to do what they are legally required to do and that the Court will hold them to it.
By way of background, the salient facts are that Alden Leeds was the importer of chemicals that were subject to an antidumping duty investigation. At the time of entry, the importer was required to make a cash deposit of almost 25%. Because the producer requested an administrative review of the deposit rate, Commerce instructed Customs to suspend liquidation of the entries. The review subsequently found an assessment rate of about 4%. That should have made for a hefty refund to Alden. Unfortunately, it did not.
Rather than withhold liquidation, Customs affirmatively posted an official bulletin notice stating that the entries had liquidated by operation of law (i.e., they were "deemed liquidated"). This is the first odd thing about these facts. A deemed liquidation occurs when the time for liquidation expires without any action by Customs. It is a non-sequitur to publish a notice of deemed liquidation. It appears that what Customs tried to do was publish a notice of liquidation. That, of course, should have been prohibited by the suspension instructions from Commerce. It appears that someone at Customs noticed the entries, investigated, wrongly determined that they had been deemed liquidated by operation of law, and decided to publish notice just to let the world know that fact.
When Commerce published the final results, Alden Leeds sought a refund. Customs' unfortunate response was that the entries liquidated. Because the importer did not file a timely protest, Customs believed that it had no means by which to refund the money. So sorry. Alden Leeds then had no where to turn but the Court of International Trade.
It is worth pausing here to consider the next odd part of this case. It is absolutely clear that Customs made a mistake in this case by liquidating the entries. It is also clear that the United States government does not have a right to the funds. Should the apparent lack of a legal avenue by which the importer can force Customs to refund the money really dictate the policy here? Why did no one in Customs say, "file a suit and we will settle for the full amount you are owed." Is there something that prevents Customs from acting like a reasonable commercial actor in this case? That is not a rhetorical question. If you know the answer, drop a comment below.
On the law, the problem for Alden Leeds is a prior case called Juice Farms which involves a similar unfortunate set of facts. In that case, the Court of Appeals for the Federal Circuit held that the improper liquidation should have been the subject of a protest and that a protest would have provided an adequate remedy. Because a protest was possible, the Court of International Trade did not have jurisdiction under 1581(i), the residual jurisdiction provision.
The CIT, however, distinguished Juice Farms, on the grounds that it involved affirmative rather than deemed liquidations. Oddly, in this case Customs posted a bulletin notice of liquidation, which sounds a lot more like an affirmative liquidation than a deemed liquidation. Furthermore, there is nothing different about the protestability of a normal versus a deemed liquidation. But, because this case involves supposed deemed liquidations, which require no action from Customs, the Court found Juice Farms to be inapplicable.
In the end, the Court made the point that the notice of liquidation was a legal nullity. Customs might just as easily posted a notice saying that I had won the Tour de France. Since the posting was in error and meaningless because of the official suspension of liquidation, there was no liquidation and I am not Lance Armstrong. Without a liquidation, filing a protest would be futile, making it a "manifestly inadequate" step. Thus, the Court held that no protest was required and the Court had (i) jurisdiction to decide the case.
This could easily have gone the other way on the basis of Juice Farms, and it might still. As a policy matter, one could argue that importers are supposed to monitor the status of their entries and that the protest process gives importers recourse. Extending this burden to include monitoring erroneous or illegal liquidations is not particularly far fetched. Further, there is a principle of law that estoppel does not run against the government. That means that parties cannot make a claim against the government (absent a statute permitting it) simply because the party relied on the representation of the government to its detriment. In this case, that would be relying on the statement from Commerce that Customs will not liquidate the entries. But that strikes me as bad policy. An importer should be able to accept that the relevant agencies are going to do what they are legally required to do and that the Court will hold them to it.
Comments
2. You have been waiting for years for the right case to use this title. Congratulations.
3. If Customs did declare you winner of the Tour de France, you would leap to the top of DEA's deemed performance-enhancing drug watch list.