Consolidated Fibers: What the EAJA?

Consolidated Fibers, Inc. v. United States involves an importer’s motion for attorneys’ fees under the Equal Access to Justice Act (“EAJA”). And, it is a cautionary tale for importers and customs lawyers.

The underlying facts are not too complicated. Consolidated entered polyester stable fiber from Korea. At the time of entry, it deposited the 7.9% estimated dumping duties that were then due. Because the producer was subject to administrative review, the liquidation of the entry was suspended. On December 10, 2007, Commerce published the results of the review and determined the assessment rate to be 48.14%. On January 14, 2008, Commerce issued instructions to Customs to liquidate the entries at the assessment rate. CBP failed to act on those instructions until May 6, 2011 when it published a bulletin notice of liquidation stating that the entry liquidated by operation of law on June 10, 2008 at the 7.9% deposit rate. But, shortly thereafter, on June 17, 2011, CBP “rate advanced” the entry to 48.14% and reliquidated the entry.

Consolidated protested the reliquidation. In its protest, Consolidated noted that the entry liquidated by operation of law six months after the assessment rate was published. Since liquidations are generally final as to all parties, this might appear to be enough. Consolidated relied on a 2004 CIT case called International Trading v. United States, 28 CIT 1, 16-18, 306 F. Supp. 2d 1265, 1278-79 (2004), which was affirmed by the Court of Appeals in 2005, as support for its position.
The Court, however, noted that by the time CBP reliquidated Consolidated‘s entry, Congress had amended 19 U.S.C. § 1501 to allow Customs to reliquidate an entry that had liquidated under § 1504, i.e., liquidated by operation of law, within 90 days of the date of publication of the notice of liquidation. That means that the clock started running on this liquidation on May 6, 2011 when Customs issued the notice of liquidation and the reliquidation was timely. [Note from Larry: This changed again in 2016 when the statute was amended to start the reliquidation clock running from the date of the deemed liquidation not the notice.]

 OK, so how does that relate to the EAJA claim?

The odd thing about this case is that it follows a “confession of judgment,” in which the United States effectively admitted that it should not have rate advanced the entry. In other words, the government is willing to pay back the extra antidumping duties Consolidated paid. But, plaintiff refused to stipulate the case unless the U.S. also agreed to pay attorneys’ fees, which the U.S. government would not do. 
To qualify for fees under EAJA, the requesting party must have prevailed in the litigation and show that the other party’s position was not substantially justified. That means that no reasonable person would have accepted the position as justified. This includes the administrative position. So, was Customs substantially justified in denying the protest?
The protest only cited the pre-amendment International Traders case as support for its protest. On that basis alone, according to the Court of International Trade, Customs was justified in denying the protest. Customs had at least arguable authority to reliquidate the entry up to 90-days following the publication of the bulletin notice. In the protest, Consolidated did nothing to refute this. According to the CIT, Customs has no obligation to recognize and act on other grounds that might have been asserted in the protest. Specifically, had Consolidated argued that a nearly three-year gap between the deemed liquidation and the notice was unreasonable and the reliquidation void, Customs would have been able to respond. Absent the presence of those grounds in the protest itself, CBP was substantially justified in denying the protest.

And yet, you say, the government apparently felt it was in the wrong. It agreed to refund the additional dumping duties. All I can say to that is being wrong is not the same as being substantially unjustified. It is a good thing whenever the government cooperates and agrees to stipulate or otherwise settle a case. All parties should be encouraged to do that. Settling, however, does not mean that the original administrative or litigation position was substantially unjustified. We need to keep that in mind.
The more important lesson of this case is that CBP need not hunt around for a justification to grant a protest. It must only consider the grounds asserted by the protestant. Maybe this means our protests need to look a little more like the kitchen sink. It also strongly weighs in favor of importers recognizing the protest as a pre-litigation document that should be drafted by a lawyer.

Comments

Post a Comment

Popular posts from this blog

CAFC Decision in Double Invoicing Case

The Federal Circuit has issued a decision on the merits in United States v. Inn Foods, Inc.  There had been a previous decision on jurisdiction, which was followed by a trial at the Court of International Trade and then this appeal on the substance. The initial issue is whether Inn Foods' invoicing practice amounts to fraud.  Inn Foods had been receiving an invoice from growers in Mexico that had a relatively low sales prices on it.  Subsequent to entry, Inn Foods created a second invoice at something more similar to market value, retaining the original invoice number, and paid at that higher amount.   Superficially, this looks like a standard-issue double-invoicing scheme.  But, in the age of reconciliation, is it really more like a provisional pricing mechanism?  It might have been possible to make that argument had Inn Foods adjusted its entries accordingly.  It didn't and the loss of revenue was approximately $624,000.  Based on testimony and evidence indicating both knowl
Read more

Ninestar and UFLPA Exhaustion

Image
Exhaustion is a key doctrine in administrative law. When applicable, it requires that a party unhappy with an agency’s determination complete the administrative appeal process before turning to the courts for judicial review. Requiring exhaustion typically promotes judicial efficiency by ensuring that disputes are resolved at the agency and, if they are not, that there is a complete record of the agency process. Exhaustion also ensures that the judiciary respects the executive agencies and their expertise.  There are, on the other hand, times when the courts will find that exhaustion is not necessary or appropriate. Such is the case in  Ninestar Corporation et al. v. United States  et al., a decision of the U.S. Court of International Trade.  Ninestar is also interesting because it is one of the first cases in the CIT involving the Uyghur Forced Labor Prevention Act, known as UFLPA. In my hiatus from active blogging, I missed the rise of UFLPA as a major compliance topic. So, let's
Read more

Precious Tritium

Image
One thing I have learned as a customs lawyer who does a lot of classification work is that there are millions of odd items moving in international trade the existence of which I am completely ignorant. Such is the case of the gaseous tritium light sources used in, among other things, firearm sights. These things use tritium sealed in a glass that has been coated in phosphor. The radioactive tritium decays, releasing beta particles, which interact with the phosphor causing it to emit light. In other words, it creates light with no external power source. Pretty cool.  Tritium is, of course, a real thing. It is an isotope of hydrogen. We know this from the excellent documentary "Spider-Man." This comes up in relation to the Court of International Trade decision in Trijicon, Inc. v. United States  in which the importer challenged the tariff classification of several versions of the gaseous tritium light sources ("GTLS"). The plaintiff uses them to make gun sights. The
Read more