By September 21st, over 3,500 importers filed cases at the Court of International Trade (CIT) challenging the so-called “List 3” Section 301 duties assessed on certain Chinese-origin imports. But if you’re still wondering if it is too late to file a court challenge, there is still a possibility that your company can still file a List 3 case at the CIT.
On September 10, 2020, HMTX Industries LLC et al v. United States (Court No. 20-00177) filed a lawsuit at the CIT challenging the U.S. Trade Representative’s (USTR) authority to assess Section 301 List 3 duties (a substantive claim under the Trade Act of 1974), as well as the USTR’s procedural steps to implement those duties (a procedural claim under the Administrative Procedures Act [APA]). Thousands of other companies filed similar lawsuits on the same grounds as HMTX, hoping for a positive outcome should that case succeed.
How You Could Still File Successfully
While most lawsuits were filed by the September 21st deadline, recommendations were made to other companies to file their lawsuits by September 24th. This seeming discrepancy comes from different theories regarding when the cause of action “accrues” for purposes of the two-year statute of limitations asserted in the HMTX case. Given the uncertainty surrounding the date of accrual, importers have filed (and continue to file) additional lawsuits based on one of three statute of limitations theories:
Date of Publication of List 3 in the Federal Register. The vast majority of the additional lawsuits were filed by September 21, 2020, which was two years after the USTR published List 3 in the Federal Register. This was the most conservative approach for avoiding a statute of limitations defense, as this is arguably the deadline for the APA procedural claim in the HMTX case.
Date of Initial Collection of List 3 Duties. Over 100 additional lawsuits were filed from September 22 to September 24, 2020, alleging that the cause of action “accrued” on September 24, 2018, the date the government first collected List 3 duties.
Continuing Claim Theory. There is also an argument that the cause of action for a substantive challenge to List 3, as opposed to a procedural challenge to its method of promulgation, accrues each time List 3 duties are assessed on an aggrieved importer. Under this “continuing claim theory” an importer may have the opportunity to file a lawsuit based on each entry subject to Section 301 List 3 duties. Therefore, a lawsuit filed today may be considered timely for List 3 duties paid within two years prior to the filing of the action. A few cases filed after September 25, 2020 appear to rely on this theory.
Although an importer may be time-barred from asserting a procedural claim under the APA (based on the Date of Publication theory), there is an argument that a lawsuit asserting a substantive challenge to List 3 duties may still be timely. It is well-established that a party acquires standing to sue under the APA when it suffers actual “injury in fact.” In the case of Section 301 tariffs, the first tariffs were not imposed until September 24, 2018. And, in APA cases, the first “injury in fact” an importer suffers occurs in the first date that Customs demands payment of Section 301 tariffs from that importer. Thus, if your company was not assessed with Section 301 tariffs until March 1, 2019, you arguably have until February 28, 2021, to file a suit in the CIT to redress that injury.
Given the relatively minimal cost of filing suit, coupled with the potentially significant relief at issue, presents a low-risk/high-reward scenario for most importers impacted by Section 301 List 3 duties.
If you have questions about your rights to potential List 3 duty refunds, or if you have any questions about this pending litigation, please contact us at 877.799.0789.