PrimeSource Building Products, Inc. v. United States et al

Slip Op. No. 21-
UNITED STATES COURT OF INTERNATIONAL TRADE
PRIMESOURCE BUILDING
PRODUCTS, INC.,
Plaintiff,
v.
UNITED STATES, et al.,
Defendants.
Before: Timothy C. Stanceu, Judge
Jennifer Choe-Groves, Judge
M. Miller Baker, Judge
Court No. 20-00032
OPINION AND ORDER
[Granting defendants’ motion for stay pending appeal.]
Dated: August 2, 2021
Jeffrey S. Grimson, Mowry & Grimson, PLLC, of Washington, D.C., for plaintiff.
With him on the brief were Kristin H. Mowry, Jill A. Cramer, Sarah M. Wyss, and Bryan P.
Cenko.
Brian M. Boynton, Acting Assistant Attorney General, Commercial Litigation
Branch, Civil Division, U.S. Department of Justice, of Washington, D.C., for defendants.
With him on the brief were Jeanne E. Davidson, Director, and Tara K. Hogan, Assistant
Director.
Stanceu, Judge: Defendants move for a partial stay pending their appeal of the
judgment this Court entered in PrimeSource Bldg. Prods., Inc. v. United States, Judgment
(Apr. 5, 2021), ECF No. 111 (“Judgment”). The Judgment granted certain relief to
plaintiff PrimeSource Building Products, Inc. (“PrimeSource”), an importer of steel
94
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 1 of 16

Court No. 20-00032 	Page 2
nails, in a challenge to a Presidential action taken under Section 232 of the Trade
Expansion Act of 1962, 19 U.S.C. § 1862 (“Section 232”) imposing additional duties of
25% ad valorem on certain imported products made of steel, including steel nails.1 See
Proclamation 9980, Adjusting Imports of Derivative Aluminum Articles and Derivative Steel
Articles Into the United States, 85 Fed. Reg. 5,281 (Exec. Office of the President Jan. 29,
2020) (“Proclamation 9980”). Plaintiff opposes the motion for a stay.
The court grants the motion for a stay, orders suspension of liquidation of the
entries affected by this litigation, and requires PrimeSource and the government to
consult to obtain agreement on bonding of entries made on and after April 5, 2021, for
protection of the revenue potentially owing due to Proclamation 9980.
I. BACKGROUND
The background of this action is set forth in our prior opinions and
supplemented herein. See PrimeSource Bldg. Prods., Inc. v. United States, 45 CIT __, 497 F.
Supp. 3d 1333 (2021) (“PrimeSource I”), PrimeSource Bldg. Prods., Inc. v. United States, 45
CIT __, 505 F. Supp. 3d 1352 (2021) (“PrimeSource II”).
On February 13, 2020, upon the consent of both parties, this Court entered a
preliminary injunction that prohibited defendants from collecting 25% cash deposits on
PrimeSource’s entries of merchandise within the scope of Proclamation 9980 and
1 Citations to the United States Code herein are to the 2012 edition. Citations to
the Code of Federal Regulations are to the 2020 edition.
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 2 of 16

Court No. 20-00032 	Page 3
prohibited the liquidation of the affected entries. Order (Feb. 13, 2020), ECF Nos. 39
(conf.), 40 (public) (“Prelim. Inj. Order”). The preliminary injunction required, further,
that PrimeSource terminate its existing continuous bond and replace it with a
continuous bond having a higher limit of liability to reflect the additional duties
PrimeSource otherwise would have been required to deposit. Prelim. Inj. Order 2.
On February 12, 2021, again with the consent of parties, the court amended the
preliminary injunction to require PrimeSource, instead of conferring with defendants
prior to the expiry of its continuous bond, “to monitor its subject imports and foregone
duty deposits” and terminate and replace its continuous bond once the amount of
foregone duty deposits reached the amount of the bond, minus the baseline bond
amount as calculated pursuant to the general continuous bonding formula of U.S.
Customs and Border Protection (“Customs” or “CBP”). [Amended] Order 1–2 (Feb. 12,
2021), ECF No. 105 (“Am. Prelim. Inj. Order”). The amended preliminary injunction
also authorized Customs “to deny release to PrimeSource’s entries until PrimeSource
terminates its current continuous bond and obtains a new continuous bond . . . or enters
the merchandise using single transaction bonds in the amount of 100 percent of the
value of the merchandise, plus 100 percent of the estimated duties, taxes, and fees, plus
the foregone duty deposit on each entry.” Id. at 2.
This amended preliminary injunction dissolved upon the entry of judgment
entered in PrimeSource II on April 5, 2021. See Judgment 1–2. In the Judgment, this
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 3 of 16

Court No. 20-00032 	Page 4
Court ordered, inter alia, that defendants liquidate the duties affected by this litigation
without the assessment of the 25% additional duties provided for in Proclamation 9980.
Id.
Defendants filed a notice of appeal of the judgment entered in PrimeSource II on
June 4, 2021, ECF No. 112, and filed the instant motion for a stay pending appeal the
same day. Defs.’ Mot. for Partial Stay of J. to Maintain the Status Quo Pending Appeal
(June 4, 2021), ECF No. 113 (conf.); (June 9, 2021), ECF No. 114 (public) (“Defs.’ Mot. for
Stay”). Defendants requested that, for the pendency of the appeal, the court: (1) stay the
requirement to liquidate PrimeSource’s entries without the assessment of the 25%
additional duties; (2) reinstate the order to suspend liquidation; and (3) reinstate the
requirement that PrimeSource monitor its imports of merchandise covered by
Proclamation 9980 and maintain a sufficient continuous bond for the duty liability on
these imports. Defs.’ Mot. for Stay 1–2.
Plaintiff filed its response in opposition to defendants’ stay motion on June 25,
2021. Pl. PrimeSource Resp. to Defs.’ Mot. for Partial Stay of J. to Maintain the Status
Quo Pending Appeal, ECF No. 116 (“Pl.’s Resp.”).
II. DISCUSSION
In exercising its traditional powers to further the administration of justice, a
federal court may stay enforcement of a judgment pending the outcome of an appeal.
Nken v. Holder, 556 U.S. 418, 421 (2009). “While an appeal is pending from . . . [a] final
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 4 of 16

Court No. 20-00032 	Page 5
judgment that grants, continues, modifies, refuses, dissolves, or refuses to dissolve or
modify an injunction, the court may suspend, modify, restore, or grant an injunction on
terms for bond or other terms that secure the opposing party’s rights.” USCIT R. 62(d).
When that judgment was rendered by a three-judge panel, “the order must be made . . .
by the assent of all its judges, as evidenced by their signatures.” Id.
The party seeking a stay pending appeal has the burden of showing that the stay
is justified by the circumstances. Nken, 556 U.S. at 433–34 (citations omitted). We
consider four factors in deciding whether the movant has met that burden: (1) whether
defendants have made a strong showing that they will succeed on the merits;
(2) whether they will be irreparably harmed absent the stay; (3) whether issuance of the
stay will substantially injure the plaintiff; and (4) where the public interest lies. See
Hilton v. Braunskill, 481 U.S. 770, 776 (1987). “There is substantial overlap between these
and the factors governing preliminary injunctions.” Nken, 556 U.S. at 434 (citing Winter
v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 24 (2008)). The “likelihood of success” and
“irreparable harm” factors, working together, are the most critical, and where the
United States is a party, the balance of equities and the public interest factors “merge.”
Id. at 434–35.
We conclude that all four factors support our granting defendants’ motion to
stay.
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 5 of 16

Court No. 20-00032 	Page 6
A. Success on the Merits
A recent decision by the Court of Appeals for the Federal Circuit (“Court of
Appeals”) in Transpacific Steel LLC v. United States, No. 2020-2157, 2021 WL 2932512
(Fed. Cir. 2021) (“Transpacific II”) causes us to conclude that defendants have made a
sufficiently strong showing that they will succeed on the merits on appeal, so as to
satisfy the first factor in our analysis. In Transpacific II, the Court of Appeals vacated a
judgment of this Court in Transpacific Steel LLC v. United States, 44 CIT __, 466 F. Supp.
3d 1246 (2020) (“Transpacific I”), rejecting a claim similar in some respects to a claim this
Court found meritorious in PrimeSource I and PrimeSource II.
The Transpacific litigation involves a Presidential proclamation that increased to
50% the then-existing 25% Section 232 duties on imports of steel products from Turkey.
See Proclamation 9772, Adjusting Imports of Steel Into the United States, 83 Fed. Reg. 40,429
(Exec. Office of the President Aug. 15, 2018) (“Proclamation 9772”). In Transpacific I, this
Court held the proclamation invalid as untimely and as a violation of equal protection.
Regarding the former, Transpacific I held that Proclamation 9772 was issued after the
close of the combined 105-day time period Congress established in 1988 amendments to
Section 232 (the time period codified as Section 232(c)(1), 19 U.S.C. § 1862(c)(1)), that
commenced upon President Trump’s receipt, on January 11, 2018, of a report by the
Secretary of Commerce issued under the authority of 19 U.S.C. § 1862(b)(3)(A) (the
“2018 Steel Report”). The President’s receipt of that report by the Commerce Secretary
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 6 of 16

Court No. 20-00032 	Page 7
had been the procedural predicate for the issuance of Proclamation 9705, Adjusting
Imports of Steel Into the United States, 83 Fed. Reg. 11,625 (Exec. Office of the President
Mar. 15, 2018) (“Proclamation 9705”).
The Court of Appeals reversed and remanded the case to this Court. On the
issue of the time limits added by the 1988 amendments to Section 232, the Court of
Appeals reasoned that “[n]one of the new language in the statute, on its own or by
comparison to what came before, implies a withdrawal of previously existing
presidential power to take a continuing series of affirmative steps deemed necessary by
the President to counteract the very threat found by the Secretary.” Transpacific II, 2021
WL 2932512 at *19. The Court of Appeals stated that “[i]n this context, the directive to
the President to act by a specified time is not fairly understood as implicitly meaning
‘by then or not at all’ as to each discrete imposition that might be needed, as judged
over time.” Id.
PrimeSource I and II arose from somewhat different facts than did the Transpacific
litigation. Rather than upwardly adjust the tariffs imposed by a previous Section 232
proclamation, the action contested here imposed, for the first time, tariffs of 25% on a
previously unaffected group of products. These products, identified in Proclamation
9980 as “Derivatives of Steel Articles,” Proclamation 9980, 85 Fed. Reg. at 5,281, were
different than the steel articles affected by the earlier Presidential proclamation,
Proclamation 9705. In this litigation, defendants have relied upon the President’s
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 7 of 16

Court No. 20-00032 	Page 8
receipt of the 2018 Steel Report as the procedural basis upon which the President issued
Proclamation 9980, arguing that the President retained “modification” authority over
the previous Section 232 action. See PrimeSource II, 45 CIT at __, 505 F. Supp. 3d at 1355
(noting that defendants’ “position continues to be that procedural preconditions for the
issuance of Proclamation 9980 were met by the Secretary’s 2018 Steel Report and the
timely issuance of Proclamation 9705.”). Proclamation 9980 was signed by the President
on January 24, 2020 (and published in the Federal Register on January 29, 2020), long
after the President’s receipt, on January 11, 2018, of the 2018 Steel Report. This Court
held that, due to the combined 105-day time limitation set forth in 19 U.S.C. § 1862(c)(1),
the President’s authority to adjust tariffs on the “derivative” articles of steel had expired
by the time Proclamation 9980 was issued, if that time period were presumed to
commence upon the receipt of the 2018 Steel Report. PrimeSource I, 45 CIT at __,
497 F. Supp. 3d at 1356. We concluded, later, that defendants had waived any defense
that the procedural requirements of Section 232 were met based on any procedure other
than one reliant upon the 2018 Steel Report. PrimeSource II, 45 CIT at ___,
505 F. Supp. 3d at 1355.
Our decision in PrimeSource II is also distinguishable from Transpacific II in the
length of time that transpired between the receipt of a Section 232(b)(3)(A) report from
the Secretary of Commerce and the President’s taking implementing action. In issuing
Proclamation 9980, the President acted more than two years after receiving the 2018
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 8 of 16

Court No. 20-00032 	Page 9
Steel Report. In the Transpacific litigation, the analogous time period was approximately
seven months. In Transpacific II, the Court of Appeals rejected the appellee’s argument
that Congress sought, through the time limits, to ensure that the President will have
timely information on which to act. See Transpacific II, 2021 WL 2932512 at *21
(“Concerns about staleness of findings are better treated in individual applications of
the statute, where they can be given their due after a focused analysis of the proper role
of those concerns and the particular finding of threat at issue.”).
Even though Transpacific II and this case arose from somewhat different facts, we
nevertheless conclude that the opinion of the Court of Appeals potentially affects the
outcome of this litigation. In reaching this conclusion, we do not opine on whether
Transpacific II necessarily controls that outcome, i.e., whether the President’s adjusting
of tariffs on derivatives of steel products falls within what the Court of Appeals termed,
in a different factual setting, “a continuing series of affirmative steps deemed necessary
by the President to counteract the very threat found by the Secretary,” id. at *19. But for
purposes of ruling on the instant stay motion, it is sufficient that the discussion in
Transpacific II of the “continuing” nature of Presidential Section 232 authority is
expressed in broad terms. Accordingly, we conclude that defendants have made a
showing that they will succeed on the merits on appeal that is sufficient to satisfy the
first factor in our analysis.
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 9 of 16

Court No. 20-00032 	Page 10
B. Irreparable Harm in the Absence of the Requested Stay
In their motion for a stay, defendants request that, for the pendency of the
appeal, the court: (1) stay the requirement to liquidate PrimeSource’s entries without
the assessment of the 25% additional duties; (2) reinstate the order to suspend
liquidation; and (3) reinstate the requirement that PrimeSource monitor its imports of
merchandise covered by Proclamation 9980 and maintain a sufficient continuous bond
for the duty liability on these imports. Defs.’ Mot. for Stay 1–2. The court concludes
that all three of these requested measures are necessary to prevent a form of irreparable
harm to the United States. As we discuss below, that harm is the loss of the authority,
provided for by statute and routinely exercised by Customs in every import transaction,
to require and maintain such bonding as it determines is reasonably necessary to
protect the revenue of the United States. Without the requested stay, the judgment
entered in PrimeSource II would interfere with the exercise of that authority.
In Section 623(a) of the Tariff Act of 1930, Congress explicitly recognized the
importance of security, such as bonding, to protect the revenue. In pertinent part, the
relevant provision reads as follows:
In any case in which bond or other security is not specifically
required by law, the Secretary of the Treasury may by regulation or
specific instruction require, or authorize customs officers to require, such
bonds or other security as he, or they, may deem necessary for the
protection of the revenue. . . .
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 10 of 16

Court No. 20-00032 	Page 11
19 U.S.C. § 1623(a). This authority is effectuated in the Customs Regulations and
applies generally to all import transactions. See 19 C.F.R. § 113. Due to the decision of
the Court of Appeals in Transpacific II, the government has established a likelihood that
ultimately it will assess Section 232 duties of 25% ad valorem on all entries at issue in this
litigation. In any ordinary import transaction, i.e., one not affected by litigation such as
this, Customs would exercise its statutory and regulatory authority to ensure that the
basic importer’s bond (be it a continuous or single transaction bond) has a sufficient
limit of liability to secure the liability for all potential duties, such as the Section 232
duties that potentially will be owed by PrimeSource.
Importers’ bonds are the ordinary means by which the government ensures that
the joint and several liability of the importer of record, and of its surety (up to the limit
of liability on the bond) will attach for the payment of all duties and other charges
eventually determined to be owed. Notably, in the situation posed by this litigation,
PrimeSource, due to the consent preliminary injunction that dissolved upon the entry of
judgment in this litigation, has made no cash deposits of estimated duties to cover
potential duty liability from Proclamation 9980. The enhanced bonding required by the
consent preliminary injunction was a substitute for these estimated duty deposits.
If an importer’s bond has a limit of liability that is too low to cover the ordinary
duties plus the 25% duties, there is an inherent risk to the revenue, codified by statute
and effectuated by regulation, because one of the two parties that contractually could
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 11 of 16

Court No. 20-00032 	Page 12
have been bound to pay the duties—the surety—has liability limited by the face amount
of the bond. In short, Congress contemplated in 19 U.S.C. § 1623 that the government
should have resort to two parties for assessed duty liability, the importer of record and
the surety.
We do not base our decision to grant the requested stay on a factual
determination that PrimeSource will be unable to satisfy its potential duty obligation.
Rather, we base it on the loss of the ability of the United States to exercise, as it would in
the ordinary course of administering import transactions, the statutory authority of
19 U.S.C. § 1623(a) to secure this potential duty liability. That loss, absent the requested
stay, itself will constitute an irreparable harm to the United States. 2 But for the
judgment entered in PrimeSource II, the government would maintain, and continue into
the future, the requirement of bonding adequate to secure the revenue potentially
owing on the entries affected by this case. In summary, were we to deny the
2 Because we find irreparable harm for the reasons noted, we need not, and do
not, consider whether finality of liquidation itself constitutes potential irreparable harm
to the United States. Defendants claim they may be unable to collect duties on entries
for which liquidation has become final under 19 U.S.C. § 1514(a), see Defs.’ Mot. for
Partial Stay of J. to Maintain the Status Quo Pending Appeal 12 (June 4, 2021), ECF No.
113 (conf.); (June 9, 2021), ECF No. 114 (public). Their argument is brought into
question by precedent recognizing the authority of this Court, in a case brought
according to 28 U.S.C. § 1581(i), to enforce its own judgments by ordering the
reliquidation of the entries. See Shinyei Corp. of Am. v. United States, 355 F.3d 1297, 1311–
12 (Fed. Cir. 2004). The opinion in Shinyei reasoned that finality of liquidation under
19 U.S.C. § 1514 does not “preclude judicial enforcement of court orders after
liquidation,” as “the Court of International Trade has been granted broad remedial
powers.” Id. at 1312.
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 12 of 16

Court No. 20-00032 	Page 13
government’s motion to stay the effect of that judgment as to these entries, we would be
interfering with the exercise of the government’s statutory authority under 19 U.S.C.
§ 1623(a). Based on the intent Congress expressed in enacting that provision, we
conclude that any such interference is best avoided.
In addition to enhanced bonding, the government’s stay motion seeks a stay of
our order to liquidate without Section 232 liability the entries subject to this litigation
and a suspension of the liquidation of those entries pending the appeal. We agree that
these steps are warranted. The court notes the possibility that finality of liquidation,
should it attach to all entries associated with a particular continuous bond, could result
in the cancellation of such a bond and the resultant extinguishing of the liability of the
surety. Such a prospect would pose irreparable harm to the United States for the
reasons the court has discussed. Because avoiding irreparable harm requires that the
government have the authority not only to require, but to maintain, sufficient bonding
for potential duty liability on all entries at issue in this case, we conclude that avoiding
such harm requires that the affected entries remain in an unliquidated state during the
pendency of the appeal.
C. Balance of the Hardships
The government also prevails on the third factor. Defendants seek narrow relief
that would not substantially prejudice PrimeSource. They do not seek cash deposits;
rather, under their proposed stay order PrimeSource will incur instead the costs of
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 13 of 16

Court No. 20-00032 	Page 14
maintaining enhanced bonding for the potential Section 232 duty liability, i.e., the cost
of the bond premiums. Although this will require that PrimeSource “pay a new
premium with its surety every time it must put in place a new bond to cover its
estimated Section 232 deposits,” Pl.’s Resp. 20, these are conditions PrimeSource found
acceptable in agreeing to the initial preliminary injunction order and the amended
preliminary injunction orders, implicitly acknowledging they were necessary and
appropriate under 19 U.S.C. § 1623(a). See Pl.’s Resp. 21; Prelim. Inj. Order 2–3; Am.
Prelim. Inj. Order 1–2. The government’s request for a stay essentially maintains the
balance struck by the parties in their agreement for a consent injunction that maintained
enhanced bonding while the outcome of this case was not yet determined by this Court.
In comparison, denying the government the authority to require such bonding on
current and future entries poses a hardship on the United States that, under the
statutory scheme designed to ensure adequate protection of the revenue, is
unwarranted now that such duty liability is likely to be incurred.
D. The Public Interest
Unquestionably, the public interest favors allowing the government to exercise
its lawful authority to protect the revenue, and potential revenue, of the United States,
which in this case involves a significant amount of potential duty liability. See Defs.’
Mot. for Stay 12–13. PrimeSource has a continuous bond that secures the 25%
additional duty liability for all entries between February 1, 2020 until April 5, 2021, the
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 14 of 16

Court No. 20-00032 	Page 15
date judgment was entered in favor of PrimeSource. The court will order the parties to
consult with a view to reaching an agreement under which the entries occurring on and
after April 5, 2021, and going forward throughout the appeal (with a superseding bond,
if necessary), will be covered by bonding reasonably necessary to secure the potential
Section 232 duties.
Prior to the decision of the Court of Appeals in Transpacific II, PrimeSource
argued that “[a]ny concerns over protecting the revenue of the United States are
rendered moot if the government never had a claim to that revenue in the first
instance.” Pl.’s Resp. 26. But the government now has a potential claim to the revenue,
to which the court must give due consideration.
III. CONCLUSION AND O RDER
All four factors necessitate granting the governments’ motion to stay. Upon the
court’s consideration of the parties’ motions, including defendants’ motion to stay and
plaintiff’s response, and all other filings herein, and upon due deliberation, it is hereby
ORDERED that Defs.’ Mot. for Partial Stay of J. to Maintain the Status Quo
Pending Appeal (June 4, 2021), ECF No. 113 (conf.); (June 9, 2021), ECF No. 114 (public)
be, and hereby is, granted; it is further
ORDERED that the order of this Court to liquidate the entries subject to this
litigation, as stated in the Judgment entered on April 5, 2021 be, and hereby is, stayed
pending the appeal of that judgment before the United States Court of Appeals for the
Federal Circuit; it is further
ORDERED that defendants be, and hereby are, enjoined, through the pendency
of the appeal, from liquidating the entries affected by this litigation; it is further
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 15 of 16

Court No. 20-00032 	Page 16
ORDERED that plaintiff and defendants shall confer to seek to reach agreement
on PrimeSource’s monitoring and continuous bonding for entries of merchandise
within the scope of Proclamation 9980 that have occurred, and will occur, on and after
April 5, 2021, to secure potential liability for duties and fees, including potential liability
for duties under Proclamation 9980; should the parties be unable to reach such an
agreement, the parties shall file a joint status report with the court by no later than by
August 16, 2021; and it is further
ORDERED that this Order shall remain in effect until issuance of a mandate of
the Court of Appeals for the Federal Circuit in the pending appeal of the judgment
entered by this Court.
ȱ
ȦœȦȱTimothy C. Stanceu, Judge
ȦœȦȱȱJennifer Choe-Groves, Judge
ȦœȦȱȱM.ȱMiller Baker, Judge
Dated: August 2, 2021
New York, New York
Case 1:20-cv-00032-TCS-JCG-MMB Document 118 Filed 08/02/21 Page 16 of 16