Government to Appeal Universal Refund Order
As we have long expected, on Friday, May 29 the government informed the Court of International Trade that intends to appeal the Court's universal refund order. This represents a seismic shift in the tariff refund landscape that will profoundly reshape the path forward for importers.
To recap how we got here:
On February 20, the Supreme Court struck down the IEEPA tariffs.
All the cases that had been filed seeking refunds were then assigned to Judge Richard Eaton on the Court of International Trade.
On March 4, Judge Eaton issued what we refer to as the "universal refund order." That order purported to direct CBP to issue refunds to all 330,000 importers who paid IEEPA tariffs--not just the plaintiffs who had sued.
On April 7, Judge Eaton re-issued the same order in a different case because the plaintiff in the original case voluntarily dismissed its lawsuit.
On April 20, CBP launched the CAPE program, which accepts filings requesting refunds for IEEPA tariff duties on entries that are either (i) unliquidated, or (ii) are within 80 days of liquidation.
On May 27, Judge Eaton ordered government to explain why CBP hadn't complied with his entire order--specifically, why it hadn't extended CAPE to all entries, not just those falling into categories (i) and (ii) above.
On May 29, the government responded by informing the Court that it will appeal the universal refund order. Its response is attached to this email. The government explained that it had never complied with the order--instead, it was "[r]elying on its own authorities" when it established the CAPE program. That likely refers to CBP's existing statutory authority--wholly aside from the universal refund order--to voluntarily reliquidate entries up until 90 days after liquidation. According to the government, the universal refund order " exceeds the Court’s jurisdiction and equitable authority under Trump v. CASA, Inc., 606 U.S. 831, 839 (2025)." That case held that federal courts have the power to issue relief only to the plaintiffs in the cases before them, and no one else.
As we have previously explained, the government is very likely to prevail in its appeal. That significantly impacts the steps importers must take to receive refunds. Here's a breakdown:
Entries for which a refund has already been received through CAPE: The government is extremely unlikely to seek to recoup refunds already issued.
Entries which are eligible for CAPE but for which a refund has not yet been received: Because the government has made clear that it created CAPE using its voluntary authority, it could--in principle--shut down the program at any time. There is not indication, at this point, that it intends to do so, but its legal position would permit it.
Entries which are not eligible for CAPE: The government's position--which will likely prevail on appeal--is that for these entries "CBP has no authority to reliquidate or refund
money without a court order." The implication is that each importer must file suit in the Court of International Trade in order to receive a refund for these entries. (For now, it appears the government is not arguing that importers must file protests with CBP before suing in the CIT--but we'll know more on that issue when the government makes its next filing.)
The upshot is that hundreds of thousands of importers must file individual lawsuits. We anticipate importers to rush to file those suits beginning immediately next week. For that reason, we believe the prudent course is for importers to decide now whether they wish to file a lawsuit to recover refunds for CAPE-ineligible entries, and if so to file right away.
As always, we stand ready to assist importers in making these important strategic decisions and to help them pursue their next legal steps.
Matthew A. Seligman