                                        Slip Op. 16-75

                UNITED STATES COURT OF INTERNATIONAL TRADE


 FEDMET RESOURCES CORPORATION,

                Plaintiff,
                                                    Before: Timothy C. Stanceu, Chief Judge
                v.
                                                    Court No. 14-00297
 UNITED STATES,

                Defendant.


                                          OPINION

[Denying plaintiff’s motion for judgment on the agency record and entering declaratory
judgment on a claim adjudicated earlier in these proceedings]

                                                                   Dated: August 1, 2016

        Donald B. Cameron, Morris, Manning & Martin LLP, of Washington D.C., for plaintiff
Fedmet Resources Corporation. With him on the brief were Brady W. Mills, Julie C. Mendoza,
R. Will Planert, Sarah S. Sprinkle, and Mary S. Hodgins.

        Melissa M. Devine, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, of Washington D.C., for defendant United States. With her on the brief
were Amy M. Rubin, Assistant Director, Commercial Litigation Branch, Civil Division, U.S.
Department of Justice, Patricia M. McCarthy, Assistant Director, Jeanne E. Davidson, Director,
and Benjamin C. Mizer, Principal Deputy Assistant Attorney General. Of counsel on the brief
was Paula S. Smith, Senior Attorney, Office of the Assistant Chief Counsel, International Trade
Litigation, U.S. Customs and Border Protection.

       Stanceu, Chief Judge: Plaintiff Fedmet Resources Corporation (“Fedmet”), a U.S.

importer, challenges an internal directive of U.S. Customs and Border Protection (“Customs” or

“CBP”) that targeted only Fedmet. Designated by Customs as a “user defined rule,” or “UDR,”

the directive instructed Customs port directors on bonding to secure potential antidumping and

countervailing duties on entries of a class of imported merchandise, magnesia carbon bricks

(“MCBs”), entered by Fedmet during the period from September 6, 2014 to September 30, 2015.
Court No. 14-00297                                                                            Page 2

Customs applied the UDR to require Fedmet to post 260.24% ad valorem single transaction

bonds to obtain release of this merchandise into the commerce of the United States.

The 260.24% ad valorem duty rate is the sum of the deposit rates Customs applied under an

antidumping duty (“AD”) order (236%) and a countervailing duty (“CVD”) order (24.24%) on

imported MCBs from the People’s Republic of China (“China” or the “PRC”). Customs based

the UDR on an investigation of Fedmet for alleged importation of Chinese-origin magnesia

carbon bricks using false declarations of Vietnamese origin.

       In its prior opinion, Fedmet Resources Corp. v. United States, 39 CIT __,

77 F. Supp. 3d 1336 (2015) (“Fedmet I”), this court resolved two of the three claims in Fedmet’s

complaint. Before the court is Fedmet’s Motion for Judgment on the Agency Record on the

remaining claim, in which Fedmet seeks a judgment declaring the UDR unlawful. Because the

UDR expired according to its own terms soon after the briefing was completed on Fedmet’s

motion and because there are no remaining entries upon which the UDR can be applied, the court

concludes that plaintiff’s claim challenging the UDR is moot and denies the motion for judgment

on the agency record.

       Also before the court are the parties’ responses to the court’s inquiry concerning a

remedy on one of the claims in this case, on which Fedmet obtained a favorable court ruling.

The court will enter a declaratory judgment on this claim.

                                        I. BACKGROUND

       The court’s opinion in Fedmet I, 39 CIT at __, 77 F. Supp. 3d at 1338-39, presents

background information on this case, which is summarized briefly and supplemented herein with

developments since the issuance of that opinion.
Court No. 14-00297                                                                         Page 3

            A. Administrative Proceedings before U.S. Customs and Border Protection

       Customs issued the UDR, “UDR 1057274,” on September 6, 2014, in response to

information provided to Customs by an agent of Immigration and Customs Enforcement (“ICE”)

concerning an ongoing criminal investigation of Fedmet. See id., 39 CIT at __, 77 F. Supp. 3d

at 1346.

       On October 21, 2014, Fedmet made two consumption entries of MCBs from Vietnam at

the port of Cleveland (Entry Nos. 336-3104829-0 and 336-3104919-9). See Second Am. Compl.

¶ 17 (Jan 15, 2015), ECF Nos. 45 (conf.), 46 (public); Entry Documents for Entry

No. 336-3104829-0 (Dec. 10, 2014), (Admin.R.Doc. No 3) ECF No. 30-4 (conf.); Entry

Documents for Entry No. 336-3104919-9 (Dec. 10, 2014), (Admin.R.Doc. No. 4) ECF No. 30-5

(conf.). 1 On November 6, 2014, Customs issued to Fedmet an “Entry/Rejection Notice” for the

two October 21, 2014 entries, stating that “[t]he country of origin for magnesia carbon brick is

believed to be China” and requiring for release the posting of a 260.24% single transaction bond

for each entry. See Entry/Summary Rejection Sheet for Entry No. 336-3104829-0

(Dec. 10, 2014), (Admin.R.Doc. No. 1) ECF No. 30-2 (conf.); Entry/Summary Rejection Sheet

for Entry No. 336-3104919-9 (Dec. 10, 2014), (Admin.R.Doc. No. 2) ECF No. 30-3 (conf.).

After Fedmet submitted the required single transaction bonds for these two entries, Customs

released the merchandise into commerce. See Second Am. Compl. ¶ 20; Jan. 21, 2015 Decl. of

Edward Wachovec, Supervisory Import Specialist at the Port of Cleveland ¶ 2 (Jan. 28, 2015),

ECF No. 47-1.

       Fedmet made a third consumption entry of MCBs from Vietnam at the port of Cleveland

on December 2, 2014 (Entry No. 336-3105573-3). Second Am. Compl. ¶ 21. On

       1
           Administrative record citations are to the Cleveland administrative record.
Court No. 14-00297                                                                        Page 4

December 30, 2014, Customs issued an Entry/Rejection Notice for the December 2, 2014 entry,

informing Fedmet that the shipment would not be released unless Fedmet submitted a single

transaction bond in an amount calculated at 260.24% of the entered value. See id. ¶ 23;

Entry/Summary Rejection Sheet for Entry No. 336-3105573-3 (Jan. 23, 2015), (Admin.R.Doc.

No. 15) ECF No. 47-2 (conf.). Fedmet has not submitted a 260.24% single transaction bond on

the December 2, 2014 entry, and the merchandise covered by that entry has not been released.

                     B. Proceedings before the Court of International Trade

        Plaintiff commenced this action by filing a summons and a complaint on

November 12, 2014, and a second amended complaint on January 9, 2015, which the court

deemed filed on January 15, 2015. Summons, ECF No. 1; Compl., ECF No. 5; Second Am.

Compl. Plaintiff’s second amended complaint pled three claims (referred to herein as Counts I,

II, and III). See Second Am. Compl.

        In Count I, Fedmet claimed that the MCBs on the October 21, 2014 entries were products

of Vietnam and that CBP’s 260.24% bonding requirement therefore was unlawful. Id. ¶ 25. In

Count II, Fedmet claimed that Customs acted unlawfully in imposing the same bonding

requirement upon the merchandise of the December 2, 2014 entry, alleging that this

merchandise, too, was a product of Vietnam. Id. ¶ 27. In Count III, Fedmet claimed that

Customs acted unlawfully in applying the UDR to all of its entries of MCBs from Vietnam.

Id. ¶ 29.

        Defendant filed a Motion to Dismiss Counts I and III of the second amended complaint

on January 23, 2015. Def.’s Mot. to Dismiss Counts I & III of Pl.’s Second Am. Compl., ECF

Nos. 49 (conf.), 50 (public). On Count II, plaintiff moved for partial judgment on the agency
Court No. 14-00297                                                                           Page 5

record pursuant to USCIT Rule 56.1. Mot. of Pl. Fedmet Res. Corp. for Partial J. upon the

Agency R. (Feb. 4, 2015), ECF Nos. 55 (conf.), 56 (public).

       In its opinion in Fedmet I, this court granted defendant’s motion to dismiss with respect

to Count I and denied it with respect to Count III. Fedmet I, 39 CIT at __, 77 F. Supp. 3d

at 1340-43. The court granted Fedmet’s Motion for Judgment on the Agency Record with regard

to Count II of the second amended complaint. Id., 39 CIT at __, 77 F. Supp. 3d at 1343-50. The

court also ordered additional briefing regarding the form of remedy to be granted to Fedmet upon

the claim stated in Count II. Id., 39 CIT at __, 77 F. Supp. 3d at 1350.

       On July 28, 2015, following issuance of the court’s opinion in Fedmet I, Fedmet moved

for judgment on the agency record pursuant to USCIT Rule 56.1 with regard to the remaining

count, Count III, of the second amended complaint. Mot. of Pl. Fedmet Res. Corp. for J. upon

the Agency R. and Mem. of Law in Supp., ECF Nos. 80 (conf.), 81 (public) (“Pl.’s Br.”).

Defendant filed a response on August 24, 2015. Def.’s Resp. in Opp’n to Pl.’s Mot. for J. upon

the Admin. R., ECF No. 82 (“Def.’s Opp’n”). Plaintiff filed a reply brief on September 2, 2015.

Reply Br. of Pl. Fedmet Res. Corp., ECF No. 83 (“Pl.’s Reply”).

                                         II. DISCUSSION

  A. Plaintiff’s Motion for Judgment on the Agency Record on Count III of Fedmet’s Second
                                    Amended Complaint

       Plaintiff moves for judgment on the agency record on Count III of the second amended

complaint, in which Fedmet challenges as unlawful the UDR, which it describes as a “final

determination . . . that all entries of MCBs from Vietnam by Fedmet will be required to be

entered with STBs [single transaction bonds] at the 260.24 percent rate applicable to imports of

MCBs from China.” Second Am. Compl. ¶ 29. Fedmet argues that the UDR is arbitrary and

capricious because the administrative record contains no evidence that the magnesia carbon
Court No. 14-00297                                                                             Page 6

bricks Fedmet seeks to import from Vietnam are in fact of Chinese origin. Pl.’s Br. 13.

It argues, further, that it was arbitrary and capricious for Customs to fail to address the record

evidence it submitted that the origin of this merchandise actually is Vietnam. Id. at 14-16.

Finally, Fedmet maintains that the UDR imposes an unreasonable and punitive burden on

Fedmet. Id. at 16-19.

       The parties completed their briefing on Fedmet’s motion for judgment on the agency

record on September 2, 2015. The UDR contested in Count III and in Fedmet’s motion was

created on September 6, 2014 and applied to entries by Fedmet that occurred on or before

September 30, 2015. See UDR Report (Dec. 10, 2014), (Admin.R.Doc. No. 13) ECF No. 30-14

(stating “Start Date 9/6/2014” and “End Date 9/30/2015”). Neither party addressed in its

briefing the jurisdictional issue posed by the then-imminent expiration of the UDR at issue in

this case. Now that the scheduled expiration has occurred, the issue presented is whether the

court is required to dismiss as moot Fedmet’s claim contesting the UDR. Even though no party

has raised this issue, the court must consider it sua sponte because it is jurisdictional in nature.

See St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 537 (1978).

       The jurisdiction of federal courts is limited by the Constitution to those cases involving

actual cases or controversies. See U.S. CONST. art. III, § 2, cl. 1; Flast v. Cohen, 392 U.S. 83, 94

(1968). A cause of action becomes moot, and therefore outside of a court’s jurisdiction, “when

the issues presented are no longer ‘live’ or the parties lack a legally cognizable interest in the

outcome.” Powell v. McCormack, 395 U.S. 486, 496-97 (1969) (citing E. BORCHARD,

DECLARATORY JUDGMENTS 35-37 (2d ed. 1941)).

       Plaintiff’s judicial challenge to the UDR is moot. Customs created the UDR on

September 6, 2014; the UDR expired on September 30, 2015. See UDR Report. By its own
Court No. 14-00297                                                                            Page 7

terms, the UDR is inapplicable to future entries of merchandise. Moreover, no new issues can

arise from entries of MCBs by Fedmet that were made prior to the expiration of the UDR. The

record indicates that Fedmet made only three consumption entries of MCBs from Vietnam at the

port of Cleveland during the time that the UDR was in effect, and the parties’ submissions

indicate nothing to the contrary. Two of the entries were made on October 21, 2014, and the

remaining one was made on December 2, 2014. The court resolved Fedmet’s claims regarding

these entries in Fedmet I. See Fedmet I, 39 CIT at __, 77 F. Supp. 3d at 1340-50. Nothing in the

pleadings, Fedmet’s motion, or the administrative record demonstrates that any other entries

occurred that potentially could be subject to the UDR.

       While it can be argued that the issues raised by the UDR may occur again should

Customs issue or apply a similar rule in the future, a judicial challenge arising out of that future

rule could be brought only through a new cause of action. In the instant action, any conclusion

the court could reach on the issue of whether Customs lawfully issued the now-expired UDR

could be only an advisory opinion. See Chafin v. Chafin, 568 U.S. __, __, 133 S.Ct. 1017, 1023

(2013) (“Federal courts may not ‘decide questions that cannot affect the rights of litigants in the

case before them’ or give ‘opinion[s] advising what the law would be upon a hypothetical state

of facts.’”) (quoting Lewis v. Cont’l Bank Corp., 494 U.S. 472, 477 (1990)). The court,

therefore, must dismiss on mootness grounds Fedmet’s claim challenging the UDR and deny the

motion for judgment on the agency record.

                       B. Appropriate Form of Relief Concerning Count II

       In Fedmet I, the court granted plaintiff’s Motion for Judgment on the Agency Record on

Count II of the second amended complaint, holding unlawful Customs’ decision to impose a

bonding requirement on Fedmet’s Entry No. 336-3105573-3. Fedmet I, 39 CIT at __,
Court No. 14-00297                                                                              Page 8

77 F. Supp. 3d at 1350. As relief on the claim in Count II, plaintiff sought “an order that not

only holds unlawful the contested decision but also orders Customs ‘to admit the entry into the

United States without the posting of an STB or other security’ for payment of antidumping and

countervailing duties.” Id. At oral argument, the court inquired of defendant whether, should

the court set aside the contested decision to require a 260.24% bond on Entry

No. 336-3105573-3, Customs promptly would release the merchandise. See Conf. Oral Arg.

Tr. 66: 8-14 (May 5, 2015), ECF No. 70 (conf.). Because defendant was unable to provide the

court and plaintiff an answer to that question at oral argument, the court could not determine

whether the second form of requested relief, an order to admit the entry without the posting of a

single transaction bond or other security, was necessary. See Fedmet I, 39 CIT at __, 77 F. Supp.

3d at 1350. Accordingly, the court ordered the parties to brief the court “concerning the form of

remedy to be granted upon the claim stated in Count II of the second amended complaint.” Id.

       Defendant, in responding to plaintiff’s current motion for judgment on the agency record,

did not respond to the court’s request for additional briefing concerning whether, once the court

sets aside the contested decision to require a 260.24% bond on Entry No. 336-3105573-3,

Customs would act promptly to release the merchandise at issue. See Def.’s Opp’n 25-26.

Instead, defendant devotes the entirety of its argument regarding the appropriate form of relief on

the claim in Count II to a recitation of the reasons why it believes plaintiff is not entitled to an

injunction. See id.

       Plaintiff also fails to respond in its briefing to the court’s request as to the form of remedy

that is appropriate on Count II. See Pl.’s Br. 19; Pl.’s Reply 10-11. However, plaintiff states in

its reply brief that “[a]lthough Fedmet’s complaint includes a permanent injunction among the

relief requested, Fedmet has not moved for such an injunction at this time.” Pl.’s Reply 10. The
Court No. 14-00297                                                                              Page 9

court interprets this statement to mean that Fedmet is not now seeking permanent injunctive

relief.

          The court issued in Fedmet I an order declaring unlawful CBP’s decision to require a

260.24% bond on Entry No. 336-3105573-3. Plaintiff has not made a showing that relief in the

form of an affirmative injunction directing Customs to admit the merchandise on the entry

without the posting of a single transaction bond or other additional security is necessary or

appropriate. Therefore, in accordance with Fedmet I, the court grants plaintiff declaratory relief

on Count II of the second amended complaint.

                                          III. CONCLUSION

          For the reasons discussed above, the court concludes that the claim in Count III of

plaintiff’s second amended complaint is moot and denies plaintiff’s Motion for Judgment on the

Agency Record. Plaintiff is entitled to declaratory relief on its claim set forth as Count II of the

second amended complaint. Judgment will enter accordingly.


                                                       /s/ Timothy C. Stanceu
                                                       Timothy C. Stanceu
                                                       Chief Judge
Dated: August 1, 2016
       New York, NY
