CUSTOMS COMPLIANCE | 2026-09-01

IEEPA Tariff Refunds for Finally Liquidated Entries: CAPE Phase 3

How California importers can recover invalidated IEEPA duties on finally liquidated entries through CBP CAPE Phase 3 and Court of International Trade reliquidation orders.

After the U.S. Supreme Court held in February 2026 that the International Emergency Economic Powers Act does not authorize the President to impose tariffs, U.S. Customs and Border Protection began the largest duty-refund operation in its history. Most refunds now flow through CAPE, a new consolidated processing system, but finally liquidated entries require a Court of International Trade order.

Update, September 24, 2026: CBP has confirmed that CAPE Phase 3 opens on October 6, 2026. For the current process from the Court of International Trade complaint to the ACH refund, read CAPE Phase 3 Step by Step.

The Supreme Court Decision That Set the Refunds in Motion

On February 20, 2026, the U.S. Supreme Court decided Learning Resources, Inc. v. Trump (No. 24-1287), consolidated with Trump v. V.O.S. Selections, Inc., holding by a vote of 6-3 that the International Emergency Economic Powers Act, 50 U.S.C. Section 1701 et seq., does not authorize the President to impose tariffs. Chief Justice John Roberts wrote the majority opinion, joined in full by Justices Gorsuch and Barrett and joined in part by Justices Sotomayor, Kagan, and Jackson. Justices Thomas, Alito, and Kavanaugh dissented. The case had been argued on November 5, 2025.

The practical effect of the decision was to invalidate the tariffs that the executive branch had imposed by invoking IEEPA emergency authority. Those measures included the so-called reciprocal tariffs and the fentanyl and border-related tariffs applied to goods from China, Canada, and Mexico. For thousands of importers, the ruling meant that duties they had paid at the time of entry were collected under a statute the Court found did not permit them, converting an ordinary cost of importing into a potential refund claim.

Why the Ruling Created an Administrative Problem, Not Just a Legal One

A Supreme Court decision invalidating a tariff does not, by itself, put money back into an importer's account. Customs duties are collected entry-by-entry through a highly structured administrative process, and reversing that process requires CBP to recalculate the duties owed on each affected transaction, determine the correct amount, and issue a refund with interest. When the affected population spans millions of entries filed by tens of thousands of importers, the ordinary refund machinery is simply not built for that volume.

CBP faced a genuine operational challenge. Processing refunds one entry at a time would have taken years and consumed enormous agency resources. The agency needed a way to handle refunds in bulk while still respecting the statutory framework that governs liquidation, protest, and finality. That framework, and in particular the concept of a finally liquidated entry, is what ultimately divided importers into those who could be refunded automatically and those who could not.

What the Decision Means for California Importers

California is one of the nation's largest gateways for imported merchandise, with the Ports of Los Angeles and Long Beach handling a substantial share of the containerized cargo entering the United States. Importers of record based in Los Angeles, the Inland Empire, and throughout the state paid IEEPA duties on merchandise ranging from consumer goods to industrial inputs. For many of these businesses, the invalidated duties represent a material sum, and the mechanics of recovery, rather than the underlying legal question, now determine whether that money comes back.

How CBP Built CAPE to Administer the Refunds

To manage refunds at scale, CBP developed a new functionality within the Automated Commercial Environment known as CAPE, which stands for Consolidated Administration and Processing of Entries. CAPE represents a departure from the traditional entry-by-entry model. Instead of requiring a separate refund request for each transaction, CAPE allows an importer of record, or its licensed customs broker acting on the importer's behalf, to submit a single CAPE Declaration that can cover thousands of entries at once.

Once a CAPE Declaration is submitted, CBP recalculates the duties on the covered entries without the invalidated IEEPA amounts, liquidates or reliquidates the entries as appropriate, and issues a consolidated refund that includes interest. The consolidation is the central efficiency: rather than generating thousands of individual refund transactions, CBP can process a single declaration that resolves an importer's entire affected portfolio in one administrative action.

CAPE Phase 1 and the Unliquidated Entries

CAPE Phase 1 launched on April 20, 2026. This phase covers most unliquidated entries along with certain recently liquidated entries. Unliquidated entries are, in general, the easiest category for CBP to address, because liquidation, the point at which CBP makes its final calculation of duties owed, has not yet occurred or has occurred so recently that the agency retains clear authority to adjust the numbers. For importers whose affected entries fall into this category, Phase 1 offers the most direct path to a refund.

CAPE Phase 2 and Reconciliation-Flagged Entries

CAPE Phase 2 opened on June 29, 2026. It addresses entries that were flagged for Reconciliation but for which no Reconciliation entry has been filed. Reconciliation is a program that allows importers to file entry summaries with the best available information at the time of entry and later reconcile certain elements, such as value or classification, once final data is known. Entries flagged for Reconciliation occupy a distinct administrative posture, and CAPE Phase 2 was designed to route them into the consolidated refund process appropriately.

The Scale of CAPE as Reported to the Court

The magnitude of the CAPE operation is reflected in status declarations that CBP filed with the Court of International Trade. Those declarations, submitted by Brandon Lord, an executive in CBP's Office of Trade, reported that as of July 31, 2026, more than 75,000 CAPE Declarations had been submitted and roughly 17.69 million entries had been liquidated without IEEPA tariffs, with approximately 128.68 billion dollars accepted for processing in CAPE. Later status updates put the amount accepted for CAPE processing at roughly 132.5 billion dollars, covering about 26.4 million entries, with approximately 106.6 billion dollars certified and sent to the Treasury, against an estimated total refund pool on the order of 166 billion dollars. These figures, presented here as approximate amounts that CBP reported to the court, convey both the enormous scale of the refunds and the fact that a significant portion of the pool remained to be processed.

Finally Liquidated Entries and the Phase 3 Problem

Not every entry could be swept into Phase 1 or Phase 2. A distinct and legally complicated category consists of entries that were already finally liquidated when the Supreme Court decision came down. Understanding why these entries require special treatment requires a brief explanation of liquidation and finality under the customs statutes.

What Liquidation and Final Liquidation Mean

Liquidation is the process by which CBP makes its final computation of the duties, taxes, and fees due on an entry. It is, in effect, the closing of the accounting on a particular importation. Under 19 U.S.C. Section 1501, CBP has a 90-day window in which it may voluntarily reliquidate an entry, meaning it may revisit and adjust its own determination. After that period passes, a liquidation generally becomes final. Finality is a foundational principle of customs administration: it gives importers and the government certainty that, past a certain point, the duties on a transaction are settled and will not be disturbed.

The finality principle, ordinarily a source of stability, became an obstacle in the refund context. Many importers had entries that liquidated months before the February 2026 decision, and by the time the tariffs were invalidated, the 90-day reliquidation window on those entries had long since closed. Those entries were finally liquidated, and the deposits paid on them were, under the ordinary rules, beyond CBP's unilateral reach.

CBP's Position: A Court Order Is Required

CBP took the position that it lacked unilateral authority to reopen finally liquidated entries. In the agency's view, once an entry has passed the statutory finality point, CBP cannot simply reliquidate it on its own initiative, even to correct duties that a court has since found unlawful. What CBP concluded it could do was comply with a court order directing reliquidation. This position is the reason CAPE Phase 3 exists as a separate, restricted track rather than as an automatic extension of Phases 1 and 2.

Who Can Access CAPE Phase 3

CAPE Phase 3 covers finally liquidated entries, but it is available only to importers who filed suit at the Court of International Trade and obtained a reliquidation order. In practical terms, litigation became the gateway. An importer who did not bring an action at the CIT, and therefore has no court order directing CBP to reliquidate its finally liquidated entries, currently has no confirmed mechanism through CAPE to recover the IEEPA duties paid on those entries. This is the critical distinction that separates Phase 3 from the earlier phases: the first two phases are administrative and broadly available, while the third is judicial and available only to litigants.

The Court of International Trade Reliquidation Orders

The judicial pathway that unlocks Phase 3 took concrete shape in mid-July 2026. On July 15 and July 17, 2026, Senior Judge Richard K. Eaton of the Court of International Trade issued orders directing CBP to reliquidate, without regard to IEEPA duties, any and all of the plaintiffs' entries that had been liquidated for more than 80 days and on which the plaintiffs had made estimated deposits pursuant to IEEPA.

Why the Orders Used an 80-Day Threshold

The 80-day threshold in Judge Eaton's orders is a deliberate and technically significant choice. Recall that under 19 U.S.C. Section 1501, CBP's voluntary reliquidation window runs for 90 days, after which liquidation becomes final. By directing reliquidation of entries liquidated for more than 80 days, the court captured entries before they crossed the 90-day finality line during the time CBP would need to process the reliquidation. In other words, the 80-day figure was chosen to give CBP a working margin so that entries approaching finality would be reached by the order rather than slipping past the statutory deadline while the agency worked through them. This is the kind of procedural detail that separates an order that produces refunds from one that founders on timing.

The Order's Reach Across Thousands of Cases

The court indicated that the same relief would be entered across the approximately 3,700 IEEPA refund cases pending before it. This signaled that the reliquidation orders were not a one-off remedy for a single plaintiff but a template intended to govern the large body of litigation that importers had filed to protect their refund rights. For an importer that had brought a CIT action, this meant a realistic path to a court order compelling reliquidation of its finally liquidated entries and, through that order, access to CAPE Phase 3.

What the Orders Mean in Practice

The practical significance of the CIT orders is that they convert the finality obstacle into a solvable problem for litigants. An importer holding a reliquidation order can present that order as the authority CBP said it needed, and CBP can then reliquidate the finally liquidated entries without the IEEPA duties and route the resulting refund through CAPE Phase 3. Importers who never filed suit remain outside this pathway, which is why the decision whether to litigate carried, and continues to carry, real financial consequences.

The Federal Circuit Appeal and Ongoing Uncertainty

The reliquidation orders did not end the legal contest. The U.S. Department of Justice appealed the CIT refund order to the U.S. Court of Appeals for the Federal Circuit and moved to amend or vacate the sweeping reliquidation order. That appeal remains pending, and its pendency introduces genuine uncertainty into the Phase 3 picture.

Why the Appeal Matters

An appeal of a reliquidation order means that the scope, and potentially the survival, of the relief the CIT ordered is not yet settled at the appellate level. The government's motion to amend or vacate signals that it may seek to narrow how far the reliquidation orders reach or to alter the mechanics of how refunds on finally liquidated entries are administered. Until the Federal Circuit resolves the appeal, importers relying on Phase 3 face a degree of contingency: the pathway exists, but its ultimate contours could shift depending on the appellate outcome.

How Importers Should Treat the Uncertainty

For California importers, the sensible posture is to preserve rights rather than to wait for the appeal to conclude. Statutory deadlines for protests and other remedies continue to run regardless of the appeal's status, and an importer who lets those deadlines lapse while waiting for appellate certainty may find that its alternative recovery routes have closed. Monitoring the Federal Circuit appeal is important, but monitoring is not a substitute for taking timely protective steps. The appeal affects how much relief the CIT orders ultimately provide; it does not pause the clock on the deadlines that govern an importer's own filings.

Recovery Options for Importers Who Did Not Sue

Importers who did not file suit at the CIT are in a different and more constrained position with respect to finally liquidated entries. Because CBP takes the view that it needs a court order to reopen a finally liquidated entry, and because these importers hold no such order, they currently have no confirmed mechanism to recover IEEPA duties on entries that have finally liquidated. That does not mean they are without any tools, but it does mean their tools are more limited and more time-sensitive.

The Administrative Protest Under 19 U.S.C. Section 1514

For entries that are still within the applicable window, the principal tool for a non-litigant importer is the administrative protest, filed on CBP Form 19 under 19 U.S.C. Section 1514. A protest challenges CBP's decision on an entry, including its liquidation, and must be filed within 180 days of the date of liquidation. The procedures governing protests are set out in 19 C.F.R. Part 174. The 180-day protest window is the deadline that importers most need to guard, because a protest filed one day late is generally barred, and the opportunity to challenge the liquidation through this route is lost.

The interaction between the protest deadline and the finality concept is worth emphasizing. An entry that has not yet crossed into final liquidation, or that is within its protest window, may still be reachable through a timely protest. Once the protest window closes and the entry becomes final, the non-litigant importer's administrative options largely disappear, and the judicial pathway that unlocks Phase 3 is available only to those who brought suit. This is why the calendar, rather than the merits, often determines whether a refund is recoverable.

Post-Summary Corrections and Reconciliation for Unliquidated Entries

For entries that remain unliquidated, additional administrative mechanisms may apply. Post-summary corrections allow an importer to amend an entry summary before liquidation, and reconciliation may be available for entries flagged into that program. These tools operate on entries that have not yet reached final liquidation and are therefore still within CBP's ordinary authority to adjust. They are not solutions for finally liquidated entries, but they can be important for portfolios that include a mix of liquidated and unliquidated transactions.

Practical Steps for California Importers

The refund landscape rewards importers who act deliberately and on time. The following steps reflect the practical takeaways for California businesses seeking to recover invalidated IEEPA duties, whether their entries fall into the automatic CAPE phases or the litigation-gated Phase 3.

File and Verify CAPE Declarations for Unliquidated Entries

Importers should file or verify CAPE Declarations for their unliquidated entries under Phase 1. Because Phase 1 offers the most direct administrative route to a refund, ensuring that declarations are correctly submitted, cover the full set of affected entries, and are processed by CBP is the first order of business. A licensed customs broker can submit these declarations on the importer's behalf, and coordination between the importer and its broker is essential to make sure no eligible entry is omitted.

Preserve Rights on Liquidated Entries by Filing Timely Protests

For liquidated entries, importers must preserve their rights by filing timely protests within the 180-day window under 19 U.S.C. Section 1514. This is the single most time-sensitive step for many importers, and it applies with particular force to those who did not litigate at the CIT. Allowing the protest window to lapse can permanently foreclose recovery on entries that would otherwise have been recoverable. Importers should calendar the liquidation dates of their affected entries and file protests well before the deadline rather than at the last moment.

Consider a CIT Action for Finally Liquidated Exposure

Importers with large IEEPA exposure on finally liquidated entries may need to have filed, or to file, an action at the Court of International Trade to access CAPE Phase 3, given CBP's position that it requires a court order to reopen a finally liquidated entry. For businesses whose most significant refund exposure sits behind finality, the litigation pathway may be the only realistic route to recovery, and the value at stake often justifies the effort. The CIT reliquidation orders issued in July 2026, and the court's indication that similar relief would extend across the pending cases, suggest that the judicial path can produce results for those who pursue it.

Monitor the Federal Circuit Appeal and Maintain Documentation

Importers should monitor the pending Federal Circuit appeal, because its outcome could affect the scope of the reliquidation relief and the mechanics of Phase 3. At the same time, importers should maintain thorough documentation of their affected entries, including entry summaries, CBP Form 7501 records, and proof of the IEEPA duty deposits they made. Solid documentation is the foundation of any refund claim, whether administrative or judicial, and importers who can readily produce clean entry records will be better positioned to substantiate their claims and respond to CBP or the court.

Frequently Asked Questions

What is a finally liquidated entry, and why does it matter for my refund?

A finally liquidated entry is one on which CBP has completed its final computation of duties and the statutory window for adjustment has closed. Under 19 U.S.C. Section 1501, CBP generally has 90 days to voluntarily reliquidate an entry, after which the liquidation becomes final. It matters for refunds because CBP has taken the position that it cannot unilaterally reopen a finally liquidated entry to return invalidated IEEPA duties. As a result, refunds on these entries are available only through CAPE Phase 3, which requires a court order.

How is CAPE Phase 3 different from Phases 1 and 2?

Phases 1 and 2 are administrative and broadly available. Phase 1, launched April 20, 2026, covers most unliquidated entries and certain recently liquidated entries. Phase 2, opened June 29, 2026, covers entries flagged for Reconciliation with no Reconciliation entry filed. Phase 3 covers finally liquidated entries and is available only to importers who filed suit at the Court of International Trade and obtained a reliquidation order. The essential difference is that the first two phases are open to importers generally, while the third is reserved for litigants who hold a court order.

I never filed a lawsuit. Can I still recover IEEPA duties on my finally liquidated entries?

Under the current framework, an importer who did not file suit at the CIT has no confirmed mechanism to recover IEEPA duties on finally liquidated entries, because CBP says it needs a court order to reopen them and the importer holds none. For entries still within the protest window, the principal tool is an administrative protest on CBP Form 19 under 19 U.S.C. Section 1514, which must be filed within 180 days of the date of liquidation. Preserving that deadline is critical, and importers with significant exposure on finally liquidated entries should evaluate whether a CIT action is warranted.

What was the significance of the 80-day threshold in the CIT orders?

On July 15 and July 17, 2026, Judge Richard K. Eaton ordered CBP to reliquidate the plaintiffs' entries that had been liquidated for more than 80 days and on which IEEPA deposits were made. The 80-day figure was chosen to capture entries before they crossed the 90-day finality line during processing, giving CBP a working margin so that entries approaching finality would be reached by the order rather than becoming final while the agency worked through them.

Does the pending Federal Circuit appeal put my refund at risk?

The Department of Justice appealed the CIT refund order to the Federal Circuit and moved to amend or vacate the reliquidation order, and that appeal remains pending. Its outcome could affect the scope and mechanics of the Phase 3 relief. The prudent approach is to preserve your rights now by filing timely CAPE Declarations and protests and, where appropriate, pursuing a CIT action, rather than waiting for the appeal to conclude, because statutory deadlines continue to run regardless of the appeal.

What documentation should I gather to support my refund claim?

Importers should maintain complete records of their affected entries, including entry summaries, CBP Form 7501 documents, and proof of the IEEPA duty deposits paid. Well-organized documentation supports both administrative and judicial claims and allows an importer to respond promptly to CBP or the court. Clean entry records make it far easier to substantiate the amount of the refund and to demonstrate eligibility, whether through CAPE or through a protest.

How do I know whether my entries fall into Phase 1, Phase 2, or Phase 3?

The classification depends on the liquidation status of each entry. Unliquidated entries and certain recently liquidated entries generally fall under Phase 1. Entries flagged for Reconciliation with no Reconciliation entry filed fall under Phase 2. Entries that were already finally liquidated fall under Phase 3 and require a court order. A careful review of your entry portfolio, ideally with a licensed customs broker and customs counsel, will identify which entries fall into which category and what action each requires.

How can Trembach Law Firm help my California business recover IEEPA duties?

Trembach Law Firm helps importers at the Ports of Los Angeles and Long Beach evaluate their entry portfolios, file and verify CAPE Declarations, prepare timely protests under 19 U.S.C. Section 1514, pursue Court of International Trade actions to obtain reliquidation orders for finally liquidated entries, and monitor the pending Federal Circuit appeal. The firm combines detailed customs-law knowledge with practical documentation review to help California businesses maximize their recovery. To discuss your IEEPA refund exposure and the steps that apply to your entries, contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Contact Trembach Law Firm at (818) 514-7680 for a confidential consultation.

Trembach Law Firm | 27001 Agoura Road, Suite 350, Calabasas, CA 91301