CIT Says It Likely Has Jurisdiction on Claim Against UFLPA Entity List

Chinese exporter Ninestar Corp. is likely to show that the Court of International Trade has jurisdiction over the company's challenge to its placement on the Uyghur Forced Labor Prevention Act Entity List, the trade court ruled in a Nov. 30 opinion.

Judge Gary Katzmann said that jurisdiction is likely under Section 1581(i), the court's "residual" jurisdiction, which covers any civil action regarding "embargoes or other quantitative restrictions." While the U.S. said the UFLPA Entity List does not create an embargo since it establishes a rebuttable presumption, Katzmann said the court has exerted jurisdiction over similar embargoes where exemptions or reconsideration are granted.

The court said that the "prohibition on importing goods produced with nonvoluntary labor is a longstanding principle of U.S. trade and customs law that falls within CIT's expertise."

Katzmann's narrow ruling on jurisdiction came in response to Ninestar's motion for a preliminary injunction against its placement on the list. With jurisdiction established, the court said that all "other contentions" regarding the PI motion are left to "further proceedings."

Katzmann first looked to the language of Section 1581(i) when deciding the jurisdictional question, finding that the text of the UFLPA "clearly imposes an embargo within the meaning" of this statute. The Supreme Court in its 1988 decision K Mart Corp. v. Cartier ruled that an embargo, for purposes of this law, is a "governmentally imposed quantitative restriction -- of zero -- on the importation of merchandise." Here, the UFLPA sets a presumption of forced labor that bars a company's imports, the court noted. The presumption is set by Congress and enforced by CBP without the involvement of a third party. The word "prohibit" and phrase "not entitled to entry at any ... ports" in the statute make clear that the presumption sets this type of restriction.

The U.S. argued that the Entity List sets a rebuttable presumption, making the restriction "qualitative" instead of "quantitative." Katzmann disagreed, pointing to prior cases in which the court has asserted jurisdiction over embargoes that grant exemptions or reconsideration. For instance, the court pointed to a case arising under the Marine Mammal Protection Act concerning the vaquita porpoise (see 2306210046).

"Surely all of these other embargoes cannot be characterized as 'qualitative' merely because they require fact-specific determinations as to which entities and goods are embargoed," the judge said.

The court noted that the "broader issue" with the U.S. interpretation of the statute is that it "creates a jurisdictional barrier between the UFLPA and [Section 307 of the Trade Act of 1930] when Congress was clear that the two statutes do not operate independently from one another." Section 307 bars the import of goods created wholly or in part by forced labor. Katzmann said that in reality the UFLPA was meant to boost the prohibition against goods made with forced labor by making sure China does not "undermine the effective enforcement of section 307."

In fact, Section 307 cases have been adjudicated at the trade court. "In short, if challenges to agency action implementing section 307 sit comfortably within § 1581(i), so, too, must challenges to agency action implementing the UFLPA. To have jurisdiction over section 307 but not over the UFLPA would otherwise lie in tension with Congress’s intention to create a coherent statutory scheme prohibiting the importation of goods produced with forced labor," the opinion said.

Ninestar filed its case in the trade court in August, contending the court should vacate the listing decision given that the Forced Labor Enforcement Task Force (FLETF) failed to offer any "reasoned explanation" for its decision (see 2308230016). FLETF had added the companies to the UFLPA Entity List in June.

(Ninestar Corp. v. United States, Slip Op. 23-169, CIT # 23-00182, dated 11/30/23; Judge: Gary Katzmann; Attorneys: Gordon Todd of Sidley Austin for plaintiffs led by Ninestar; Monica Triana for defendant U.S. government)