CAFC Judges Sharply Question 8th Amendment Claim Against AFA Rate Not Raised Administratively

Judges at the U.S. Court of Appeals for the Federal Circuit during Dec. 7 oral arguments sharply questioned importer Rimco's arguments that it didn't need to raise an Eighth Amendment challenge to its adverse facts available rate administratively at the Commerce Department before challenging it in court (Rimco v. United States, Fed. Cir. # 22-2079).

Judge Todd Hughes in particular appeared to disagree with Rimco, setting up the biggest question of the session: whether Commerce had the expertise to decide a constitutional claim even if it was raised by Rimco administratively.

John Peterson, counsel for Rimco, claimed that Section 502 of the Trade Preferences Extension Act made it so Commerce has no obligation to address the constitutional claim or commercial reality at all when setting AFA rates. "I don't understand this argument at all," Hughes replied, noting that the court sees AFA cases all the time "where parties involved are saying that the adverse facts rate is too high, and we routinely send them back for Commerce to look at and say, 'is this punitive versus not punitive.'"

Hughes asked Peterson why the importer couldn't still raise the constitutional issue with Commerce, even if Commerce had no obligation to address it under TPEA. Peterson responded that Commerce doesn't have the expertise to rule on constitutional arguments and that raising the issue would have been futile, since the agency wouldn't even rule on it.

Rimco brought the suit to challenge the 231.70% China-wide antidumping rate and 451.10% countervailing duty rate it was assessed on its steel wheel imports. The Court of International Trade tossed the suit for lack of jurisdiction, because Rimco could have sought relief under Section 1581(c) (see 2207110032).

Judges Richard Taranto and Sharon Prost, the other judges sitting on the case, asked why CBP has more authority to rule on a constitutional claim, seeing as Rimco filed its suit under Section 1581(i), the court's "residual" jurisdiction, and Section 1581(a), the portion of the law giving the court jurisdiction over CBP decisions. While Peterson said CBP doesn't have more competency on constitutional issues, it was the agency that actually assessed the duties on the company's entries.

DOJ attorney Beverly Farrell also faced scrutiny from the appellate court judges. Hughes asked Farrell whether Commerce would rule on an Eight Amendment challenge if presented administratively. She said it could issue a determination, which drew surprise from Hughes, who said he was surprised to hear the government say an agency could make a constitutional determination. Farrell later acknowledged Commerce doesn't have the expertise to make a constitutional claim.

The judge noted that the only way Rimco's argument makes any sense is if it's challenging a rate found to be remedial, and not punitive, by Commerce, but that also violates the Constitution under the Eighth Amendment. Hughes asked Farrell if this could ever be the case. The DOJ attorney said this could never be the issue, especially since the issue was never raised administratively. "There may be additional information that wouldn't typically show up because the information that Commerce can hear is beyond just what other petitioners are saying or AFA or anything," Farrell noted, arguing that the agency needs the chance to first consider the additional information that would accompany a constitutional claim.