Administrative Exhaustion 'Useless' in UFLPA Entity List Challenge, Ninestar Says

Chinese printer cartridge exporter Ninestar Corp. argued that it didn't need to exhaust its administrative remedies regarding its listing on the Uyghur Forced Labor Prevention Act Entity List before seeking judicial review because the case arises under the Administrative Procedure Act. As a result, exhaustion is required only when an agency rule requires appeal before review, Ninestar said (Ninestar Corp. v. U.S., CIT # 23-00182).

In a Jan. 25 supplemental brief following oral argument at the Court of International Trade, Ninestar argued that regardless of that rule, requiring exhaustion is inappropriate because the company didn't have timely access to the confidential information in the case. In this instance, exhaustion before the Forced Labor Enforcement Task Force would be "necessarily speculative, illogical, and useless."

In addition, the company said that without access to the record it gained upon suing at CIT, it couldn't have guessed that the FLETF "stitched together its patchy record with an unlawfully low standard of proof." The FLETF "surely would not have disclosed its record voluntarily," and the trade court "does not demand exhaustion in such circumstances," the brief said.

An exhaustion procedure also would be insufficient, since there is no time frame for a delisting process and the company doesn't know why it was listed. The exporter said it must "convince FLETF beyond a reasonable doubt that it should be delisted" without seeing the evidence. "Unsurprisingly, no entity has accomplished that Herculean feat," the brief said.

The U.S. replied in its own supplemental brief that 28 U.S.C. § 2637(d) requires exhaustion for cases brought under Section 1581(i), as Ninestar's is, since it requires CIT to require exhaustion of administrative remedies "where appropriate." The FLETF identified the procedure for seeking delisting in its Federal Register notice advising Ninestar of its addition to the list, the brief noted. This delisting process serves "the dual purposes of exhaustion," which are "preserving agencies' administrative authority" and "promoting judicial efficiency," the brief said.

The government said the FLETF has a certain expertise in assessing delisting claims, which puts the exhaustion requirement in line with congressional intent. This expertise "makes the task force uniquely situated to critically evaluate evidence supporting these statutory criteria against the backdrop of the circumstances in Xinjiang and China when they develop the UFLPA Entity List, and if a listing decision is challenged, to consider evidence submitted by an entity seeking removal," the brief said.

In addition, judicial efficiency is promoted by exhaustion because the FLETF would have had the chance to find whether Ninestar was entitled to access to the record -- something the company is currently suing for -- and the "record would have been more fully developed" for judicial review. The court's role under the APA is not to "weigh evidence," but to find whether the FLETF's decision was "arbitrary or capricious," but the task force didn't yet have the chance to consider the claims or evidence Ninestar asks CIT to consider, the government claimed.

Ninestar said the 1993 U.S. Supreme Court case Darby v. Cisneros bars exhaustion, but this case merely said that the APA alone doesn't permit the creation of exhaustion requirements, adding that the requirement must come from a separate statute or agency rule. "Darby did not interpret section 2637(d)’s exhaustion rule," which clearly imposes an exhaustion requirement, the U.S. said.

Ninestar and the U.S. both addressed the exhaustion requirement before Judge Gary Katzmann during a Jan. 18 oral argument session (see 2401180032). During a closed portion of the session, the parties additionally addressed Ninestar's claims pertaining to the standard of review the FLETF used in listing the exporter. The task force said it needs only "reasonable cause" to add the exporter to the UFLPA Entity List, while Ninestar says the law requires a preponderance of the evidence to support the listing decision.

In its supplemental brief, Ninestar said during oral argument, the government conflated the statutory and constitutional requirements regarding the standard of review. The U.S. admitted the UFLPA has no explicit directive for a standard of proof below the preponderance of the evidence. "Congress, to be sure, could have written a statute that explicitly authorized making these findings under a lower standard of proof," and it has in fact "done so elsewhere," but it "did not do so in the UFLPA." The U.S. didn't address its standard of review defense in its supplemental brief.