CAFC Dismisses Eighth Amendment AD/CVD Challenge for Lack of Jurisdiction Under 1581(a), (i)

The U.S. Court of Appeals for the Federal Circuit on April 8 dismissed importer Rimco's challenge of antidumping and countervailing duties on its steel wheel entries, for lack of subject-matter jurisdiction.

While Rimco filed suit under Section 1581(a) or, Section 1581(i) in the alternative, which grant the Court of International Trade jurisdiction to hear civil suits, Judges Sharon Prost, Richard Taranto and Todd Hughes ruled that jurisdiction would have been proper under Section 1581(c) as a challenge to a Commerce Department decision since the action's "true nature" was challenging a Commerce determination, Hughes wrote the opinion.

Rimco challenged the duties as being excessive under the Eighth Amendment to the U.S. Constitution and said that filing suit under Section 1581(c) would have been "manifestly inadequate" because the agency lacked the "institutional competence to judge the constitutionality of its own determinations." The judges disagreed.

Commerce "is required to review the statutory appropriateness of its" AD/CVD rates, and in doing so, the agency "would have considered facts to determine whether its rates were proportional to the harm they were intended to address and 'necessary to serve the purpose of deterrence,'" the opinion said. The review "turns on a proportionality determination," meaning the agency typically could dispatch the "constitutional issue by reviewing the rates for statutory compliance," it said.

The court found it noteworthy that Rimco itself conceded that a correctly calculated AD/CVD rate "would not be susceptible to constitutional challenges under the Eighth Amendment."

The second reason for the holding is that the court has already rejected the claim that it would be "futile" to seek administrative remedies "when an agency is unable to make constitutional findings." Citing the Federal Circuit's 2022 decision in Bowling v. McDonough, the court said "the agency will nevertheless serve its immensely useful record-development and fact-finding functions." Even if an AD/CVD rate were legally calculated but still violated the Eighth Amendment as an excessive fine, "however unlikely," the court said, "administrative exhaustion would still be required."

Commerce initially published the AD/CVD orders on steel wheels from China in 2019, setting China-wide AD and CVD rates of 231.08% and 457.10%, respectively. No parties requested an administrative review of the order for the 2018-19 period, leading to Rimco receiving the AFA rates. Commerce issued liquidation instructions to CBP imposing these margins. Rimco filed a protest with CBP challenging the rates as violating the U.S. Constitution.

The subsequent lawsuit, brought under Section 1581(a), which allows judicial review of CBP decisions, was dismissed for lack of subject-matter jurisdiction by the trade court (see 2207110032). Judge Mark Barnett said that the "true nature" of the action was Commerce's decision to set the rates at those levels, meaning remedy was available under Section 1581(c).

The appellate court agreed. Ruling against Rimco's claim that the liquidation decision is protestable even if it's carried out ministerially, the court said that "when Customs’ role is purely ministerial, liquidation of entries subject to AD and CVD orders is 'not a ‘decision’ under § 1514(a).'" Actions that are "merely ministerial" aren't "protestable," the decision said.

The Federal Circuit also sided against Rimco's claim for jurisdiction under Section 1581(i), the trade court's "residual" jurisdiction. While Rimco said it isn't challenging any Commerce decision, the appellate court said "this conclusory statement directly contradicts Rimco's own argument." The Eighth Amendment challenge explicitly says the duty rates stem from Commerce's decision to base the AD/CVD rates on AFA, the court said.

While Rimco said it would have lacked standing under Section 1581(c) because it wasn't a party to the AD/CVD investigations, the court said this claim "provides no explanation as to why, in light of Commerce's notice of opportunity, Rimco failed to seek administrative review of the orders."

John Peterson, counsel for Rimco, said in an email that he currently has "no plans to litigate the constitutional issue in a 1581(c) case." He noted that Rimco stopped importing steel wheels that would face the duties and in the present case "Commerce had completed its review of the period in question before the client even knew it had a dumping issue. So, it's not clear that 1581(c) review was ever available."

(Rimco v. U.S., Fed. Cir. # 22-2079, dated 04/08/24; Judges: Sharon Prost, Richard Taranto, Todd Hughes; Attorneys: John Peterson of Neville Peterson for plaintiff-appellant Rimco; Beverly Farrell for defendant-appellee U.S. government)