Plywood Importers Torch EAPA Process in Motion for Judgment

Plaintiffs, led by American Pacific Plywood, that stand accused of evading antidumping and countervailing duty orders on hardwood plywood from China vigorously challenged CBP's finding of evasion, in an Aug. 5 brief backing their motion for judgment at the Court of International Trade. In another case going after CBP's alleged violations of due process in Enforce and Protect Act investigations (see 2107010085), the plaintiffs argued that CBP's missteps are not merely procedural mistakes, but rather a "failure of essential process that led to profound harm." The violations are so egregious that they "would be unacceptable in any country that prides itself on democratic process -- and for the United States, they are a travesty," the brief said (American Pacific Plywood, Inc. et al. v. United States, CIT Consol. #20-03914).

In 2018, the Commerce Department imposed antidumping and countervailing duty orders on hardwood plywood from China. In response and "following the hallowed traditions of enterprising American capitalism," Chinese plywood manufacturers legally moved their operations to Cambodia to avoid the AD/CV duties, the plaintiffs said. "Apparently frustrated that its plans to crush foreign competition had been thwarted, the self-styled Coalition for Fair Trade of Hardwood Plywood ('Coalition') responded by charging without evidentiary foundation that Plaintiffs must have been selling Chinese hardwood plywood which had been transshipped via Cambodia," American Pacific said with a tinge of snark.

CBP's Trade Remedy Law Enforcement Directorate then conducted an investigation of duty evasion, coming away with an affirmative finding for the plaintiffs. Due to EAPA regulations, TRLED was able to impose interim measures without timely notification to plaintiffs, a clear violation of the plaintiffs' due process rights, the brief alleged. "19 CFR §165.15(d)(1) does not provide a legal basis for TRLED’s enforcement action, however, because CBP issued its EAPA regulations as interpretative rules, which lack the force and effect of law and are not accorded that weight in the adjudicatory process," the plaintiffs said. "Plaintiffs suffered injury to their businesses, losses for breach of contracts with their U.S. customers, and injury to their reputations and relations with U.S. customers that could have been avoided if CBP had timely notified Plaintiffs of the pending EAPA investigation."

While not the first to take issue with CBP's EAPA processes, American Pacific certainly provided one of the most thorough challenges to the agency's proceedings. In its 213-page brief supporting its motion for judgment, the plaintiffs challenged CBP's lack of notice, lack of public summaries of confidential information, failure to establish a reasonable suspicion of evasion and improperly applied substantial evidence standard in evasion finding, among other things. What separates American Pacific's challenge is that it is more centered around CBP's regulations as opposed to the larger EAPA.

"This Court should find that TRLED’s interim measures imposed without observance of due process are void. CBP’s decision to designate its EAPA regulations as 'interpretive rules' stymied the normal rulemaking process, the purpose of which is 'to assure fairness and mature consideration of rules of general application,' and to give affected members of the public an opportunity to comment," the brief said. In an attempt to show that EAPA practices are used to skirt AD/CVD law, the brief also included a line from CBP's own website: “[f]or years, CBP’s enforcement actions against antidumping evasion schemes were stymied by legal restrictions, but after the passage of the Enforce and Protect Act of 2015, everything changed.”

The brief continued: "It is inconceivable that a court would find the complete denial of the predicates of fairness to be perfectly acceptable. Hiding information, maintaining secret records, imposing sanctions before allowing a meaningful process to take place, may be how other countries choose to behave. It is hardly part of our legal heritage, our rules, and our process. The actions undertaken are not just procedural errors. They are illegal."