No Due Process Exception for Business Confidential Information, Importer Tells Federal Circuit

There is no exception for business confidential information to the requirement that CBP provide a company subject to an antidumping duty and countervailing duty evasion investigation access to the evidence on which the agency relies, importer Royal Brush told the U.S. Court of Appeals for the Federal Circuit in a Feb. 4 opening brief. CBP's denial of Royal Brush's access to the BCI in the Enforce and Protect Act investigation violated its due process rights and created a "flawed process for adjudicating complaints of duty evasion," the brief said (Royal Brush Manufacturing Inc. v. United States, Fed. Cir. #22-1226).

In the EAPA investigation, CBP said that Royal Brush evaded the AD/CVD orders on pencils from China by transshipping them through the Philippines. Crucially, CBP determined during an unannounced site visit and a subsequent on-site verification that Royal Brush’s supplier in the Philippines was incapable of manufacturing pencils in the amounts imported. CBP officials also found evidence that the supplier was repackaging Chinese-origin pencils into boxes marked, “Made in Philippines.”

Royal Brush sued, arguing that its due process rights were violated. The trade court initially agreed, finding that CBP didn't provide adequate public summaries of the BCI, but it stopped short of finding that CBP should have shared the confidential information with Royal Brush (see 2012020050). Under 19 CFR 165.4, confidential business information placed on the record of an EAPA proceeding must, where possible, include a summary of the redacted information made available to the public. However, CIT eventually upheld the final evasion finding from CBP after it provided the public summaries (see 2111010036).

The importer wants the CAFC to find that CBP should have permitted Royal Brush to see the BCI. "There is no doubt that Royal Brush was entitled to all evidence that Customs placed into the record," the company said. "... This Court has recognized that an agency’s decision to withhold evidence on which it purports to rely is an egregious violation of the standard of fairness agencies are expected to uphold when administering their responsibilities. See Doty v. United States, 53 F.3d 1244, 1251 (Fed. Cir. 1995). Yet that is precisely what happened in this case."

CBP also shifted to analyzing whether the manufacturer could have made all the pencils it exported to the U.S. in 2018. Royal Brush said this shift in practice was something that it was entitled to respond to and that the CAFC has repeatedly held that an agency can't change theories in "mid-stream" without a proper notice-and-comment period. "Royal Brush was entitled to rebut the Verification Report’s conclusion that the Philippine Manufacturer lacked the capacity to produce all of the pencils it exported to the U.S. in 2018. Customs wrongfully denied Royal Brush the opportunity to do so, in contravention of its own regulation and Royal Brush’s right to due process."