US Tells Federal Circuit That No Due Process Rights Were Violated During EAPA Investigation

Importer Royal Brush Manufacturing failed to show that the Court of International Trade wrongly held that CBP did not violate the company's due process rights in an Enforce and Protect Act investigation, the U.S. argued in a June 9 reply brief at the U.S. Court of Appeals for the Federal Circuit. In its opening brief, Royal Brush failed to cite "any legal authority" to back its theory that the trade court erred in shielding the business confidential information (BCI) from disclosure, DOJ said (Royal Brush Manufacturing Inc. v. United States, Fed. Cir. #22-1226).

In the EAPA investigation, CBP said that Royal Brush evaded the antidumping and countervailing duty 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 since it was not granted access to the BCI in the case and that the public summaries CBP did provide were inadequate. The trade court initially agreed with the latter point, finding that CBP didn't provide adequate public summaries, but it stopped short of finding that CBP should have shared all of the BCI with Royal Brush (see 2012020050). Under 19 CFR 165.4, BCI 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 then brought its case to the Federal Circuit, where it is seeking a broader ruling against CBP in the case on due process grounds (see 2202070071). In its reply, the U.S. argued that the plaintiff-appellant ignored the standard established by the Supreme Court in Mathews v. Eldridge, which set up a three-factor balancing test to find whether the administrative procedures in a given case are constitutionally sufficient.

"Royal Brush never explains how the trial court erred in applying that standard, which dooms its due process challenge," the brief said. "Nor does Royal Brush explain why the trial court erred in holding that, by complying with its regulation, CBP provided Royal Brush with all the process it is due." DOJ further argued that Royal Brush failed to point to any legal authority to support its theory that the trade court erred in ruling that CBP is not required to give Royal Brush access to all of the BCI in the case.

"Neither the EAPA statute nor CBP’s regulations permits, let alone requires, CBP to release confidential business information to Royal Brush," the brief said. "Rather, in an EAPA investigation, interested parties 'may request that CBP treat any part of the submission as business confidential information,' and CBP will treat the information as such so long as certain requirements are satisfied." The U.S. argued that the cases the appellant rely on to argue that it's entitled to see the BCI do not even themselves "require the disclosure of confidential information."

Royal Brush also argued in its opening brief that CIT wrongly found that the constitutional right to due process does not require CBP to establish an administrative protective order (APO) procedure. The importer said that the absence of an explicit statutory authorization for an APO does not preclude CBP from taking steps to "protect proprietary information ... while making that information available to the parties." The U.S. replied that "while the absence of statutory authorization may not necessarily preclude agencies from promulgating a regulation to govern an APO procedure, nor does statutory silence compel agencies to institute such a procedure." DOJ further said that Royal Brush does not have a due process right to a particular form of procedures.