EAPA Statute, CBP Regulations Irrelevant to Constitutional Due Process Arguments, Importer Argues

The U.S. Court of Appeals for the Federal Circuit owes no deference to CBP's procedures in an antidumping and countervailing duty evasion investigation since those procedures violated importer Royal Brush Manufacturing's due process rights, the importer argued in a June 30 reply brief. Royal Brush also argued that CBP's decision to not give the importer access to business confidential information in the Enforce and Protect Act proceeding is a problem of CBP's own creation, and that the U.S. offers insufficient defenses of the company's constitutional due process claims (Royal Brush Manufacturing Inc. v. U.S., 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.

In its reply, Royal Brush argued that this argument fails since one "relatively immutable" due process principle is that where government action seriously injures an individual, the evidence used to prove the U.S.'s case must be disclosed so that the individual can show that the evidence is untrue. Royal Brush said it correctly stated its claim by invoking this principle rather than the "superfluous" Eldridge test.

The U.S. also argued there's no legal basis to establish access to the BCI in the case since neither the EAPA statute nor CBP's regulation permits such access. Royal Brush said this claim fails for two reasons: the appellant's claims are based on the Constitution and not the EAPA statute or CBP's regulations, and the fact that the EAPA statute doesn't forbid the release of BCI. On the latter point, Royal Brush said that the statute is silent on the use of BCI and that when CBP came up with its regulations, it could have allowed the use of administrative protective orders but chose not to.

"Customs’ professed inability to provide the information at issue here to Royal Brush is a problem of its own creation," the brief said. "The agency promulgated regulations that enable it to obtain and use confidential business information in an evasion proceeding but deny that information to the other parties. In short, Customs created adjudicatory procedures that deprive a respondent of due process. Customs cannot hide behind either the EAPA statute or its own regulations in defending itself against Royal Brush’s constitutional claim."

Royal Brush went on to argue that CBP violated the Constitution by rejecting its rebuttal filing to CBP's verification report analyzing the Philippines manufacturer's overall production capacity and that the evasion finding itself was made without substantial evidence. Discussing CBP's rejection of its reply filing, the importer said that it had "both a constitutional and a regulatory right" to reply to the new evidence used by the agency. "Customs attempts to portray the issue here as solely a regulatory matter," the brief said. "... The agency’s need to timely resolve its proceedings does not enable it to circumscribe Royal Brush’s due process rights. Nor does this Court, in evaluating Royal Brush’s due process claim, owe any deference to the agency’s application of its own procedures."