Federal Circuit: CBP's Lack Of Protective Order In Evasion Case Violates Importer's Due Process

• Jurisdiction: United States,Federal
• Law Firm: Mayer Brown
• Subject Matter: International Law, International Trade & Investment
• Author: Mr Sydney Mintzer, Ellen L. Aldin and Jennifer Parry
• Published date: 08 August 2023

On July 27, 2023, the Federal Circuit issued its opinion in Royal Brush Manufacturing, Inc. v. United States, Dixon Ticonderoga Company, holding that US Customs and Border Protection's ("CBP") refusal to provide the target of an antidumping evasion action with the business confidential information that CBP used in reaching its decision violated the target's due process rights. The decision paves the way for importers accused of evading antidumping duty orders to access confidential information through methods similar to the administrative protective orders in place for the Department of Commerce's antidumping and countervailing duty proceedings.

Case Background

In 2018, CBP investigated pencil importer Royal Brush Manufacturing, Inc. ("Royal Brush") for transshipping pencils from China through the Philippines and wrongly claiming that the pencils originated in the Philippines to avoid antidumping orders in place on Chinese pencils.¹ The investigation was brought under the Enforce and Protect Act of 2015 ("EAPA") and corresponding customs regulation 19 CFR Part 165. During the EAPA investigation, CBP conducted a verification site visit to Royal Brush's Filipino supplier and issued a verification report concluding that the manufacturer lacked the capability to produce pencils in large enough quantities to account for the pencils that Royal Brush had imported into the United States. Based on this report, CBP determined that Royal Brush was evading the Chinese antidumping duty order.² However, the verification report provided to Royal Brush redacted critical information pertaining to the Filipino manufacturer, including images of the production line and production statistics, on the basis that the information was the Filipino manufacturer's confidential business information.³

Royal Brush appealed CBP's decision to the Court of International Trade ("CIT") in 2019, arguing, among other claims, that CBP "denied Royal Brush procedural due process and redacted material evidence in an arbitrary and capricious manner[.]"⁴ CBP argued that the EAPA statute and regulations do not permit the disclosure of confidential business information.⁵The CIT held that, while Royal Brush was not "entitled to receive business confidential information," the regulations set forth in 19 CFR ' 165.4 require CBP to provide Royal Brush with a public summary of the confidential information provided in the report.⁶ On remand, CBP provided a summary with generic descriptions of photographs...