Trade Court Upholds Plywood Evasion Finding, Says Due Process Not Violated

CBP said that the U.S. Court of Appeals for the Federal Circuit established that substantial evidence means providing relevant evidence, such as a reasonable mind might accept as adequate to back a conclusion. The importers said the agency's standard of clearing whatever its own mind might consider adequate violates the standard. Judge M. Miller Baker sided with the government.

"We are gravely concerned about this opinion because importers can be on the line for hundreds of percentage points of rate advance on entries based on macro country export statistics and the procedures lack any of the key protections involved in antidumping reviews or circumvention proceedings," Greg Menegaz, counsel for the importers, said in an email.

Maureen Thorson, counsel for the petitioner, said that she is very pleased with the opinion, adding that "CBP’s ability to robustly administer the [Enforce and Protect Act] is critically important for domestic hardwood plywood manufacturers and many other American industries, who need strong trade remedy enforcement to stop duty evasion and transshipment."

Baker held that the importers offered no support for the theory that CBP applied a subjective review instead of the objective "reasonable mind" standard. "Instead, they shift gears and address access to confidential information," the judge noted. And Baker said that the importers' lack of access to all of the confidential information in the suit does not constitute a due process violation.

While the importers say that the public summaries of the confidential information were insufficient, they failed to point to any particular summary "much less explain why they believe it was inadequate," the judge said. The companies instead attacked the adequacy of public summaries in general, claiming that for proper adjudication of the case without violating due process, full disclosure of the information is needed.

Citing the trade court's opinion in Royal Brush Manufacturing v. U.S., Baker said that CBP's authority to provide public summaries of confidential information is "established," and the companies failed to show that greater access to the data is "otherwise constitutionally required." Baker added that the importers "cite no authority permitting this court to order Customs to adopt any particular procedure, much less the" administrative protective order used by the Commerce Department and the International Trade Commission.

"Some of the procedures that exporters and importers find problematic are pending before the CAFC in Royal Brush and we anticipate that there will be a growing group of cases before the CAFC concerning the serious lack of procedural protections for importers in confronting the full actual charges against them in EAPA cases due to the implementing regulations themselves (rather than the statute)," Menegaz added.

The importers also argued that the record is devoid of any evidence that its goods were transshipped in Cambodia. CBP, on the other hand, said that it based its decisions on questionnaire responses from the Cambodian manufacturers, LB Wood and Happy Home, along with a declaration from a CBP employee who visited the facilities and said that the types of plywood at the factories are temperate woods that don't grow well in Cambodia.

Baker said the importers seemed to be conflating "evidence" with "concrete proof," insofar as that "absent hard proof of transshipment or commingling, they prevail. But they forget that ‘substantial evidence’ does not require concrete proof -- rather, it asks whether a reasonable mind might accept the evidence to support a conclusion. Here, Customs cited evidence in the administrative record supporting its conclusion.”

The plywood importers also said that they cited over 11,000 pages of evidence showing that they did not transship the merchandise. To this, the judge said that a citation to that many pages "is the functional equivalent of citing nothing," adding that, "'Judges are not like pigs, hunting for truffles buried in briefs’ or in administrative records." The submissions only show that the importers only filed "copious filings to Customs."

The court also sided with CBP with regard to the importers' challenge to the interim measures imposed due to the investigation. The companies had said the measures are invalid since the agency did not give timely notice of the investigation nor the companies a timely chance to rebut against the evasion allegation and imposition of the interim duties, adding that the rules for interim measures are interpretative.

Baker also noted that the EAPA statute says CBP must decide if there is a reasonable suspicion that covered merchandise was entered via evasion and to impose interim measures if so. The importers say the "reasonable suspicion" standard requires a particularized and objective basis for suspecting the existence of this behavior. The judge said that given the definition of suspicion, it is "inappropriate to flyspeck the evidence piece-by-piece to analyze what each item shows or does not show -- the question is what all the evidence at the relevant stage of the investigation showed."

The importers said that there was no specific evidence that the companies were importing covered merchandise via evasion. The court responded that while the companies may be right on the particular pieces of evidence, "they miss the forest for the trees."

(American Pacific Plywood v. United States, Slip Op. 23-93, CIT Consol. #20-03914, dated 06/22/23, Judge M. Miller Baker; Gregory Menegaz of deKieffer & Horgan for plainiffs American Pacific and U.S. Global Forest; Ignacio Lazo of Cadden & Fuller for plaintiff InterGlobal Forest; Hardeep Josan for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor Coalition for Fair Trade in Hardwood Plywood)