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IP Alert: Importers Entitled to See Confidential Evidence Used Against Them in Antidumping Proceedings

August 14, 2023

On July 27, in Royal Brush Manufacturing, Inc. v. United States, the Federal Circuit held that importers have a right to see the evidence used against them in antidumping proceedings by the Customs and Border Patrol (CBP), including data and confidential business information. The decision concerns a CBP antidumping investigation where the agency made a final determination of evasion but redacted confidential information from its report.

The CBP initiated its investigation after Dixon Ticonderoga Co., a pencil importer, alleged that Royal Brush Manufacturing, Inc., a competing importer, was transshipping Chinese-manufactured pencils through the Philippines and falsely claiming the pencils to be of Philippine origin. As part of its investigation, the CBP visited Royal Brush’s Philippines manufacturing facility to confirm whether the plant in fact had the production capabilities that Royal Brush alleged. The CBP concluded that the plant did not have the alleged production capabilities and provided its findings and reasoning in an Attaché Report and a Verification Report (together, the “Reports”). The Reports contained estimates and other Royal Brush confidential business information—including numbers used to calculate production capability, determinations about the final production capacity, facility photographs, and invoice and purchase order information.

After making its final determination, the CBP provided Royal Brush with a copy of the Reports, but with the estimates and business information redacted. Royal Brush appealed to the Court of International Trade (CIT), which remanded the case and required the CBP to provide a summary of the redacted information. On remand, the CBP issued a public summary and replaced the redacted photographs with generic descriptions, such as “photo of labeled box with finished merchandise,” and the production numbers with nondescript terms, such as “number.” Royal Brush appealed again to the CIT, but the court held that the CBP’s summarized version of the Reports complied with the relevant regulations and that Royal Brush had not established that the CBP failed to provide due process. Royal Brush appealed to the Federal Circuit.

On appeal, the Federal Circuit noted that it is an “immutable principle” that individuals have access to the evidence used against them by the government to support a case and concluded that the summarized version of the Reports did not convey to Royal Brush with sufficient detail the evidence used against them. The court recognized that, while the Trade Secrets Act can prevent government employees from disclosing confidential business information in certain instances, such measures did not apply to information required to be released as a matter of constitutional due process under the Fifth Amendment. The court further noted how the government’s concerns over providing the information could be alleviated by the simple issuance of a Protective Order by the CBP. The court found the government’s position—that it could “avoid compliance with due process requirements by the simple expedient of failing to provide for a protective order in a statute or regulation”—to be untenable. Instead, the Federal Circuit remanded the case to the CBP and stated that it had “no doubt that [the] CBP ha[d] inherent authority to provide protective orders in EAPA proceedings before the agency.”

This decision is a reminder of how the CBP must give parties in antidumping proceedings proper access to the evidence used against them. It is also a reminder to importers in antidumping proceedings that they have a due process right to see the evidence that the CBP uses against them.

For more information on this holding, please contact Fitch Even partner Joseph F. Marinelli or associate Alvaro Cure Dominguez, authors of this alert.

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