U.S. Customs and Border Protection (CBP) has detained thousands of shipments under the Uyghur Forced Labor Prevention Act (UFLPA). CBP detains (and often excludes) shipments without explaining to the importer why it believes the product is subject to the UFLPA, including in cases where the importer submits to CBP extensive evidence demonstrating that the UFLPA does not apply. In a recent decision from the U.S. Court of Appeals for the Federal Circuit, CBP was found to have violated an importer’s due process rights by taking enforcement action against the importer without disclosing its basis for those actions. While that case involved a non-UFLPA trade proceeding, the court’s decision raises important questions as to whether CBP is violating importers’ due process rights by making admissibility decisions under the UFLPA without disclosing the basis for those decisions. Importers that have had shipments detained (and/or excluded) under the UFLPA should consider taking steps to preserve their legal rights.
The UFLPA requires CBP to presume that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China or produced by an entity” on a UFLPA entity list is prohibited from importation under 19 U.S.C. §1307.1 The UFLPA further provides that this presumption shall be applied unless CBP determines that the importer has rebutted the presumption of forced labor by “clear and convincing evidence” (among other things).2 In short, the statute authorizes CBP to apply one presumption: If there is Xinjiang content, or production by a UFLPA listed entity, then CBP must presume that the articles sought to be imported were made with forced labor. The statute does not authorize CBP to also presume that an article contains Xinjiang content or was produced by a UFLPA listed entity.
In practice, CBP detains imported goods under the UFLPA but does not provide the importer with any information about why. If the importer believes that the UFLPA does not apply (because there is no Xinjiang content or listed entity involvement), it can respond to the detention notice by submitting evidence that the UFLPA does not apply (which CBP refers to as an “applicability review”). This generally involves tracing the supply chain from the imported article back through production all the way to the individual raw materials. This is a significant undertaking, and such submissions often run to several hundreds of pages. These submissions often request that if, after reviewing the importer’s submission, CBP believes that the imported articles are subject to the UFLPA because there is Xinjiang content of listed entity production, it please identify the basis for that conclusion (i.e., what component, material, or production is the trigger for UFLPA applicability).
If, after reviewing the importer’s applicability review submission, CBP determines that the UFLPA applies, it proceeds directly to excluding the merchandise. CBP does not provide the importer with any details as to why or how the UFLPA applies and does not provide the importer with an opportunity to rebut the forced labor presumption.
The recent case that may impact this process is Royal Brush Manufacturing, Inc. v. United States, Dixon Ticonderoga Company.3 In short, the case involved CBP’s investigation under the Enforce and Protect Act of 2015 of an allegation that the importer (Royal Brush) was transshipping pencils from China through the Philippines to avoid antidumping duties on pencils from China. The part of the case that could relate to UFLPA enforcement is the importer’s challenge under the Due Process Clause of the U.S. Constitution to CBP’s failure to provide the importer with the factual information the agency relied on in reaching its determination that the importer was evading antidumping duties. The government appears to have argued that the information it relied on was confidential business information that could not be shared with the importer. The court explained:4
One “relatively immutable” principle of due process is that “where governmental action seriously injures an individual, and the reasonableness of the action depends on fact findings, the evidence used to prove the [g]overnment’s case must be disclosed to the individual so that he has an opportunity to show that it is untrue.” Greene v. McElroy, 360 U.S. 474, 496 (1959). This immutable principle applies to cases where facts have been withheld from an entity during an administrative proceeding. Id. at 497 (gathering cases); Ramirez v. Dep’t of Homeland Sec., 975 F.3d 1342, 1349–53 (Fed. Cir. 2020); Doty v. United States, 53 F.3d 1244, 1251 (Fed. Cir. 1995) (“The agency’s ... withholding of the evidence on which [it] purported to rely ... w[as] ... egregiously removed from the fairness required of an agency in its administrative responsibilities ....”).
The court went on to conclude that5
In sum, CBP relied on factual information that was not provided to Royal Brush to determine that Royal Brush had evaded duties. This, in and of itself, is a clear violation of due process.
There would seem to be a parallel between CBP’s actions in this case and how it is currently approaching UFLPA enforcement. CBP is making a decision about the admissibility of an article based on facts (or more likely assumptions) that are not being shared with the importer. In addition, once CBP makes its determination that the UFLPA applies, it is not providing the importer with the opportunity provided by the statute to rebut the presumption. This process strikes most importers as inherently unfair (as well as counterproductive). It will be interesting to see whether the Federal Circuit’s decision in Royal Brush impacts CBP’s UFLPA enforcement efforts going forward (on its own initiative or otherwise).
Importers that have had shipments detained under the UFLPA should consider taking certain steps to preserve their legal rights, including filing a “protest” within the required period after the merchandise has been presented for examination. If the protest is denied, the importer may challenge the denial by filing suit at the U.S. Court of International Trade and lodging claims (including procedural due process claims, as in Royal Brush) against CBP’s enforcement of the UFLPA.
If your company has any questions about UFLPA compliance, CBP’s enforcement efforts, or this decision, please reach out to the authors of this alert or your Sidley contact.
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