EAPA Process Didn't Violate Due Process Rights, CIT Says While Still Remanding Evasion Finding

"We’re gratified by the Court’s recognition that CBP provided DTT with due process," said Maureen Thomas of Wiley Rein, counsel for the evasion alleger Diamond Sawblades Manufacturers' Coalition. "While the Court remanded certain aspects of the agency’s decision, it has also confirmed that DTT’s imports made on or after December 1, 2017 are properly covered by CBP’s determination. We look forward to working with the agency on remand, and are confident that it will make a remand determination consistent with the Enforce and Protect Act’s purpose of robustly addressing evasion."

The Enforce and Protect Act evasion inquiry kicked off when the DSMC alleged that DTT was transshipping diamond sawblades from China through Thailand. CBP visited DTT's Thai manufacturing facility and imposed interim evasion measures in 2017, nine days after the statutory deadline to impose such measures. DTT's said CBP's failure to meet this deadline nullifies the interim measures themselves.

Reif said it does not. For starters, the judge held that the deadline is precatory, expressing will or intent, and not mandatory. Citing Supreme Court precedent, the judge said that the mandatory word "shall" that is in this statute is not by itself enough to establish that a deadline is mandatory. Also, there needs to be an established consequence for missing the deadline in order for the deadline to truly exist. As there is no language that specifics such a consequence, there's no reason to issue the final results within the specified time frame, the judge held. And while both sides cited the legislative history to get the judge on their side of this issue, Reif ultimately sided with the government, holding that "it is unlikely that Congress intended to preclude Customs from imposing interim measures as a result of Customs’ failure to meet the deadline given these circumstances."

In his opinion, the judge then moved on to the question of due process -- an issue central to nearly every EAPA contest at CIT. To date, there has only been one decision at CIT that resembles anything close to a concession that the U.S. has violated EAPA respondents' due process rights. The case, Royal Brush Manufacturing v. United States, found that CBP erred by not providing sufficient public summaries of proprietary information during the investigation (see 2012020050). That decision was discussed at length in Reif's opinion.

For instance, the judge tapped the Royal Brush ruling to establish that DTT had a protected interest in the case -- a determination that is necessary for establishing a due process violation. The judge then said that DTT failed to show a protected interest in the interim evasion measures since both of the cases cited by the plaintiff did not discuss the context of interim measures, but that a protected interest was established for the final evasion finding. Moving to the issue of access to proprietary information, Reif characterized DTT's position as having expressed "satisfaction" with the access it received, particularly with regard to CBP's verification report after visiting the Thai manufacturing facility.

"DTT USA’s language does not suggest that Customs denied DTT USA 'a meaningful opportunity to participate in the administrative proceeding,'" Reif said, addressing the standard established in Royal Brush. "... Similarly, DTT USA has not demonstrated that due process requires that it receive access to proprietary information during the EAPA investigation. Moreover, DTT USA has failed to demonstrate how access to the proprietary information would have aided the company during the administrative proceeding."

The final issue of the opinion was bifurcated into a question of the adequacy of the actual evasion finding and CBP's suspension of liquidation for entries before the start date of an unrelated anti-circumvention inquiry. On the latter, CBP could not establish if the Thai-made sawblades were covered merchandise under the EAPA investigation, so it tapped the Commerce Department to issue a scope ruling. Commerce, basing its answer on its anti-circumvention inquiry into Thai diamond sawblades, said that they were. Reif then said that the interaction between CBP's EAPA investigations and Commerce's scope inquiries is a "novel one" for the court. "The court, therefore, finds it appropriate to examine whether Customs’ interpretation of the referral provision, 19 U.S.C. § 1517(b)(4)(A)-(B), is entitled to deference," the judge said.

"The text of the EAPA, however, is silent as to whether Commerce in using its findings from a separate circumvention inquiry to make its 'covered merchandise'” determination under the EAPA consequently imposes a temporal limitation on its 'covered merchandise' response to Customs," the opinion said. Going through the legislative history, Reif concluded that it was ambiguous on this question. Then, relying on the congressional intent of EAPA, Reif found that requiring CBP to be bound by Commerce's later circumvention timeline would restrict its authority to find that DTT's pre-December 2017 entries were covered merchandise. This then limits CBP's enforcement under EAPA for those entries. "Such an outcome would be contrary to the congressional intent underlying the EAPA statute and Customs’ ability to exercise its statutory authority," the judge said.

But Reif held that the overall evasion finding -- that the importer was in fact evading the AD order -- was not in line with the law. To establish evasion, CBP has to find that the respondent entered covered merchandise through "a material and false statement or a material omission." Commerce's scope ruling during the EAPA investigation said that DTT's sawblades made using Chinese cores and segments -- and assembled in Thailand -- were subject to the order but that the sawblades using Thai cores and segments were not.

CBP said that DTT in Thailand didn't distinguish between Chinese-origin sawblade cores and segments joined in Thailand and Thai-origin cores and segments joined in Thailand, and that it's the responsibility of the importer and producer to ensure that its imports are complying with the law. As such, DTT should've requested a scope ruling, CBP argued. Addressing both points, Reif said that "the court is not convinced that DTT USA’s failure to distinguish the country of origin of the cores and segments joined in Thailand constitutes a material and false statement or a material omission." The judge held that "... Customs has not explained how DTT USA’s failure to seek such a clarification constitutes a material and false statement or act, or a material omission."

Reif made his intentions clear by citing a scene from the Netflix miniseries "The Queen's Gambit." On the verge of winning a key chess match in the story, the main character, Beth Harmon, noticed her opponent realizing his impending doom. She cemented the win by asking her opponent “Do you see it now? Or should we finish this on the board?"

(Diamond Tools Technology LLC v. United States, Slip Op. 21-151, CIT #20-00060, dated 10/29/21, Judge Timothy Reif. Attorneys: Jay Campbell of White & Case for plaintiff DTT; Stephen Tosini for defendant U.S. government; Maureen Thorson of Wiley Rein for defendant-intervenor DSMC)