US Urges CIT to Adopt 'Reasonable Cause' Standard for UFLPA Entity List Removals

In arguing for a "reasonable cause" standard for review of UFLPA Entity List delisting petitions, the U.S. heavily relied on the trade court's decision in Ninestar v. U.S., in which the court held that listing decisions should be reviewed under a reasonable cause standard (see 2402290081). The government argued that the rationale for applying the reasonable cause standard for listing decisions "applies equally" to a "decision following a request for removal."

The U.S. said the criteria for the FLETF's decision, "either at listing or on a request for removal," is the same: "does the entity meet the criteria for inclusion on the UFLPA Entity List" as identified in the statute.

Camel Group argued that CIT should apply a preponderance standard, since a decision on a removal request "results from a formal agency adjudication." While the government said a preponderance of the evidence standard is proper for formal agency adjudications, UFLPA Entity List removal proceedings are in no way considered formal adjudications.

The Administrative Procedure Act provides procedural requirements for "every case of adjudication required by statute to be determined on the record after opportunity for an agency hearing," though no such requirements are provided for informal adjudications. The U.S. said there's "no statute requiring or even suggesting that the FLETF’s listing decisions, or decisions on a request for removal, must be made 'on the record after opportunity for an agency hearing,'" and Camel Group can't point to any such requirement.

The government added that a preponderance standard doesn't automatically apply to "informal agency adjudications," and courts aren't free to impose specific procedural requirements that have no basis in the APA or governing statutes on agencies. The Ninestar court found a reasonable cause standard to be proper given that it would be "incongruous" to have the greater preponderance standard apply for UFLPA Entity List listing decisions, while the lesser reasonable cause standard applies to decisions to issue withhold release orders, the U.S. noted. This is especially true given that UFLPA was meant to strengthen Section 307, which is the basis under which WROs are issued, the court said.

In addition, the Ninestar court said a “a preponderance standard in the UFLPA would not cohere with Congress’s concern with the difficulty of obtaining information regarding forced labor in China.” The Ninestar court's concerns are equally applicable regarding delisting proceedings, the government argued.

The issue of the applicable standard of review arose in Camel Group's challenge to the FLETF's decision not to remove the company from the UFLPA Entity List. Camel Group is a large manufacturing company, producing over 400 different products, that established two affiliates -- Camel Group Xinjiang Renewable Resources Co. and Camel Group Xinjiang Storage Battery Co. -- in the Xinjiang Uyghur Autonomous Region (XUAR) in 2015 and 2017.

However, the company said neither of its Xinjiang affiliates ships products to the U.S. After unsuccessfully requesting to be removed from the UFLPA Entity List, the exporter challenged FLETF's decision, arguing that evidence doesn't support the task force's decision (see 2501210052). The company filed its motion for judgment in September contesting the task force's decision (see 2509300045).

In response to Camel Group's motion, the U.S. argued, among other things, that the FLETF's decision was supported by substantial evidence. The government argued that it plainly cleared the "highly deferential" standard of review in establishing that Camel Group violated the UFLPA statutory criteria in working with the Xinjiang government to recruit, transport, harbor or receive Uyghurs or members of other persecuted groups.

The U.S. said Camel Group's motion for judgment "goes piecemeal through the evidence in an attempt to show how no single document meets the standard," yet the company's "analysis and conclusions are incorrect." The government noted that Toksun County is located in Xinjiang, and "evidence of participation in any Toksun County labor program, including labor transfer or poverty alleviation programs in the Xinjiang region that involve the receipt of Uyghurs or members of other persecuted groups, satisfies that standard."

The government argued that Camel Group took part in "several such programs," namely a labor transfer program described on the Toksun County WeChat page and a recruitment event for surplus laborers hosted by a group whose name the U.S. redacted. While Camel Group argued that the WeChat page should be disregarded, the U.S. said there's "simply no basis for" this claim.

The exporter cited a 2017 article from Sina News, a Chinese state-run outlet, that includes information on the labor transfer program but doesn't identify Camel Group as a participant. Camel Group argued that this report "corrects" the information on the Toksun County WeChat page, which does identify Camel Group. The U.S. argued that the FLETF didn't "ignore" the Sina News report and that the report doesn't refute the WeChat evidence. The task force merely didn't find the Sina News report to be "credible or compelling," since a report prepared by a separate outlet can't be considered a "retraction" of the information on the WeChat page, the brief said.

And while Camel Group also pointed to a declaration from a Camel Group employee outlining alleged communications with the Toksun government about the company's need for labor at its facilities and the need to correct the WeChat page, the U.S. said the FLETF similarly found this evidence unconvincing. The declaration is a "self-serving document, prepared after the UFLPA listing decision by a representative of the Toksun County (Xinjiang) government," the brief said.