Court Opinion

ID: 9910173
Source: CourtListenerOpinion
Date Created: 2023-12-14 23:01:13.641853+00
Date Added: 2024-06-11T12:51:14.654448
License: Public Domain

Slip Op. 23-

               UNITED STATES COURT OF INTERNATIONAL TRADE

 FAR EAST AMERICAN, INC. AND
 LIBERTY WOODS INTERNATIONAL,
 INC.,

           Plaintiffs,

                and

 AMERICAN PACIFIC PLYWOOD, INC.               Before: Mark A. Barnett, Chief Judge
 AND INTERGLOBAL FOREST LLC,                  Consol. Court No. 22-00213

           Consolidated Plaintiffs,

                 v.

 UNITED STATES,

           Defendant.

                                OPINION AND ORDER

[Granting in part Defendant’s motion for a voluntary remand for U.S. Customs and
Border Protection to reconsider an evasion determination; denying in part Defendant’s
motion with respect to amending the judicial protective order.]

                                                             Dated: December 14, 2023

Gregory S. Menegaz, Alexandra H. Salzman, J. Kevin Horgan, and Vivien J. Wang,
deKieffer & Horgan, PLLC, of Washington, DC, for Plaintiffs Far East American, Inc. and
Liberty Woods International, Inc.

Frederic D. Van Arnam, Jr., and Ashley J. Bodden, Barnes, Richardson & Colburn, LLP,
of Washington, DC, for Consolidated Plaintiff American Pacific Plywood, Inc.

Thomas H. Cadden, Cadden & Fuller LLP, of Irvine, CA, for Consolidated Plaintiff
InterGlobal Forest LLC.

Elizabeth A. Speck, Senior Trial Counsel, and Evan Wisser, Trial Attorney, Commercial
Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for
Defendant. With them on the brief were Brian M. Boynton, Principal Deputy Assistant
Attorney General, Patricia M. McCarthy, Director, and Franklin E. White, Jr., Assistant
Consol. Court No. 22-00213                                                             Page 2

Director. Of counsel on the brief was Jennifer L. Petelle, Attorney, Office of the Chief
Counsel, U.S. Customs and Border Protection, of Washington, DC.

       Barnett, Chief Judge: This consolidated case concerns U.S. Customs and

Border Protection’s (“CBP”) final affirmative determination of evasion pursuant to the

Enforce and Protect Act (“EAPA”), 19 U.S.C. § 1517. See, e.g., Compl. ¶ 1, ECF No.

6. 1 Before the court is Defendant United States’ (“the Government”) motion for a

remand for CBP to reconsider or further explain its evasion determination in light of the

finality of Far East American, Inc. v. United States, 47 CIT __, 654 F. Supp. 3d 1308

(2023), and of the U.S. Court of Appeals for the Federal Circuit’s (“Federal Circuit”)

opinion in Royal Brush Manufacturing, Inc. v. United States, 75 F.4th 1250 (Fed. Cir.

2023) (“Royal Brush CAFC”). Def.’s Mot. for a Voluntary Remand (“Def.’s Mot.”), ECF

No. 65. Plaintiffs2 and Consolidated Plaintiffs 3 (collectively referred to as “Plaintiffs”)

oppose the motion. Am. Pac. Plywood, Inc.’s Opp’n to Def.’s Mot. for a Voluntary

1 Pursuant to 19 U.S.C. § 1517(c) and (f), CBP issued an initial determination and a de

novo administrative review. Those determinations are contained in the public and
confidential administrative records filed with the court. See Public Admin. R. (“PR”),
ECF Nos. 21-1 through 21-7; Confid. Admin. R. (“CR”), ECF Nos. 22-1 through 22-55;
see also Notice of Determination as to Evasion (Jan. 28, 2022) (“Initial Determination”),
CR 81, PR 136, ECF No. 22-35; Letter to Counsel from CBP Re: Enforce and Protect
Act (“EAPA”) Consol. Case Number 7252 (June 6, 2022) (“Admin. Review”), CR 94, PR
148, ECF No. 22-55; Suppl. Letter to Counsel from CBP Re: Enforce and Protect Act
(“EAPA”) Consol. Case Number 7252 (July 6, 2022) (“Suppl. Admin. Review”), CR 95,
PR 151, ECF No. 22-55 (supplemental administrative review in response to an
importer’s request inadvertently overlooked by CBP). The court references the
confidential versions of CBP’s determinations.
2 Plaintiffs consist of importers Far East American, Inc. (“FEA”) and Liberty Woods

International, Inc. (“LBW”).
3 Consolidated Plaintiffs consist of American Pacific Plywood, Inc. (“APPI”) and

Interglobal Forest LLC (“IGF”).
Consol. Court No. 22-00213                                                           Page 3

Remand (“APPI’s Opp’n”), ECF No. 66; Consol. Pl. Interglobal Forest LLC’s Opp’n to

Def. United States’ Mot. for a Voluntary Remand (“IGF’s Opp’n”), ECF No. 67; Opp’n to

Def.’s Mot. for Voluntary Remand (“FEA & LBW’s Opp’n”), ECF No. 68.

      For the reasons discussed herein, the court grants in part the Government’s

motion with respect to CBP’s reconsideration of its evasion determination consistent

with this opinion but denies the Government’s motion insofar as it additionally requests

the court to amend the judicial protective order to govern remand proceedings.

                                      BACKGROUND

      On August 15, 2018, CBP’s Trade Remedy Law Enforcement Directorate

initiated an EAPA investigation in response to an allegation filed in July 2018 by

Plywood Source, LLC (“Plywood Source”). Initial Determination at 2. Plywood Source

alleged that several importers (Plaintiffs herein) were evading the antidumping (“AD”)

and countervailing duty (“CVD”) orders on hardwood plywood from China. Id. 4 In

4 On January 4, 2018, Commerce issued AD and CVD orders on certain hardwood

plywood products from China. Certain Hardwood Plywood Prods. From the People’s
Republic of China, 83 Fed. Reg. 504 (Dep’t Commerce Jan. 4, 2018) (am. final
determination of sales at less than fair value, and antidumping duty order) (“AD Order”);
Certain Hardwood Plywood Prods. From the People’s Republic of China, 83 Fed. Reg.
513 (Dep’t Commerce Jan. 4, 2018) (countervailing duty order) (“CVD Order”) (together,
“the AD/CVD Orders”). The merchandise subject to the AD/CVD Orders is described,
inter alia, as:
        hardwood and decorative plywood, and certain veneered panels . . . . For
        purposes of this proceeding, hardwood and decorative plywood is defined
        as a generally flat, multilayered plywood or other veneered panel,
        consisting of two or more layers or plies of wood veneers and a core, with
        the face and/or back veneer made of non-coniferous wood (hardwood) or
        bamboo.
AD Order, 83 Fed. Reg. at 512; CVD Order, 83 Fed. Reg. at 515.
Consol. Court No. 22-00213                                                         Page 4

February and April 2019, CBP issued requests for information to Plaintiffs and the

producer of the subject imports, Vietnam Finewood Company Limited (“Finewood”). Id.

at 4 & n.18. In May 2019, CBP conducted onsite verification at Finewood’s facility in

Vietnam. Id. at 4 & n.20. Plaintiffs submitted written arguments in August 2019. Id. at

4 & n.21. Plywood Source did not further participate. See id.

       CBP generally must issue its determination “not later than 300 calendar days

after the date on which” CBP initiated the investigation. 19 U.S.C. § 1517(c)(1)(A).

CBP may, however, extend this period by “not more than 60 calendar days” if CBP

determines that “the investigation is extraordinarily complicated” and “additional time is

necessary.” Id. § 1517(c)(1)(B). The statutory 360-day period for the completion of the

investigation would have ended on September 16, 2019. Confid. [FEA & LBW’s] Rule

56.2 Mem. in Supp. of Mot. for J. Upon the Agency R. at 64, ECF No. 46-1. 5 Instead of

issuing a determination, on that day, CBP submitted a covered merchandise referral to

the U.S. Department of Commerce (“Commerce”) pursuant to its authority under 19

U.S.C. § 1517(b)(4)(A). Initial Determination at 4–5. CBP explained that it “could not

determine whether two-ply panels of Chinese origin, which are further processed in

Vietnam to include the face and back veneers of non-coniferous wood, are covered by

the scope of the [AD/CVD Orders].” Id.

5 This time period accounts for the U.S. Government shutdown that tolled the deadline

for 37 days. Viet. Finewood Co. v. United States, 45 CIT __, __ & n.4, 466 F. Supp. 3d
1273, 1279 & n.4 (2020) (noting the timeframe when dismissing for lack of subject
matter jurisdiction the plaintiffs’ challenge to CBP’s allegedly untimely covered
merchandise referral).
Consol. Court No. 22-00213                                                           Page 5

       On January 27, 2022, Commerce answered the question posed by CBP’s

covered merchandise referral in the affirmative. See id. at 5. Specifically, Commerce

concluded that “two-ply panels are ‘veneered panels’ covered by the scope of the

[AD/CVD Orders]” and that the hardwood plywood exported by Finewood was not

substantially transformed in Vietnam and remained a product of China. Id. Armed with

that information, on January 28, 2022, CBP issued an affirmative evasion determination.

See id. at 9.

       In response to Plaintiffs’ request for de novo administrative review of the Initial

Determination, CBP’s Office of Regulations and Rulings affirmed its initial

determination. Admin. Review at 28; see also Suppl. Admin. Review at 10. CBP

explained that record evidence demonstrates that “Finewood did not have the

production capacity to fulfill its sales orders; but instead, in addition to Vietnamese raw

materials, it purchased and imported materials, including two-ply panels and single

veneer sheets, from a Chinese supplier, which it subsequently sent to ‘tollers’ in

Vietnam, to produce its finished hardwood plywood.” Admin. Review at 16. CBP also

affirmed its decision to obtain Commerce’s clarification as to whether Finewood’s two-

ply panels imported from China were within the scope of the AD/CVD Orders. See id. at

17. CBP concluded that substantial evidence supported a finding that Finewood

consumed “Chinese-origin two-ply in its hardwood plywood operations,” id. at 20; the

record did not allow CBP “to determine which, if any, of the [Plaintiffs’] entries did not

contain Chinese-origin covered materials,” id. at 25; and that because “Finewood

sourced two-ply panels, cores, and veneers from China to use in the production of its
Consol. Court No. 22-00213                                                        Page 6

finished hardwood,” substantial evidence supported a finding that the subject entries

“were made through false statements” when Plaintiffs failed to declare the entries as

subject to the AD/CVD Orders, id. at 25–26.

       Litigation ensued in parallel concerning both CBP’s evasion determination and

Commerce’s scope ruling. However, in Far East American, the court sustained

Commerce’s determination on remand to reverse its original scope ruling and find that

the scope of the AD/CVD Orders do not include two-ply panels. 654 F. Supp. 3d at

1310–11. No party appealed that decision, and it is now final. Accordingly, as a matter

of law, the two-ply panels that Finewood imported from China into Vietnam to use in its

hardwood plywood production are not covered merchandise.

       Separately, in Royal Brush CAFC, and as relevant here, the Federal Circuit

concluded that the absence of a statute or regulation authorizing CBP to establish a

procedure concerning the issuance of administrative protective orders for purposes of

providing the subject of an EAPA investigation with business proprietary information did

not mean that such disclosure was barred by the Trade Secrets Act, 18 U.S.C. § 1905,

when the “release of information is ‘authorized by law’ within the meaning of the Trade

Secrets Act if that release is required as a matter of constitutional due process.” 75

F.4th at 1260. Royal Brush CAFC indicates that CBP has inherent authority to fashion

an administrative protective order for purposes of sharing confidential information with

the importers subject to an EAPA investigation during the investigation. 75 F.4th at

1260–61 (“[B]ecause CBP has the inherent authority to issue protective orders,
Consol. Court No. 22-00213                                                                 Page 7

confidential business information released to [the importer] can be protected from public

disclosure . . . .”).

        Meanwhile, in this case, Plaintiffs filed their Rule 56.2 motions for judgment on

the agency record. Confid. Rule 56.2 Mot. for J. on the Agency R. on Behalf of Consol.

Pl. [APPI], ECF No. 42; Confid. Consol. Pl.’s Mot. for J. on the Agency R., ECF No. 44;

Confid. Pls.’ Mot. for J. on the Agency R., ECF No. 46. The Government requested,

and obtained, several extensions of the deadline to respond to those motions, based

primarily on the court’s resolution of Far East American. See Orders (May 25, 2023;

June 30, 2023), ECF Nos. 53, 57. 6 Based on a recent status conference, the court

permitted the Government to file the instant motion for a voluntary remand in lieu of its

response. Status Conf., ECF No. 64 (recording on file with the court).

                                       LEGAL STANDARD

        When an agency determination is challenged in the courts, the agency may

“request a remand (without confessing error) in order to reconsider its previous position”

and “the reviewing court has discretion over whether to remand.” SKF USA Inc. v.

United States, 254 F.3d 1022, 1029 (Fed. Cir. 2001) (citations omitted). An agency may

6 In various filings seeking either a stay in this litigation or, in the alternative, an

extension of time, the Government represented that Commerce’s covered merchandise
“determination is ‘potentially dispositive’ of the instant case,” Joint Mot. to Stay
Proceedings at 4, ECF No. 29, and that the determination “accounts for CBP’s finding
with respect to one of the key elements of evasion – whether plaintiffs imported
‘covered merchandise,’” such that finality of Far East American would mean that “a
substantial amount of the merchandise at issue in this case cannot legally be construed
as ‘covered merchandise,’” Def.’s Renewed Mot. to Stay Proceedings and, in the
Alternative, Mot. for an Extension of Time at 5–6, ECF No. 48.
Consol. Court No. 22-00213                                                         Page 8

also request a remand based on “intervening events outside of the agency’s control, for

example, a new legal decision.” Id. at 1028. Remand is appropriate “if the agency’s

concern is substantial and legitimate,” but “may be refused if the agency’s request is

frivolous or in bad faith.” Id. at 1029. “A concern is substantial and legitimate when (1)

[the agency] has a compelling justification, (2) the need for finality does not outweigh

that justification, and (3) the scope of the request is appropriate.” Changzhou Hawd

Flooring Co. v. United States, 38 CIT __, __, 6 F. Supp. 3d 1358, 1361 (2014) (citations

omitted).

                                       DISCUSSION

       I.     Parties’ Contentions

       The Government contends that remand is merited for CBP “to evaluate whether

the entries at issue in the EAPA investigation in fact contain covered merchandise, . . .

which may require CBP to reassess its final determination of evasion.” Def.’s Mot. at 6.

According to the Government, CBP’s analysis on remand may obviate the need for the

court to examine arguments relevant to the covered merchandise criterion and may,

therefore, expedite Plaintiffs’ relief. Id. at 6–7. The Government also contends that a

“limited voluntary remand” is merited in light of Royal Brush CAFC to address “potential

concerns with how it treated confidential information during the underlying review, and

how that may have limited [P]laintiffs in responding to the alleger’s transshipment

allegations.” Id. at 9.

       Plaintiffs contend that the Government has not demonstrated a substantial and

legitimate need for a remand. Specifically, APPI asserts that Far East American
Consol. Court No. 22-00213                                                            Page 9

undermines the basis for CBP’s covered merchandise finding and obviates any need for

CBP to address arguments concerning CBP’s inability to separate purportedly covered

merchandise from non-covered merchandise in the investigation. APPI’s Opp’n at 5–7.

APPI further asserts that, given the lengthy proceedings to date, CBP “has had more

than ample time to discuss internally and with its counsel whether it can continue to

defend the record or whether confessing judgment is the appropriate option.” Id. at 7.

APPI also contends that any reconsideration pursuant to Royal Brush CAFC should

occur, if necessary, on remand following the court’s review of Plaintiffs’ additional

claims. Id. at 9.

       IGF advances similar arguments. IGF’s Opp’n at 4–6. IGF also contends that

the disclosure of certain confidential information in the form of video evidence is

unnecessary given CBP’s lack of reliance on that evidence. Id. at 7–8.

       FEA and LBW likewise contend that CBP is not “entitled to reconsider whether

the entries at issue . . . contain covered merchandise.” FEA & LBW’s Opp’n at 9. They

contend that CBP verified the factual information placed on the record by Finewood and

a remand is unnecessary to decide whether entries incorporating Chinese two-ply

constitute covered merchandise. Id. at 10–11. FEA and LBW additionally contend that,

for entries that did not incorporate Chinese two-ply, CBP has addressed this issue and

should either “confess judgment or respond to Plaintiffs’ arguments in their [response]

brief.” Id. at 12. Lastly, FEA and LBW contend that remand is not needed to address

Royal Brush CAFC. Id. at 13. They assert that the passage of time disfavors a remand

because the Government’s request comes almost five years after CBP imposed interim
Consol. Court No. 22-00213                                                       Page 10

measures on the Plaintiffs; the exporter is no longer in business; and providing CBP

with a “second chance” to issue a determination as to evasion would “significantly

prejudice Plaintiffs.” Id. at 15–16.

       II.    Analysis

       “When, as here, the court is tasked with reviewing a decision based on an

agency record, and that record does not support the contested decision, the court must

remand for further proceedings.” Royal Brush Mfg., Inc. v. United States, 44 CIT __, __,

483 F. Supp. 3d 1294, 1304 (2020) (citing Fla. Power & Light Co. v. Lorion, 470 U.S.

729, 744 (1985)). “A voluntary remand gives the agency ‘an opportunity to correct its

own mistakes[.]’” Ellwood City Forge Co. v. United States, Slip Op. 23-110, 2023 WL

4703309, at *4 (CIT July 24, 2023) (alteration in original) (quoting McCarthy v. Madigan,

503 U.S. 140, 145 (1992)) (granting a voluntary remand).

       The record before the court in this case indicates that CBP’s evasion

determination relied on Commerce’s affirmative answer to the question whether the

scope of the AD/CVD Orders covers two-ply panels, see Initial Determination at 9;

Admin. Review at 28, but that answer has since been determined to be incorrect, see

Far East Am., 654 F. Supp. 3d at 1310. It is therefore appropriate for CBP to take

account of Commerce’s revised covered merchandise determination in the first

instance. Accordingly, the court will grant the Government’s motion for CBP to

reconsider its covered merchandise determination.

       The court will also grant the Government’s motion for CBP to reconsider its

determination consistent with the requirement to share confidential information in light of
Consol. Court No. 22-00213                                                          Page 11

Royal Brush CAFC. However, compliance with Royal Brush CAFC is necessary only to

the extent that Commerce’s negative covered merchandise determination is not

determinative based on the record before CBP.

       The Government requests the court to enter an amended judicial protective order

if the court grants its request for a voluntary remand. Def.’s Mot. at 10. While the court

previously entered a judicial protective order for purposes of allowing the sharing of

confidential information during litigation, see Protective Order, ECF No. 20, the

Government seeks to amend that protective order so that it “shall also govern any

remand proceedings before [CBP] resulting from this action,” Def.’s Mot., Attach. 1 at 2

¶ 2. The Government relies, in part, on a case in which, post-Royal Brush CAFC, the

court entered an amended protective order to govern remand proceedings. See id. at

10 (citing, inter alia, Newtrend USA Co. v. United States, Court No. 22-cv-00347 (CIT)). 7

Amendment of the judicial protective order appears unnecessary, however, “because

CBP has the inherent authority to issue [its own] protective order[]” for purposes of the

remand proceeding. Royal Brush CAFC, 75 F.4th at 1260–62. Thus, the court will

deny the Government’s request. The court will do so without prejudice in the event

circumstances require the Government to resubmit the request with additional support

for its necessity.

7 The Government also cites to Ad Hoc Shrimp Trade Enforcement Committee v. United

States, Court No. 21-cv-00129 (CIT), Def.’s Mot. at 10, but in that case, the court
entered an amended protective order to govern remand proceedings prior to the
Federal Circuit’s decision in Royal Brush CAFC, see Am. Protective Order, Ad Hoc
Shrimp Trade Enf’t Comm. v. United States, Court No. 21-cv-00129 (CIT June 9, 2022),
ECF No. 63.
Consol. Court No. 22-00213                                                        Page 12

                                   CONCLUSION AND ORDER

        For the reasons discussed herein, it is hereby

        ORDERED that the Government’s motion for a voluntary remand (ECF No. 65) is

GRANTED IN PART; it is further

        ORDERED that CBP’s evasion determination is remanded for CBP to reconsider

its covered merchandise determination consistent with Far East American, Inc. v. United

States, 47 CIT __, 654 F. Supp. 3d 1308 (2023), and, as necessary, Royal Brush

Manufacturing, Inc. v. United States, 75 F.4th 1250 (Fed. Cir. 2023); it is further

        ORDERED that CBP shall file its remand redetermination on or before March 1,

2024; it is further

        ORDERED that, within 10 days of the filing of CBP’s remand redetermination, the

parties must file a joint status report including proposed deadlines for post-remand

briefing, if any; it is further

        ORDERED that, within 14 days of the date of filing of CBP’s remand

redetermination, CBP must file an index and copies of new administrative record

documents, if any; it is further

        ORDERED that the Government’s motion for a voluntary remand (ECF No. 65) is

DENIED IN PART without prejudice with respect to the Government’s request for an

amended judicial protective order; and it is further
Consol. Court No. 22-00213                                                   Page 13

      ORDERED that briefing on Plaintiffs’ Rule 56.2 motions is stayed pending

resolution of CBP’s remand redetermination.

                                              /s/   Mark A. Barnett
                                              Mark A. Barnett, Chief Judge

Dated: December 14, 2023
      New York, New York