As EAPA Enforcement Grows, Process Seen 'Star Chamber Proceeding' Driven by Competitor Allegations

Coinciding with an increased use of CBP's Enforce and Protect Act process for investigating possible antidumping and/or countervailing duty evasion is a feeling among importers that EAPA action is largely skewed toward the alleger. “Typically, the first notice the importer receives is after the agency has already accepted the allegation and imposed draconian ‘Interim Measures’ that treat the importers’ goods as subject to anti-dumping and countervailing duties, a process" that "has proven to be massively unjust,” Mary Hodgins, a lawyer at Morris Manning, said by email. The process is facing increased scrutiny, with several lawsuits that raise due process questions making their way through the courts.

The idea behind EAPA was to allow CBP to identify and crack down on unscrupulous importers before they could run up big bills of unpaid AD/CV duties, said Will Planert, also of Morris Manning, during an interview. “In practice, it's become sort of a Star Chamber proceeding where one of your competitors can basically make an allegation,” and an initial investigation begins before any notification is given to the importer, he said. While the “original problem that EAPA was directed at was real,” there isn't “really the kind of due process you would normally expect for an investigation that literally can affect a company's livelihood,” Planert said.

The timeline should “be altered so there is some opportunity for notice and the response to whatever is being alleged before” interim measures are imposed, Planert said. “In a lot of cases, the interim measures are effectively shutting people out of the market and potentially putting them out of business and there's no opportunity to even know about, let alone to respond to the original allegation.”

But defenders say EAPA is working mostly as intended. “By improving information collection, accountability, and transparency, EAPA has become one of CBP’s most effective tools for protecting the American economy from entities that are determined to evade U.S. trade laws,” an agency spokesperson said by email. “In Fiscal Year 2020, CBP leveraged EAPA to prevent importers from evading $215 million in duties owed to the government. This revenue supports U.S. Government programs that provide essential services to the American people.” There's been some talk of an eventual expansion of EAPA to address evasion of non-AD/CV duties (see 2010210028).

EAPA vastly improved the role domestic industry can play when there are suspicions of evasion, said Wiley lawyer Robert DeFrancesco, who represents the Aluminum Extrusions Fair Trade Committee and is engaged in EAPA proceedings on multiple levels. “I think from their perspective, it's been an invaluable tool to get at a lot of that evasion,” he said during an interview. Based on the public notices released by CBP, Wiley is among the top firms involved in EAPA allegations.

Prior to EAPA, domestic industry had little recourse when it suspected evasion was happening, DeFrancesco said. EAPA now also allows for visibility into the justifications importers provide for why they thought the goods weren't subject to the duties and gives the alleger a chance to show why they should apply, he said. “Now with the EAPA proceeding in place, we at least have opportunity to participate in those conversations, whereas before, there was none at all,” he said.

Despite the recurring questions about due process, importers face similar treatment within other agency proceedings, DeFrancesco said. “I don't think their due process claim is really any different than if we filed a circumvention allegation at the Department of Commerce,” he said.

CBP “closely adheres to the statutory requirements” of EAPA, the CBP spokesperson said. “CBP’s EAPA program is a multi-party, transparent, administrative proceeding in which parties can both participate in and learn the outcome of anti-dumping and countervailing duty investigations. Moreover, EAPA maintains due process for parties to the investigation by providing an option for them to request administrative and judicial reviews of CBP determinations of evasion. CBP has published extensive information about EAPA procedures, timelines, and notices of action on its public-facing website.”

The court system may not really be able to address the “unfairness of the process” because it comes from the statute and regulations, Planert said. “What courts can do is at least hold the agency's feet to the fire a little bit in terms of whether the final decision really has solid support behind it,” he said. While the Court of International Trade remanded an EAPA determination in December (see 2012020050) based on due process issues involving the availability of public summaries for the record, “ultimately it's going to require a procedure where this stuff can come out under” administrative protective orders (APOs).

Lawyers for the allegers and importers agree that EAPA would benefit from APOs, something that stakeholders have sought for years (see 1612270018). The lack of APOs can leave the importers unable to see important evidence, such as lab results or secret declarations, that CBP relied on to determine a reasonable suspicion exists, Planert said. “It becomes very, very difficult to try and defend yourself,” he said. The allegers also would like an APO because it would allow them to see an unredacted version of the information provided by the importers, DeFrancesco said.

The main impediment to allowing for APOs seems to be CBP's concerns for violating the Trade Secrets Act (see 1612050018), but perhaps allowing importers to waive the application of that law could be one regulatory path forward for the use of APOs, DeFrancesco said. “I don't know that Customs thinks the statute can work in that way,” he said.