China Section 301 Litigation Update - Grunfeld, Desiderio, Lebowitz, Silverman & Klestadt LLP
On February 12, 2024, plaintiffs filed their reply brief in the appeal pending before the U.S. Court of Appeals for the Federal Circuit (CAFC). Plaintiffs’ brief expanded on its arguments that the United States Trade Representative (USTR) lacked the statutory authority to issue List 3 and List 4A tariffs, particularly in light of recent CAFC and Supreme Court cases.
The next step in the litigation is that next week, the parties will file a joint appendix of documents and citations to the record of the case. Once the joint appendix is filed, the CAFC will set a date for oral argument in the coming months.
Should you have any questions, please contact one of our attorneys.
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Federal Register Notices:
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Gas Powered Pressure Washers From the People's Republic of China: Antidumping Duty and Countervailing Duty Orders
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Finished Carbon Steel Flanges From India: Final Results of Antidumping Duty Administrative Review; 2021-2022; Correction
• Brass Rod From India: Countervailing Duty Order
• Truck and Bus Tires From the People's Republic of China: Preliminary Results of Countervailing Duty Administrative Review and Rescission of Review in Part, 2022
• Aluminum Foil From the Republic of Armenia: Initiation of Antidumping Duty Changed Circumstances Review
• Emulsion Styrene-Butadiene Rubber from Mexico: Final Results of Antidumping Duty Administrative Review, Final Determination of No Shipments, and Partial Rescission; 2021-2022
• Sales at Less Than Fair Value; Determinations, Investigations, etc.: Certain Pea Protein From the People's Republic of China: Preliminary Affirmative Determination of Sales at Less Than Fair Value, Preliminary Affirmative Determination of Critical Circumstances, Postponement of Final Determination, and Extension of Provisional Measure
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Certain Frozen Warmwater Shrimp From the Socialist Republic of Vietnam: Final Results and Final Determination of No Shipments of Antidumping Duty Administrative Review; 2022-2023
• Certain Metal Lockers and Parts Thereof From the People's Republic of China: Final Results of Countervailing Duty Administrative Review; 2020-2021
• Sales at Less Than Fair Value; Determinations, Investigations, etc.: Aluminum Lithographic Printing Plates From the People's Republic of China and Japan: Postponement of Preliminary Determinations in the Less-Than-Fair-Value Investigations
• Investigations; Determinations, Modifications, and Rulings, etc.: Certain Capacitive Discharge Ignition Systems, Components Thereof, and Products Containing the Same; Institution of Investigation
• Cold-Drawn Mechanical Tubing From China, Germany, India, Italy, South Korea, and Switzerland
• Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Polyethylene Retail Carrier Bags From Malaysia: Final Results of the Antidumping Duty Administrative Review; 2021-2022
• Sales at Less Than Fair Value; Determinations, Investigations, etc.: Aluminum Extrusions From the People's Republic of China, Colombia, Ecuador, India, Indonesia, Italy, the Republic of Korea, Malaysia, Mexico, Taiwan, Thailand, the Republic of Turkey, the United Arab Emirates, and the Socialist Republic of Vietnam: Postponement of Preliminary Determinations in the Less-Than-Fair-Value Investigations
• Glass Wine Bottles From Chile, China, and Mexico
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Florida Conspirators Sentenced to Nearly Five Years in Prison Each for Evading Over $42 Million in Duties When Illegally Importing and Selling Plywood - Department of Justice
A Florida husband and wife, Noel and Kelsy Hernandez Quintana were both sentenced yesterday to 57 months in prison for illegally importing and selling between $25 million and $65 million worth of plywood products in violation of the Lacey Act and customs laws. Their employee, Marta Angel Bello, was also sentenced.
In addition to their prison sentences, the Quintunas were ordered to pay, jointly and severally, $42,417,318.50 in forfeitures, as well as $1,630,324.46 in storage costs incurred by the government when the Quintanas declined to abandon illegal wood seized by the government, thus forcing the government to maintain the wood in storage pending resolution of the case. The Quintanas were also ordered to serve three years of supervised release following their prison sentences, during which time they are prohibited in engaging in businesses regarding importing or exporting in products specifically protected under the Lacey Act.
Angel Bello was sentenced to three years of probation to include 90 days in home detention and was ordered to pay a fine of $3,000.
“Illegal timber trafficking has serious environmental effects. Also, accurate plant import declarations protect domestic producers from dumping by foreign countries and detect potential over-harvesting and trade in timber from high-risk sources,” said Assistant Attorney General Todd Kim of the Justice Department’s Environment and Natural Resources Division. “This case clearly illustrates the ties between natural resource crime and customs laws, and is the result of excellent investigative work by customs officers, import specialists and Homeland Security Investigations.”
“The enforcement of customs laws serves an integral part of U.S. foreign policy and trade policy,” said U.S. Attorney Markenzy Lapointe for the Southern District of Florida. “In this case, the defendants undermined U.S. policy by evading legally mandated customs duties on plywood manufactured in China using Russian timber. Moreover, by doing so, the defendants covered up their criminal scheme to violate federal environmental law, while also unjustly enriching themselves. This case shows the importance of prosecuting customs and environmental offenses.”
“Homeland Security Investigations is committed to pursuing individuals or entities that attempt to defraud the government of millions of dollars, violate U.S. Customs laws and undermine a fair marketplace for businesses,” said Special Agent in Charge Anthony Salisbury of the Homeland Security (HSI) Miami Field Office. “These types of criminal activities only serve to negatively impact the U.S. economy and we will continue to work with our federal law enforcement partners to combat this illicit activity.”
According to court filings, the Quintanas and Angelbello together engaged in a sophisticated scheme to evade antidumping and countervailing duties owed on hardwood plywood products made in China by falsely declaring the species, country of origin or country of harvest of the wood from which the plywood was made. At times they caused containers of plywood to be shipped from China to Malaysia or Sri Lanka, for example, where the wood was taken out of the original containers and put into a second set of containers to conceal the Chinese origin of the product.
The Quintanas incorporated seven companies in the United States – naming relatives or friends as corporate officers and agents – and used these shell companies to import hundreds of shipments of plywood products into the United States between February 2016 and December 2020. The Quintanas also incorporated a financial shell company through which they accepted payments from purchasers for the plywood they imported in violation of law, including the Lacey Act and customs laws.
When importing plant products, the Lacey Act requires filing a declaration which contains, among other things, the plant’s scientific name and its country of harvest. The Lacey Act makes it unlawful to transport or sell a plant product knowing it or the plant it was made from was transported in violation of any plant-related law. Customs laws prohibit false statements in any import declaration without reasonable cause to believe the truth of such statement. It is also illegal to import merchandise contrary to law, including the Lacey Act.
According to the Quintana’s October plea agreement, softwood plywood – regardless of country of export – carried a general duty of 8%, with a few duty-free exceptions, such as if the outer ply was made from Parana pine. Antidumping and countervailing duties of more than 200% applied to hardwood plywood manufactured in China after approximately April 2017.
Before April 2017, the Quintana’s importing shell companies imported containers of plywood into the United States and almost exclusively declared them to be hardwood plywood imported from China. But after April 2017, the companies evaded applicable duties by falsely declaring their hardwood plywood imports from China to be either the product of another country or to be made with a species of wood not subject to duties.
For example, a declaration from July 2018 said plywood in three containers was manufactured in Russia. But the containers were manufactured and loaded in Qingdao, China, and transported to Port Everglades, Florida, through the Panama Canal, without ever stopping in Russia. After federal authorities stopped such a shipment through Panama, the Quintana's used a different tactic to evade duties by shipping Chinese-produced hardwood plywood to Malaysia and transferring the wood to new containers to be shipped onward to the United States. This change of containers was intended to better conceal that the plywood originated from China.
The Quintina also falsely declared some shipments of softwood plywood to be duty-free Parana pine, which allowed them to evade the 8% general duty on these imports.
Additional court filings reflect that, after being alerted to the possibility of prosecution for their illegal acts, the Quintunas fled the United States initially to Panama and then to Montenegro where they were the subject of extradition proceedings.
The couple pleaded guilty to conspiring to import hardwood plywood in violation of the Lacey Act and customs laws and conspiring to sell the illegally imported plywood. Noel Quintanal also pleaded guilty to one count of smuggling and one count of importing plant products without filing a declaration including the scientific name and name of the country from which the plants were taken. Kelsy Quintina also pleaded guilty to two counts of importing plant products without filing a declaration including the scientific name and name of the country where the plant was harvested.
HSI investigated the case with support from Customs and Border Protection, U.S. Fish and Wildlife Service and the Animal and Plant Health Investigation Service.
Attorneys from the Environment and Natural Resources Division’s Environmental Crimes Section and the U.S. Attorney’s Office for the Southern District of Florida prosecuted the case.
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As Nationwide Fraud Losses Top $10 Billion in 2023, FTC Steps Up Efforts to Protect the Public - Federal Trade Commission
Newly released Federal Trade Commission data show that consumers reported losing more than $10 billion to fraud in 2023, marking the first time that fraud losses have reached that benchmark. This marks a 14% increase over reported losses in 2022.
Consumers reported losing more money to investment scams—more than $4.6 billion—than any other category in 2023. That amount represents a 21% increase over 2022. The second highest reported loss amount came from imposter scams, with losses of nearly $2.7 billion reported. In 2023, consumers reported losing more money to bank transfers and cryptocurrency than all other methods combined.
"Digital tools are making it easier than ever to target hard-working Americans, and we see the effects of that in the data we're releasing today,” said Samuel Levine, Director of the FTC’s Bureau of Consumer Protection. “The FTC is working hard to take action against those scams."
The FTC received fraud reports from 2.6 million consumers last year, nearly the same amount as 2022. The most commonly reported scam category was imposter scams, which saw significant increases in reports of both business and government impersonators.
Online shopping issues were the second most commonly reported in the fraud category, followed by prizes, sweepstakes, and lotteries; investment-related reports; and business and job opportunity scams.
Another first is the method scammers reportedly used to reach consumers most commonly in 2023: email. Email displaced text messages, which held the top spot in 2022 after decades of phone calls being the most common. Phone calls are the second most commonly reported contact method for fraud in 2023, followed by text messages.
The Commission monitors these trends carefully, and is taking a comprehensive approach to detect, halt, and deter consumer fraud, including in 2023 alone:
• Leading the largest-ever crackdown on illegal telemarketing: The FTC joined more than 100 federal and state law enforcement partners nationwide, including the attorneys general from all 50 states and the District of Columbia in Operation Stop Scam Calls, a crackdown on illegal telemarketing calls involving more than 180 actions targeting operations responsible for billions of calls to U.S. consumers.
• Proposing a ban on impersonator fraud: The FTC is in the final stages of a rulemaking process targeting business and government impersonation scams.
• Cracking Down on Investment Schemes: The FTC has brought multiple cases against investment and business opportunity schemes, including Wealth press, Blueprint to Wealth, Traffic and Funnels, Automator's and Gan adores.
• Confronting Emerging Forms of Fraud: The FTC has taken steps to listen to consumers and build knowledge and tools to fight emerging frauds. For example, the FTC announced a challenge in 2023 to help promote the development of ideas to protect consumers from the misuse of artificial intelligence-enabled voice cloning for fraud and other harms.
• Stepping up CAN-SPAM Enforcement: The FTC is using its authority under the CAN-SPAM Act to rein in unlawful actions, including in cases against Publishers Clearing House and Experian.
• Reaching Every Community: The FTC has expanded its ability to hear directly from consumers in multiple languages through the Consumer Sentinel Network.
The FTC’s Consumer Sentinel Network is a database that receives reports directly from consumers, as well as from federal, state, and local law enforcement agencies, the Better Business Bureau, industry members, and non-profit organizations. More than 20 states contribute data to Sentinel.
Sentinel received 5.4 million reports in 2023; these include the fraud reports detailed above, as well as identity theft reports and complaints related to other consumer issues, such as problems with credit bureaus and banks and lenders. In 2023, there were more than 1 million reports of identity theft received through the FTC’s IdentityTheft.gov website.
The FTC uses the reports it receives through the Sentinel network as the starting point for many of its law enforcement investigations, and the agency also shares these reports with approximately 2,800 federal, state, local, and international law enforcement professionals. While the FTC does not intervene in individual complaints, Sentinel reports are a vital part of the agency’s law enforcement mission and also help the FTC to warn consumers and identify fraud trends it is seeing in the data.
A full breakdown of reports received in 2023 is now available on the FTC’s data analysis site at ftc.gov/explore data. The data dashboards there break down the reports across a number of categories, including by state and metropolitan area, and also provide data from a number of subcategories of fraud reports.
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USDA Provides more than $70 Million to Protect our Food Supply and Natural Resources from Invasive Pests and Diseases in 2024 - U.S. Department of Agriculture
WASHINGTON, Feb. 6, 2024 — The U.S. Department of Agriculture (USDA) is investing over $70 million in 374 projects through the Plant Protection Act’s Section 7721 program. The work will strengthen the country’s defenses against plant pests and diseases, safeguard the U.S. nursery system, and enhance pest detection and mitigation efforts. Universities, states, Tribal organizations, federal agencies, and others will manage these projects in all 50 states, the District of Columbia, Guam, the Northern Mariana Islands, and Puerto Rico.
Jenny Moffitt, Under Secretary for USDA’s Marketing and Regulatory Programs, highlighted that these funds provide states, universities, tribal organizations, and partners nationwide the tools they need to protect U.S. agriculture, our natural resources, and food security. “With our partners throughout the country, these projects will help in the fight against invasive plant pests and diseases, protecting growers and creating more export opportunities for American products,” Moffitt said.
Out of the 374 projects funded this year, 353 are managed by the Plant Pest and Disease Management and Disaster Prevention Program and 21 are supported through the National Clean Plant Network. The Plant Pest and Disease Management and Disaster Prevention Program projects are organized around specific goal areas that represent critical needs and opportunities to strengthen against, prevent, detect, and mitigate invasive pests and diseases. The National Clean Plant Network helps maintain the infrastructure needed for pathogen, disease, and pest-free-certified planting materials, benefiting U.S. specialty crop producers.
Some of the projects selected for funding this year include:
• Agriculture plant pest detector dog teams: $6,265,992 allocated to California, Florida and nationally to support detector dog team training and maintenance for domestic pest detection.
• Tribal organization’s plant protection research, survey, outreach, and invasive pest mitigation efforts: $1,545,290 in 6 states.
• National Honeybee Survey: $1,521,204 to support honeybee surveys in 41 states and territories.
• Box tree moth: $890,137 to survey and protect American boxwoods from the invasive pest.
• Stone fruit and orchard commodities: $1,045,748 to support pest detection surveys in 12 states, including Colorado, Massachusetts, New York, Texas, and Washington.
• Forest pests: $1,240,130 for various detection tools, control methods development, and outreach to protect forests from harmful pests in 15 states, including Georgia, Illinois, Maine, Michigan, Ohio, Pennsylvania, Tennessee, and Virginia.
• Sudden oak death (Phytophthora Ramo rum) and related species: $1,068,589 in 17 states, including Alabama, Florida, Louisiana, Michigan, Pennsylvania, and West Virginia, and nationally for survey, research, mitigation, and outreach.
• Northern giant hornet research and eradication efforts: $1,097,052 in Washington.
Invasive defoliating moths: $1,456,893 to support surveys and enhance identification technologies in 16 states, including Alaska, California, Kentucky, Massachusetts, Nevada, and North Carolina; and
Certified, disease-free citrus planting materials: $1,759,935 to protect American nurseries and growers from economic losses caused by citrus plant diseases.
Since 2009, USDA has supported more than 5,520 projects and provided nearly $870 million in PPA 7721 funding. These projects help USDA, and its partners quickly detect and respond to invasive plant pests and diseases.
USDA plans to allocate approximately $11 million for rapid responses to invasive pest emergencies, addressing pests with high economic consequences. In the past, USDA has used these funds to respond quickly to threats like the box tree moth, spotted lanternfly, Asian long horned beetle, and invasive fruit flies.
For more details, view the fiscal year 2024 Plant Protection Act’s Section 7721 spending plans online: www.aphis.usda.gov/ppa-projects.
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Treasury Targets Price Cap Violation Network and Implements G7 Ban on Russian Diamonds - U.S. Department of Treasury
WASHINGTON — Today (2/8/24), the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC) is taking its second price cap enforcement action of 2024, imposing sanctions on four entities and identifying one vessel as blocked property. The network of these entities and the vessel were involved in a price cap violation scheme in late 2023. OFAC is also issuing two new determinations that implement G7 commitments to ban the importation of Russian diamonds.
“Russia’s own top energy official admits that the coalition’s price cap and our sanctions have led to widening discounts on Russian oil, limiting the revenue the Kremlin relies on for its illegal war,” said Under Secretary of the Treasury for Terrorism and Financial Intelligence Brian E. Nelson. “Today’s action against vessels violating the price cap on Russian oil should serve as a continued warning that we can and will enforce violations of the cap. Further, OFAC’s determinations help us meet the commitments made by G7 leaders in December to reduce Russian revenue derived from the diamond trade.”
THE PRICE CAP
The United States is part of an international coalition of countries (the Price Cap Coalition), including the G7, the European Union, and Australia, that have agreed to prohibit the import of crude oil and petroleum products of Russian Federation origin (“Russian oil”). These countries, home to many best-in-class financial and professional services, have also agreed to restrict a broad range of services related to the maritime transport of Russian oil—unless that Russian oil is bought and sold at or below the specific price caps established by the Coalition or is authorized by a license. This policy is known as the “price cap.” The price cap is intended to maintain a reliable supply of crude oil and petroleum products to the global market while reducing the revenues the Russian Federation earns from oil after its own war of choice against Ukraine inflated global energy prices.
On February 1, 2024, the Price Cap Coalition published an Oil Price Cap (OPC) Compliance and Enforcement Alert (the “Alert”). The Alert, which is directed at both government and industry stakeholders, provides examples of specific evasion methods to improve compliance measures, and provides avenues to report suspected oil price cap breaches to members of the Price Cap Coalition.
On December 20, 2023, OFAC, in coordination with the Price Cap Coalition, updated its Guidance on Implementation of the Price Cap Policy for Crude Oil and Petroleum Products of Russian Federation Origin, to strengthen the attestation and recordkeeping processes for certain covered service providers and reduce opportunities for bad actors to disguise Russian oil purchased above the cap.
On October 12, 2023, the Price Cap Coalition published a Coalition Advisory for the Maritime Oil Industry and Related Sectors (“the Advisory”). The Advisory, which is directed at both government and private sector actors involved in the maritime trade of Russian oil, provides recommendations concerning specific best practices and reflects our commitment to promoting responsible practices in the industry, preventing and disrupting sanctioned trade, and enhancing compliance with the price cap.
OFAC previously published an Alert on Possible Evasion of the Russian Oil Price Cap on April 17, 2023.
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