Upon its December 23, 2021 enactment, the Uyghur Forced Labor Prevention Act (“UFLPA”), Public Law No. 117-78, directed the United States government’s interagency Forced Labor Enforcement Task Force (“FLETF”) to develop a strategy to enforce a prohibition on the importation of goods into the U.S. that are manufactured wholly or in part with forced labor in the People’s Republic of China, especially from the Xinjiang Uyghur Autonomous Region (“Xinjiang”). The law went into effect on June 21, 2022, with a rebuttable presumption administered by the U.S. Customs and Border Protection (“CBP”) that goods mined, produced, or manufactured wholly or in part in Xinjiang or by an entity identified by the FLETF on the UFLPA Entity List are prohibited from importation into the U.S. under 19 U.S.C. § 1307. Rebutting this presumption is indeed a very difficult hill to climb for importers, having to provide clear and convincing evidence to CBP that the goods in question didn’t involve forced labor.
As a result of the rebuttable presumption, if an entity is added to the UFLPA Entity List, it is effectively barred from selling its goods to would-be U.S. importers. It will also be effectively cut-off from purchasers in third countries that would otherwise incorporate the listed entity’s goods as inputs. This is because CBP’s rebuttable presumption also applies to downstream products that incorporate goods from Xinjiang or by an entity on the UFLPA Entity List as inputs, regardless of where those products are ultimately produced. With U.S. importers increasingly conducting due diligence on would be suppliers to prevent the involvement of forced labor and related issues under the UFLPA—in addition to the expanding use of third-party screening tools that help identify transactional parties named on government restricted parties lists—entities identified on the UFLPA Entity List are going to find themselves increasingly isolated from global supply chains.
While the FLETF continues to add entities to the UFLPA Entity List, with 26 entities added on May 16, 2024 to a total of approximately 40 listed entities, no listed entity has been removed since the initial listing action that took place on August 2, 2023. However, the FLETF does have an informal administrative removal process in place to challenge inclusion on the List. This article examines that process with certain practitioner tips, including in consideration of recent judicial precedent from the U.S. Court of International Trade (“CIT”).
Additions to the UFLPA Entity List
To understand the removal process, it is first necessary to examine how the FLETF adds an entity is added to the UFLPA Entity List to begin with. The FLETF is chaired and led by the Secretary of the Department of Homeland Security (“DHS”), but it is also composed of representatives from many other agencies, including the departments of State, Justice, Treasury, and Commerce. Any member agency may submit a recommendation to the FLETF Chair for addition of an entity to the UFLPA Entity List. However, after review by the Chair, an addition is only made upon a majority vote by all the member agencies. The “UFLPA Entity List” refers to a consolidated register of the following four lists required for the FLETF to administer under Section 2(d)(2)(B), paragraphs (i),(ii), (iv), and (v), of the UFLPA, with each list indicating its relevant designation criteria:
Section 2(d)(2)(B)(i): A list of entities in the Xinjiang Uyghur Autonomous Region that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor.
Section 2(d)(2)(B)(ii): A list of entities working with the government of the Xinjiang Uyghur Autonomous Region to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the Xinjiang Uyghur Autonomous Region.
Section 2(d)(2)(B)(iv): A list of entities that exported products described in clause (iii) from the People’s Republic of China into the United States (note: clause (iii) refers to products mined, produced, or manufactured by list (i) and (ii) entities).
Section 2(d)(2)(B)(v): A list of facilities and entities, including the Xinjiang Production and Construction Corps (“XPCC”), that source material from the Xinjiang Uyghur Autonomous Region or from persons working with the government of the Xinjiang Uyghur Autonomous Region or the XPCC for purposes of the “poverty alleviation” program or the “pairing-assistance” program or any other government labor scheme that uses forced labor.
An addition to any of the foregoing lists is an addition to the “UFLPA Entity List.”
FLETF’s Administrative Removal Process
The FLETF’s removal process for the UFLPA Entity List is neither found in the UFLPA itself nor in any implementing regulations. Instead, the process has been detailed in each Federal Register Notice that updates the UFLPA Entity List, and on DHS’s webpage for UFLPA FAQs.
To initiate the administrative removal process, the listed entity must submit its request for removal along with supporting information to the FLETF Chair, which demonstrates that the entity no longer meets or does not meet any of the 4 designation criteria detailed above. The FLETF Chair’s designated representative may follow-up with any questions or requests for additional information. Following review of the removal request by the FLETF member agencies, the decision to remove the requesting entity can only be made by majority vote of the FLETF member agencies. The requesting entity may also request a meeting with the FLETF, which if accepted can only occur at the conclusion of the member agencies’ review period but prior to their removal vote. Decisions are made in writing by the FLETF Chair.
If a removal request is denied, while administrative appeal is not permitted under FLETF’s process, the FLETF will consider renewed removal requests that are accompanied by new information. However, as detailed below, appeal to the CIT is possible for judicial review of a denial decision by the FLETF.
Initiating the Process for Removal from the UFLPA Entity List
As with removal from other US government restricted party lists (“RPL”)—e.g., the U.S. Department of Commerce’s Bureau of Industry and Security’s (“BIS”) Entity List—the initial step should be to discern why the entity was added to the UFLPA Entity List to begin with, even potentially before initiating the FLETF’s removal process depending on the particular facts of the matter. A thorough investigation will aid in examining whether the entity in question met any of the designation criteria found in either paragraphs (i), (ii), (iv), and/or (v) of Section 2(d)(2)(B) of the UFLPA at the time of its addition to the List, and in formulating strategy for the overall removal process. While doing so, keep in mind that according to recent precedent from the CIT, the applicable burden of proof for the FLETF’s listing action is the very minimal “reasonable cause to believe” standard—i.e., the agency only needs a rational connection between the facts found and the choice made. Ninestar Corp. v. United States, 2024 Ct. Intl. Trade LEXIS 24, *49.
As part of overall legal strategy for the removal request, and as is common practice in government RPL removal requests, the listed entity should also attempt to obtain the administrative record underlying the government’s decision to add it to the UFLPA Entity List. Unfortunately, the FLETF’s informal removal process does not indicate how or when to request such records. However, counsel for the petitioning entity should consider doing so early on. The record may be obtained through submission of a Freedom of Information Act Request (“FOIA”), and/or potentially through a direct written request to the Chair of FLETF. Although the disclosed record is likely to be heavily redacted, relevant judicial precedent suggests that the government may be more inclined to share otherwise redactable portions of the record with counsel, but not the client (i.e., the listed entity) itself. Ninestar Corp., 2024 Ct. Intl. Trade LEXIS at *15.
If the result of the foregoing investigation indicates—especially through the government’s disclosure of the administrative record—that either the entity never met any of the designation criteria, or that even if it did before, it no longer meets any such designation criteria because of a change in circumstance, then there is a strong case to be made for removal. The entity will need to provide the FLETF with substantiating information, including in response to any requests for information from the agency throughout the process. Although a direct judicial challenge to FLETF’s listing determination—bypassing the administrative process—may appear reasonable where the investigation confirms that the addition was clearly unlawful, consider prior precedent from the CIT reasoning that subject to the particular facts of a matter, administrative exhaustion is generally required for such removal request procedure prior to requesting judicial relief under the Administrative Procedure Act (“APA”). Ninestar Corp., 2024 Ct. Intl. Trade at *24.
If the findings of the investigation suggest that any of the designation criteria continue to be met, the underlying legal strategy will need to include the implementation of necessary remedial measures (e.g., ceasing certain problematic business relationships, relevant compliance controls, etc.) that would further substantiate the entity’s claim that such criteria are no longer applicable. In any event, a petitioning entity should generally consider taking a more cooperative stance with the FLETF by indicating that it is prepared to address all outstanding risks/reasons for its identification on the UFLPA Entity List moving forward, even where the underlying investigation suggests that the entity no longer meets the designation criteria, especially since such risks/reasons may not be readily apparent from an otherwise redacted administrative record.
Appeals
As detailed above, there is no intra-agency appeal right in the event of a denial decision by the FLETF. However, the FLETF’s denial determination may be appealed to the CIT, which has exclusive jurisdiction over UFLPA matters under 28 U.S.C. § 1581(i)(1), subject to the judicial scope of review of the APA, 5 U.S.C. § 706 (e.g., the court will set aside agency action found to be “…arbitrary, capricious, and not otherwise in accordance with law…”). Such judicial review under the APA before the CIT may also be considered during the pendency of an administrative removal request before the FLETF for other issues, including in relation to disclosure of the underlying administrative record or unreasonable delay in arriving at a final determination.
The author of this blog post is Kian Meshkat, an attorney specializing in U.S. economic sanctions, export controls, and UFLPA matters. If you have any questions please contact him at meshkat@meshkatlaw.com.
