New AD/CV Evasion Enforcement Processes Take Effect Aug. 22

Starting Aug. 22, CBP will be required to open an investigation into allegations of antidumping or countervailing duty evasion when there's "reasonable suspicion," CBP said in interim rule that implements new AD/CV duty evasion processes (here). The regulatory changes were required under the customs reauthorization law that was signed in February (see 1602230080) and spell out the new administrative proceeding at CBP for how it must respond to allegations of AD/CV duty evasions. While CBP could previously take enforcement action related to evasion, the new regulations create specific timelines for responses and add several new features that weren't part of CBP's review process (see 1605190030).

The new regulations define several notable terms, such as for an "interested party" that can file allegations with CBP, as spelled out within the law's Enforce and Protect Act (EAPA). CBP noted that such parties include "not only the importer of the covered merchandise who is alleged to have engaged in evasion, but also importers of the covered merchandise who wish to bring allegations against competing importers." While other agencies can request an investigation by CBP, the agencies aren't considered to be an "interested party" under the regulations, CBP said.

The interested parties can submit allegations through a new function in CBP's e-Allegations system, which can still be used for filing other allegations. "Each allegation may only concern one importer (because business confidential information may be involved in an EAPA proceeding), although an interested party may file multiple allegations," CBP said. The EAPA provides for CBP to give small businesses technical assistance for filing allegations, but that assistance won't be part of the official record and doesn't guarantee a CBP investigation, CBP said. The agency will then decide within 15 days whether to begin an investigation, it said. Those decisions won't be subject to administrative or judicial review, CBP said. There's some concern that the "reasonable suspicion" standard could have a disproportionate effect on smaller importers (see 1604250017).

When CBP decides to begin an investigation, it will notify "all known parties" within 95 calendar days after the investigation begins, CBP said. "CBP will use this 95 calendar-day period in order to investigate the allegation," it said. If CBP declines to open an investigation, it will tell the filing party within five days of the agency's decision, CBP said. The interested parties that request a CBP review will also be subject to various requirements, CBP said. Filers will be obligated to report to CBP any knowledge or suspicion that the merchandise could pose a health or safety risk, in which case CBP would pass along the information to the relevant agencies, it said. CBP may also seek Commerce Department input "if there is uncertainty as to whether the goods that are the subject of the allegation are within the scope of the applicable AD/CVD order(s)," CBP said.

CBP will also be required to keep an electronic administrative record "for purposes of making a determination as to evasion and conducting an administrative review of the determination," CBP said. During an investigation, CBP is required to determine whether an evasion occurred within 300 days, except for "extraordinarily complicated cases," for which CBP can extend the deadline by 60 days, it said. While CBP will "strive" to meet these deadlines, if it is unable to make a determination within the time frame, "this will not result in a deemed decision with respect to whether or not evasion occurred," it said. Third-parties will only be allowed to submit information to CBP within an investigation if CBP requests it, the agency said.

Within the investigation, the involved parties "may submit written arguments to CBP and must serve all other parties to the investigation by an e-mail message or through any other method approved or designated by CBP with a public version of the written argument," it said. While the regulations allow for some information to be protected as confidential, information on the interested party, the alleged evader, the merchandise involved and applicable AD/CV order will be "treated as public," CBP said. The regulations also detail the process for requesting an administrative review of an initial determination. CBP will also be able to "draw adverse inferences" in both the investigation and administrative review "when the party making the allegation, the alleged evader, a foreign producer or exporter fails to cooperate and comply to the best of its ability with a request for information made by CBP," it said.

CBP also sought public comments on the interim rule, which is scheduled to go into effect Aug. 22. "Although CBP could issue this as a final rule without prior notice and comment, CBP is soliciting comments in this interim rule and will consider all comments received before issuing a final rule," it said. The agency is interested in "comments that relate to the economic, environmental, or federalism effects that might result from this interim rule" and that "reference a specific portion of the interim rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change," it said.