Government Opposes Interim Drawback Rule, Says Final Regs Ready by Early 2019

The government is opposing a bid by a group of importers to have CBP issue interim drawback regulations that would allow the agency to begin processing claims under the Trade Facilitation and Trade Enforcement Act, according to recent court filings. Though those importers hope interim calculation procedures can be issued as soon as October (see 1808280037), the government said the drawback calculation provisions are “not easily divorced” from the rest of a recent proposed rule, and urged the Court of International Trade to let the rulemaking process proceed normally.

The government’s Sept. 6 brief included a list of provisions from the proposed rule that would affect the calculation of drawback under TFTEA. CIT Judge Jane Restani had requested the list at an Aug. 23 hearing, contemplating a court order that would force CBP to implement just those provisions as an interim rule. CBP issued its proposed TFTEA drawback regulations on Aug. 2 (see 1807270024), and comments on the proposal are due Sept. 17 (see 1808020049). A group of importers and customs brokers filed the lawsuit in March (see 1803260048).

According to the brief, if CIT allows the current notice-and-comment rulemaking to proceed, the government anticipates a final rule could be ready by Oct. 30 for the 90-day Office of Management and Budget review required by executive order for “economically significant” regulations. That would mean, “if everything proceeds without hiccups, the regulations could be in place by early next year, prior to the one-year timeframe for CBP to actually liquidate or process” drawback claims, said Justice Department lawyer Justin Miller at the Aug. 23 hearing, according to portions of a preliminary transcript.

“If in fact the regulations are in place in early 2019, regardless of whether CBP is actually liquidating or processing the drawback claims, the trading community would be able to receive accelerated payment, which is really what they’re looking for,” Miller continued. “So even if the ultimate drawback claim has not been liquidated by that one year period of time, so long as the regulations are in place, which under the current anticipated timeframe would occur by early 2019, plaintiffs could be receiving accelerated payment at that point in time.”

An order compelling CBP to issue the calculation procedures as interim regulations would mean the trade community would not be able to comment on important new features of drawback, including CBP’s new per-unit averaging methodology. And, because CBP would have to begin a new rulemaking process for the interim rule, including interagency review, it could be quicker just to let the normal rulemaking process continue. “We may achieve what plaintiffs are desiring more quickly if we allow the notice and comment period to proceed,” Miller said.

Judge Restani appeared less than fully convinced that the proposed rule could become final before an interim rule could be issued. “I understand that’s your position, that you can’t segregate these out without doing a whole new filing,” she told Miller at the hearing. “But I think that’s not a hundred percent clear,” she said. Describing the choice before her in the case, Restani said: “I’m talking about either following the normal regulatory process, or saying something so bad has happened that we’re going to do something else.” Another hearing is scheduled for Oct. 2.

Email ITTNews@warren-news.com for copies of the filings.