Rule2021-17861
Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws
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Published
September 20, 2021
Effective
October 20, 2021
Issuing agencies
Commerce DepartmentInternational Trade Administration
Abstract
Pursuant to its authority under Title VII of the Tariff Act of 1930, as amended (the Act), the Department of Commerce (Commerce) is modifying its regulations to improve administration and enforcement of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce is modifying its regulation concerning the time for submission of comments pertaining to industry support in AD and CVD proceedings; modifying its regulation regarding new shipper reviews; modifying its regulation concerning scope matters in AD and CVD proceedings; promulgating a new regulation concerning circumvention of AD and CVD orders; promulgating a new regulation concerning covered merchandise referrals received from U.S. Customs and Border Protection (CBP); promulgating a new regulation pertaining to Commerce requests for certifications from interested parties to establish whether merchandise is subject to an AD or CVD order; and is modifying its regulation regarding importer reimbursement certifications filed with CBP. Finally, Commerce is modifying its regulations regarding service lists, entries of appearance, and importer filing requirements for access to business proprietary information in AD and CVD proceedings.
Full Text
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<title>Federal Register, Volume 86 Issue 179 (Monday, September 20, 2021)</title>
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[Federal Register Volume 86, Number 179 (Monday, September 20, 2021)]
[Rules and Regulations]
[Pages 52300-52384]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-17861]
[[Page 52299]]
Vol. 86
Monday,
No. 179
September 20, 2021
Part II
Department of Commerce
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International Trade Administration
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19 CFR Part 351
Regulations To Improve Administration and Enforcement of Antidumping
and Countervailing Duty Laws; Final Rule
Federal Register / Vol. 86 , No. 179 / Monday, September 20, 2021 /
Rules and Regulations
[[Page 52300]]
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DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 210813-0162]
RIN 0625-AB10
Regulations To Improve Administration and Enforcement of
Antidumping and Countervailing Duty Laws
AGENCY: Enforcement and Compliance, International Trade Administration,
Department of Commerce.
ACTION: Final rule.
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SUMMARY: Pursuant to its authority under Title VII of the Tariff Act of
1930, as amended (the Act), the Department of Commerce (Commerce) is
modifying its regulations to improve administration and enforcement of
the antidumping duty (AD) and countervailing duty (CVD) laws.
Specifically, Commerce is modifying its regulation concerning the time
for submission of comments pertaining to industry support in AD and CVD
proceedings; modifying its regulation regarding new shipper reviews;
modifying its regulation concerning scope matters in AD and CVD
proceedings; promulgating a new regulation concerning circumvention of
AD and CVD orders; promulgating a new regulation concerning covered
merchandise referrals received from U.S. Customs and Border Protection
(CBP); promulgating a new regulation pertaining to Commerce requests
for certifications from interested parties to establish whether
merchandise is subject to an AD or CVD order; and is modifying its
regulation regarding importer reimbursement certifications filed with
CBP. Finally, Commerce is modifying its regulations regarding service
lists, entries of appearance, and importer filing requirements for
access to business proprietary information in AD and CVD proceedings.
DATES: Effective date: The amendments to Sec. Sec. 351.203, 351.214,
351.228, and 351.402(f)(2) in instructions 3, 4, 8, and 10,
respectively, are effective October 20, 2021. The amendments to
Sec. Sec. 351.103(d), 351.225, 351.226, 351.227, and 351.305(d) in
instructions 2, 5, 6, 7, and 9, respectively, are effective November 4,
2021.
For information concerning applicability dates, see SUPPLEMENTARY
INFORMATION.
FOR FURTHER INFORMATION CONTACT: Scott McBride at (202) 482-6292; David
Mason at (202) 482-5051; or Jessica Link at (202) 482-1411.
SUPPLEMENTARY INFORMATION:
Applicability Dates
<bullet> Amendments to Sec. 351.203 apply to segments of the
proceeding for which a petition is filed on or after October 20, 2021.
<bullet> Amendments to Sec. 351.214 apply to new shipper reviews
for which a new shipper review request is filed on or after October 20,
2021.
<bullet> Amendments to Sec. 351.225 and corresponding amendments
to Sec. Sec. 351.103(d) and 351.305(d) apply to scope inquiries for
which a scope ruling application is filed, as well as any scope inquiry
self-initiated by Commerce, on or after November 4, 2021. For
information on specific applicability dates for amendments to Sec.
351.225(l), please see section 12 in the preamble under ``Scope--Sec.
351.225.''
<bullet> Added Sec. 351.226 and corresponding amendments to Sec.
351.103(d) and Sec. 351.305(d) apply to circumvention inquiries for
which a circumvention request is filed, as well as any circumvention
inquiry self-initiated by Commerce, on or after November 4, 2021. For
information on specific applicability dates for Sec. 351.226(l),
please see section 12 in the preamble under ``Circumvention--Sec.
351.226.''
<bullet> New Sec. 351.227 and corresponding amendments to Sec.
351.103(d) and Sec. 351.305(d) apply to covered merchandise inquiries
for which a covered merchandise referral determined to be sufficient is
received on or after November 4, 2021. For information on specific
applicability dates for Sec. 351.227(l), please see section 8 in the
preamble under ``Covered Merchandise Referrals--Sec. 351.227.''
<bullet> Added Sec. 351.228 is applicable on or after October 20,
2021.
<bullet> Amendments to Sec. 351.402(f)(2) are applicable on or
after October 20, 2021.
General Background
On August 13, 2020, Commerce published proposed amendments to its
existing regulations, 19 CFR part 351, to strengthen and improve the
administration and enforcement of the AD/CVD laws.\1\ Relevant to this
final rule are the AD/CVD statutory and regulatory provisions in
general, as well as those pertaining to industry support, new shipper
reviews, scope inquiries, circumvention inquiries, covered merchandise
inquiries, certifications, and certain procedures, which we briefly
summarize below.
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\1\ Regulations to Improve Administration and Enforcement of
Antidumping and Countervailing Duty Laws, 85 FR 49472 (August 13,
2020) (Proposed Rule).
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Title VII of the Act vests Commerce with authority to administer
the AD/CVD laws.\2\ In general, the AD/CVD laws are intended to provide
relief to domestic industries, including businesses, workers, farmers,
and ranchers from the injurious effects of unfairly traded imports
through the imposition of AD/CVDs.\3\
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\2\ See generally Title VII of the Act (19 U.S.C. 1671 et.
seq.); see also titles I, II, and IV of the Uruguay Round Agreements
Act (URAA), Public Law 103-465, 108 Stat. 4809 (1994) (implementing
into law the World Trade Organization (WTO) agreements, the
Agreement on Implementation of Article VI of the General Agreement
on Tariffs and Trade 1994 (the Anti-Dumping (AD) Agreement) and the
Agreement on Subsidies and Countervailing Measures ((SCM)
Agreement)); and Uruguay Round Agreements Act, Statement of
Administrative Action, H.R. Doc. No. 103-316, vol. 1 (1994) (SAA).
\3\ See Guangdong Wireking Housewares & Hardware Co. v. United
States, 745 F.3d 1194, 1203 (Fed. Cir. 2014) (Guangdong Wireking)
(``The congressional intent behind the enactment of countervailing
duty and antidumping law generally was to create a civil regulatory
scheme that remedies the harm unfair trade practices cause.'').
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Title VII allows for a domestic interested party to file a petition
seeking an AD or CVD order, and corresponding duties, on certain
imports. If the petition meets all the elements necessary for
initiation, Commerce will initiate and conduct an AD or CVD
investigation. Similarly, the U.S. International Trade Commission (ITC)
will conduct a separate investigation concerning material injury or
threat of material injury to the domestic industry. Section 731 of the
Act directs Commerce to impose an AD order on merchandise entering the
United States when it determines that a producer or exporter is selling
a class or kind of foreign merchandise into the United States at less
than fair value (i.e., dumping), and material injury or threat of
material injury to that industry in the United States is found by the
ITC. Section 701 of the Act directs Commerce to impose a CVD order when
it determines that a government of a country or any public entity
within the territory of a country is providing, directly or indirectly,
a countervailable subsidy with respect to the manufacture, production,
or export of a class or kind of merchandise that is imported into the
United States, and material injury or threat of material injury to that
industry in the United States is found by the ITC.\4\
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\4\ A countervailable subsidy is further defined under section
771(5)(B) of the Act as existing when: A government or any public
entity within the territory of a country provides a financial
contribution; provides any form of income or price support; or makes
a payment to a funding mechanism to provide a financial
contribution, or entrusts or directs a private entity to make a
financial contribution, if providing the contribution would normally
be vested in the government and the practice does not differ in
substance from practices normally followed by governments; and a
benefit is thereby conferred. To be countervailable, a subsidy must
be specific within the meaning of section 771(5A) of the Act.
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[[Page 52301]]
After issuance of an AD/CVD order, Commerce directs CBP to
``suspend liquidation'' \5\ and collect cash deposits, or estimated
amounts of duties, on appropriate entries subject to the scope of the
order corresponding to the margins of dumping established under an AD
order and the CVD rates established under a CVD order.\6\ On a yearly
basis, interested parties may request that Commerce conduct an
administrative review to determine the appropriate dumping margin or
CVD rate for entries subject to the order during the previous review
year.\7\ Pursuant to its administrative review procedures, Commerce
instructs CBP to ``lift the suspension of liquidation'' and assess AD/
CVDs at the appropriate amount.\8\
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\5\ ``Liquidation'' is the point at which CBP ascertains and
assesses the final rate and amount of duty on an entry. See
generally 19 U.S.C. 1500.
\6\ See generally section 706 of the Act; section 736 of the
Act; see also 19 CFR 351.211.
\7\ See section 751(a)(1) of the Act; see also 19 CFR 351.212-
213.
\8\ 19 CFR 351.212-213.
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With respect to industry support, once an AD petition under section
732(b) of the Act or a CVD petition under section 702(b) is filed, the
statute provides Commerce with 20 days in which to determine whether
the elements necessary for initiation of an investigation have been
satisfied, including the requirement to demonstrate industry support.
In exceptional circumstances, Commerce may extend the 20-day period to
a maximum of 40 days solely for purposes of determining industry
support. In the Proposed Rule, Commerce proposed to modify Sec.
351.203 to provide for the establishment of a deadline by which parties
may file comments on industry support. As discussed below, we are
adopting the modifications from the Proposed Rule.
Regarding new shipper reviews, section 751(a)(2)(B) of the Act and
Sec. 351.214 provide a procedure by which exporters or producers who
did not export the product during the original AD or CVD investigation
can obtain their own individual dumping margin or countervailing duty
rate on an accelerated basis (referred to as a ``new shipper
review'').\9\ Commerce explained in the Proposed Rule that in 2016 the
Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) was signed
into law, which contains title IV--Prevention of Evasion of Antidumping
and Countervailing Duty Orders (short title ``Enforce and Protect Act
of 2015'' or ``EAPA'').\10\ Section 433 (entitled ``Addressing
Circumvention by New Shippers'') added two key provisions to the new
shipper procedures under section 751(a)(2)(B) of the Act.\11\ First,
section 433 removed the ability for importers to post AD/CVD-specific
bonds or security in lieu of AD/CVD cash deposits by striking this
provision from section 751(a)(2)(B) of the Act.\12\ Second, section 433
added a provision that the individual dumping margin or countervailing
duty rate determined for a new shipper must be based on bona fide sales
in the United States and codified the factors that Commerce has
historically used to determine whether a sale is bona fide.\13\
Accordingly, in the Proposed Rule, Commerce proposed conforming
amendments to Sec. 351.214, which are adopted in this final rule. The
modifications to Sec. 351.214 clarify the circumstances under which
Commerce will grant a new shipper review and establish specific factors
to be considered in determining whether the sales at issue constitute
bona fide sales for purposes of the AD and CVD laws.
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\9\ Section 751(a)(2)(B) of the Act was enacted in the URAA in
1994. See SAA at 816 (``Article 9.5 [of the AD Agreement]
establishes special procedures for imposing antidumping duties on
exporters or producers who did not export the product to the
importing country during the original period of investigation (so-
called `new shippers').''). Section 351.214 was subsequently adopted
pursuant to a rulemaking in 1997. See Antidumping Duties;
Countervailing Duties, Proposed Rule, 61 FR 7308, 7317-18 (Feb. 27,
1996) (1996 Proposed Rule) (discussing the proposed new shipper
review regulation); Antidumping Duties; Countervailing Duties, Final
Rule, 62 FR 27296, 27318-19 (May 19, 1997) (1997 Final Rule)
(discussing the finalized new shipper review regulation).
\10\ Trade Facilitation and Trade Enforcement Act of 2015,
Public Law 114-125, 130 Stat. 122 (2016) (TFTEA).
\11\ See Public Law 114-125, section 433, 130 Stat. at 171. See
also H.R. Rep. No. 114-114, at 89 (2015) (``The Committee is
concerned that the ability of new exporters and producers to obtain
their own individual weighted average dumping margins or individual
countervailing duty rates from the Department of Commerce on an
expedited basis (known as `new shipper reviews') has been abused to
avoid antidumping and countervailing duties.'')
\12\ See Public Law 114-125, section 433, 130 Stat. at 171. See
also H.R. Rep. No. 114-114, at 89; H.R. Rep. No. 114-376, at 192
(2015) (Conf. Rep.).
\13\ See Public Law 114-125, section 433, 130 Stat. at 171. See
also Conf. Rep., H.R. Rep No. 114-376 at 192-193.
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With respect to scope inquiries, upon issuance of an AD or CVD
order, the Act requires Commerce to provide a description of the class
or kind of merchandise subject to the order at issue (i.e., subject
merchandise).\14\ That description is known as the scope of the AD/CVD
order. Because the statute ``does not require Commerce to define the
class or kind of foreign merchandise in any particular manner[,]
Commerce has the authority to fill that gap and define the scope of an
order consistent with the countervailing duty and antidumping duty
laws.'' \15\ Further, ``under the statutory scheme, Commerce owes
deference to the intent of the proposed scope of an antidumping
investigation as expressed in an antidumping petition.'' \16\
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\14\ See section 706(a)(2) of the Act; section 736(a)(2) of the
Act; section 771(25) of the Act.
\15\ Canadian Solar, Inc. v. United States, 918 F.3d 909, 917
(Fed. Cir. 2019) (internal citations and punctuation omitted)
(Canadian Solar).
\16\ Ad Hoc Shrimp Trade Action Committee v. United States, 637
F. Supp. 2d 1166, 1174 (CIT 2009).
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Under the statutory framework, as recognized by the U.S. Court of
International Trade (CIT) and U.S. Court of Appeals for the Federal
Circuit (Federal Circuit), Commerce is the agency charged with
establishing and interpreting the scope of AD/CVD orders,\17\ and CBP
is the agency charged with applying and enforcing the AD/CVD
orders.\18\ As part of its statutory responsibility ``to fix the amount
of duty owed on imported goods[,]'' CBP ``is both empowered and
obligated to determine in the first instance whether goods are subject
to existing [AD/CVD orders].'' \19\ Pursuant to 19 U.S.C. 1514(b)
(section 514 of the Act), this ``determination is then `final and
conclusive' unless an interested party seeks a scope ruling from
Commerce (which ruling would then be reviewable pursuant to [19 U.S.C.
1516a]).'' \20\
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\17\ See Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed.
Cir. 2002) (``Commerce should in the first instance decide whether
an antidumping order covers particular products, because the order's
meaning and scope are issues particularly within the expertise of
that agency.'') (internal citations and punctuation omitted).
\18\ See Sunpreme Inc. v. United States, 946 F.3d 1300, 1303
(Fed. Cir. 2020) (Sunpreme) (holding that ``it is within Customs's
authority to preliminarily suspend liquidation of goods based on an
ambiguous [AD or CVD] order, such that the suspension may be
continued following a scope inquiry by Commerce.''); and Fujitsu Ten
Corp. v. United States, 957 F. Supp. 245, 248 (CIT 1997) (Fujitsu)
(``The statute recognizes Customs makes the initial determination
that an existing antidumping order applies to a specific entry of
merchandise. The statute states that such a decision is `final and
conclusive' unless it is appealed by petition to Commerce.''
(citations omitted)).
\19\ Id., 946 F.3d at 1317 (citing 19 U.S.C. 1500(c)).
\20\ See TR International Trading Co. v. United States, 433 F.
Supp. 3d 1329, 1341 (CIT 2020) (citing Sunpreme, 946 F.3d at 1318)
(TR International) (appeal pending) (referencing section 516 of the
Act); see also Fujitsu, 957 F. Supp. at 248.
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Commerce retains discretion to define the scope of the order to
ensure that all imports causing injury have been addressed, and,
additionally, may take into account potential circumvention and duty
evasion concerns in crafting
[[Page 52302]]
the scope language.\21\ Because the scope of an AD/CVD order is written
in general terms, questions may arise as to whether a certain product
is covered by the scope of an order. Beyond a general recognition that
Commerce may issue ``class or kind of merchandise'' determinations,\22\
the statute is otherwise silent regarding the procedures and standards
that Commerce may apply in issuing a scope ruling. Therefore,
Commerce's regulation, Sec. 351.225, describes the applicable
procedures and standards concerning ``scope rulings'' that Commerce
will issue upon application of an interested party, or by initiating a
``scope inquiry.'' In the Proposed Rule, Commerce proposed numerous
revisions to Sec. 351.225, many of which are further revised or
adopted in this final rule.
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\21\ See Canadian Solar, 918 F.3d at 921-22 (``It is unnecessary
for Commerce to engage in a game of whack-a-mole when it may
reasonably define the class or kind of merchandise in a single set
of orders, and within the context of a single set of investigations,
to include all imports causing injury.'').
\22\ See section 516A(a)(2)(B)(vi) of the Act (referencing, in
the judicial review provision of the statute, ``[a] determination by
the administering authority as to whether a particular type of
merchandise is within the class or kind of merchandise described in
an existing finding or dumping our antidumping or countervailing
duty order.'')
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Concerning circumvention inquiries (considered another type of
``class or kind determination'' under the jurisdictional provisions of
the statute), section 781 of the Act identifies four types of products
that may be found circumventing an AD/CVD order, and, therefore, may be
included within the scope of the order. The legislative history
accompanying the Omnibus Trade and Competitiveness Act of 1988 provides
that ``[a]n order on an article presumptively includes articles altered
in minor respects in form or appearance[,]'' and that the purpose of
the circumvention statute ``is to authorize the Commerce Department to
apply AD and [CVD] orders in such a way as to prevent circumvention and
diversion of U.S. law.'' \23\ Further, the legislative history
indicates that Congress was concerned with the existence of
``loopholes,'' i.e., foreign companies evading orders by making slight
changes in their method of production, because such scenarios
``seriously undermine the effectiveness of the remedies provided by the
antidumping and countervailing duty proceedings, and frustrated the
purposes for which these laws were enacted.'' \24\ Congress also
recognized that ``aggressive implementation of [the circumvention
statute] by the Commerce Department can foreclose these practices.''
\25\ With the implementation of the URAA, the SAA expressed similar
concerns about scenarios limiting the effectiveness of the AD duty law
(i.e., completion or assembly in a country other than the subject
country).\26\ Accordingly, Commerce ``has been vested with authority to
administer the antidumping laws in accordance with the legislative
intent'' and, thus, ``has a certain amount of discretion [to act] . . .
with the purpose in mind of preventing the intentional evasion or
circumvention of the antidumping duty law.'' \27\ In the Proposed Rule,
Commerce proposed to adopt a new regulation, Sec. 351.226, to address
circumvention inquiries and determinations. After making some revisions
from the Proposed Rule, Commerce is adopting Sec. 351.226 in this
final rule.
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\23\ Omnibus Trade Act of 1987, Report of the Senate Finance
Committee, S. Rep. No. 100-71, at 101 (1987).
\24\ Id.
\25\ Id.
\26\ See SAA at 892-95.
\27\ Tung Mung Development Co., Ltd. v. United States, 219 F.
Supp. 2d 1333, 1343 (CIT 2002) (Tung Mung) (quoting Mitsubishi Elec.
Corp. v. United States, 700 F. Supp. 538, 555 (CIT 1988) (Mitsubishi
I), aff'd 898 F.2d 1577, 1583 (Fed. Cir. 1990) (Mitsubishi II)).
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Pertaining to covered merchandise inquiries, title IV of the TFTEA
(referred to as EAPA), section 421, added section 517 to the Act,\28\
which establishes a formal process for CBP to conduct civil
administrative investigations of potential duty evasion of AD and CVD
orders on the basis of an allegation by an interested party or upon
referral by another Federal agency (referred to herein as an ``EAPA
investigation''). Pursuant to section 517(b)(4)(A) of the Act, if CBP
is conducting an EAPA investigation based on an allegation from an
interested party, and is unable to determine whether the merchandise at
issue is ``covered merchandise'' within the meaning of section
517(a)(3) of the Act, it shall refer the matter to Commerce to make a
covered merchandise determination (referred to herein as a ``covered
merchandise referral'').\29\ Although Congress did not require that
Commerce promulgate regulations with respect to section 517 of the Act,
in the Proposed Rule, Commerce proposed to adopt Sec. 351.227, a new
regulation to address procedures and standards specific to Commerce's
consideration of covered merchandise referrals. In particular, this new
regulation would govern Commerce's receipt of a covered merchandise
referral, Commerce's initiation and conduct of a covered merchandise
inquiry, and Commerce's covered merchandise determination, pursuant to
section 517(b)(4) of the Act. With some revisions, Commerce is adopting
Sec. 351.227 in this final rule.
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\28\ See Public Law 114-125, 421, 130 Stat. at 161-69.
\29\ See H.R. Rep. No. 114-376, at 190 (``If the Commissioner is
unable to determine whether the merchandise at issue is covered
merchandise, the Commissioner shall refer the matter to the
Department of Commerce to determine whether the merchandise is
covered merchandise. The Department of Commerce is to make this
determination pursuant to its applicable statutory and regulatory
authority, and the determination shall be subject to judicial review
under 19 U.S.C. 1516a(a)(2). The Conferees intend that such
determinations include whether the merchandise at issue is subject
merchandise under 19 U.S.C. 1677j.'' (referencing sections 516 and
781 of the Act)).
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Regarding certifications, in the Proposed Rule, Commerce proposed
to adopt Sec. 351.228, a regulation to codify and enhance Commerce's
existing authority and practice to require certifications by importers
and other interested parties as to whether merchandise is subject to an
AD/CVD order. With minor revisions, Commerce is adopting Sec. 351.228
in this final rule.
Another form of certifications relates to importer reimbursement
certifications as provided for under Sec. 351.402(f)(2). In the
Proposed Rule, Commerce proposed to amend Sec. 351.402(f)(2) regarding
importer certifications for the payment or reimbursement of AD/CVDs on
entries subject to AD orders to account for updated procedures. With
minor revisions, Commerce is adopting the amendments to Sec.
351.402(f)(2) in this final rule.
To implement the substantive changes in the final rule, Commerce is
also adopting proposed changes to two procedural regulations. First, in
conducting its administrative proceedings, the statute directs Commerce
to make certain information generally available on a public record.\30\
Pursuant to Sec. 351.103(d)(1), with some exceptions, parties that
wish to be served with public information on a segment of a proceeding
must file an entry of appearance on that record to be placed on the
relevant segment-specific public service list.\31\ In the Proposed
Rule, Commerce proposed to amend Sec. 351.103(d)(1) to reflect that
certain interested parties need not file an entry of appearance to be
placed on the segment-specific service list for the
[[Page 52303]]
relevant segment. With a minor revision, these changes are adopted in
this final rule. Additionally, Sec. 351.103(d) contains a cross-
reference to the service list procedures for scope ruling applications,
which are further described in Sec. 351.225(n). This language has been
updated to include reference to service list procedures for requests
for circumvention inquiries, which are further described in Sec.
351.226(n).
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\30\ See generally section 777(a) of the Act. See also 19 CFR
351.104 (describing the official record of AD/CVD proceedings).
\31\ Section 351.303(b)(2) contains procedures regarding the
filing of documents through Commerce's Antidumping and
Countervailing Duty Centralized Electronic Service System (ACCESS).
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Second, because of the nature of Commerce's proceedings, which
frequently require Commerce to rely on non-public information such as
business proprietary information (BPI) in issuing its determinations,
the statute also requires Commerce to make BPI available to interested
parties who have been authorized to receive such information under an
administrative protective order (APO).\32\ Section 351.305(d) provides
specific filing requirements for importers to access BPI in Commerce's
proceedings, including certain requirements for importers in scope
inquiries. In the Proposed Rule, Commerce proposed to amend Sec.
351.305(d) to add reference to importers in circumvention inquiries and
to exempt importers identified by CBP in a covered merchandise referral
from these specific filing requirements. These changes are adopted in
this final rule.
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\32\ Pursuant to section 777(c)(1)(A) of the Act, Commerce must
make BPI submitted to it during the course of an AD/CVD proceeding
available to interested parties who have been authorized to receive
such information under an APO. Additionally, section 777(d) of the
Act requires that parties submitting BPI to Commerce which is
covered by an APO must serve such information on ``all interested
parties who are parties to the proceeding'' that are subject to the
APO. ``Interested party'' is defined under section 771(9) of the Act
and 19 CFR 351.102(b)(29); ``party to the proceeding'' is defined
under 19 CFR 351.102(b)(36).
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Explanation of Modifications From the Proposed Rule to the Final Rule
and Responses to Comments
In the Proposed Rule published on August 13, 2020, Commerce invited
the public to submit comments.\33\ Commerce received 37 submissions
providing comments and 17 rebuttal submissions from interested parties,
including domestic producers, exporters, importers, surety companies,
and foreign governments. We have determined to make certain
modifications to the Proposed Rule in response to issues and concerns
raised in those comments and rebuttal comments. We considered the
merits of each submission and on many of the issues and concerns
raised, we analyzed the legal and policy arguments in light of both our
past practice, as well as our desire to strengthen the administration
and enforcement of our AD/CVD laws.
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\33\ On September 10, 2020, in response to concerns raised by
interested parties, Commerce determined that it would benefit ``the
public and the agency'' if parties had ``the opportunity to submit
rebuttal comments in response to comments filed by other parties on
the proposed rule.'' Regulations to Improve Administration and
Enforcement of Antidumping and Countervailing Duty Laws; Extension
of Comment Period to Allow Submissions of Rebuttal Comments and
Requirement of Electronic Submission of Comments and Rebuttal
Comments, 85 FR 55801 (Sept. 10, 2020). Accordingly, Commerce
granted ``an extension of time solely for the purpose of allowing
the public to file such rebuttal comments.'' Id.
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As we explained in the Proposed Rule,\34\ the purpose of these
modifications and additions to our regulations is to strengthen the
administration and enforcement of AD/CVD laws, make such administration
and enforcement more efficient, and to create new enforcement tools for
Commerce to address circumvention and evasion of trade remedies. These
modifications allow Commerce to better fulfill the Congressional intent
behind the AD/CVD laws--namely, to remedy the injurious effects of
unfairly traded imports. In addition, these regulations promote the
Administration's objective to strongly enforce and efficiently
administer the AD/CVD laws rigorously.
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\34\ Proposed Rule, 85 FR 49472 at 49472-73.
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The preamble to the Proposed Rule provides extensive background,
analysis, and explanation which are relevant to these regulations. With
some modifications, as noted, this final rule codifies those proposed
on August 13, 2020. Accordingly, to the extent that parties and the
public wish to have a more detailed and comprehensive interpretation of
these regulations, we advise not only considering the preamble to these
final regulations, but also the analysis and explanations in the
preamble to the Proposed Rule.
In drafting this final rule, Commerce carefully considered each of
the comments received. The following sections generally contain a brief
discussion of each regulatory provision, a summary of the comments we
received (if any) and Commerce's responses to those comments. In
addition, these sections contain an explanation of any changes Commerce
has made to the Proposed Rule, either in response to comments or that
it deemed necessary for conforming, clarifying, or providing additional
public benefit. The final section discusses other comments received not
related to the regulations covered in this final rule.
Comment Period on Industry Support Prior to Initiation Determination--
Sec. 351.203(g)
Section 351.203(g) establishes a deadline for comments on industry
support no later than five business days before the scheduled date of
initiation, and rebuttal comments no later than two calendar days
thereafter. We received several comments and rebuttal comments both in
support and in opposition to the Proposed Rule. In addition, some
commenters proposed that the final rule should impose additional
requirements for parties filing comments in opposition to the
petitioning party's claims of industry support.
After considering the comments and rebuttal comments, we have not
adopted the suggested modifications to the Proposed Rule and,
therefore, have left unchanged proposed Sec. 351.203(g). We believe
the Proposed Rule to establish a deadline for industry support comments
and rebuttal comments is reasonable because it provides sufficient time
for parties to submit comments and rebuttal comments, while balancing
the need for Commerce to have sufficient time to consider and analyze
the comments and information on the record within the normal timeframe
established by Congress. We also believe the deadlines, as set forth in
the Proposed Rule, recognize the importance of giving parties adequate
time to prepare meaningful comments. Last, we recognize that
establishing regulatory deadlines is a reasonable exercise of
Commerce's authority to implement the statutory provisions the agency
is responsible for administering.
1. Time Limits for Comments
Several commenters understand Commerce's desire to have adequate
time to consider comments on industry support, and several commenters
support and agree with Commerce's proposal to set a new deadline. Other
commenters contend that Commerce's justification about needing time to
review industry support comments does not outweigh the importance of
giving parties time to prepare meaningful comments because the issue
cannot be revisited after initiation.
In particular, one commenter asserts that adding a limitation on
the timeline for filing comments on industry support is contrary to the
Act because the Act does not permit Commerce to limit the period for
comments on industry support and the statute is unambiguous in allowing
comments any time before Commerce initiates the investigation. The
commenter further argues that even
[[Page 52304]]
if the Act were silent on this issue, Commerce's interpretation is
arbitrary and capricious and not based on a permissible construction of
the statute. Another commenter disagrees, arguing that the commenter's
statutory analysis is flawed. The rebutting commenter contends the Act
does not set forth an explicit timeline for submitting comments on
industry support and further that the Act allows Commerce to promulgate
regulations such as this one. Moreover, the rebutting commenter states,
this proposed regulation is neither arbitrary nor capricious because
Commerce's proposal provides sufficient time for interested parties to
challenge the industry support claim provided in the petition for
relief.
Response:
Contrary to the commenter's argument that the statute prohibits
Commerce from limiting the time for comments on industry support, there
is nothing in the statute that precludes Commerce from adopting a rule
that provides parties with specific deadlines for submission of
comments or rebuttal comments on the issue of industry support. The
sole commenter advancing the statutory argument did not cite to any
express language in the statute for support. To the contrary, sections
702(c)(4)(E) and 732(c)(4)(E) of the Act provide that, before the
administering authority makes a determination with respect to
initiating an investigation, any person who would qualify as an
interested party may submit comments or information on the issue of
industry support. The Act does not set forth an explicit timeline for
submitting comments, provided it is before Commerce makes its
determination. Thus, based upon its authority to promulgate
regulations, Commerce may establish a reasonable timeframe for when
industry support comments are to be submitted. Nothing in the Act
restricts Commerce from doing so. Indeed, the Act allows for, and
Commerce has set, deadlines for most other types of submissions in its
AD and CVD proceedings.
2. Sufficiency of Time for Comment
Several commenters claim that shortening the time to file comments
on industry support would prejudice interested parties because
respondents do not have advanced notice of new petitions and,
therefore, a limited time to prepare comments. Commenters also allege
that there is a delay in obtaining access to the petitions because the
respondents must obtain APO approval to access BPI in the petition,
although other commenters contradict this claim, arguing that
interested parties have notice of the petitioner's industry support
claims on the first day the petition is filed.
Other commenters raise concerns about the rebuttal comment
deadline, arguing that this is an insufficient amount of time. These
commenters suggest expanding the rebuttal deadline from two days to
five days and recommend that Commerce revise the rule to restrict the
deadline for industry support comments further, to ten days before the
date of initiation, rather than five business days, as Commerce
proposed. Another commenter wonders how Commerce would take rebuttal
claims into account if due only two days before the scheduled date of
the initiation decision. Alternatively, some commenters propose that
Commerce should work with Congress to amend the Act and expand the
timeframe for initiation decisions from 20 days to 40 days.
Response:
We have not accepted these proposed changes. With respect to the
arguments of insufficient time for parties to provide information and
comment, we disagree. The Proposed Rule provides parties with, at a
minimum, more than a week, and in many cases a longer period, for
preparation of comments. This amount of time should be sufficient. As a
general rule, we believe the deadlines proposed for the submission of
comments and rebuttal comments on the sole issue of industry support
provide a sufficient and reasonable amount of time for interested
parties to address industry support issues.
With respect to the point made by certain commenters regarding
insufficient notice, we disagree. Subsections 702(b)(4) and 732(b)(4)
of the Act state that, upon receipt of a petition, the administering
authority is required to notify the government of any exporting country
named in the petition by delivering a public version of the petition to
an appropriate representative of such country. Thus, the government of
the exporting country receives notice of the petition on or about the
day of receipt by Commerce. The commenters seem to imply there should
be advance notice of a petition filing. This is incorrect, and in any
case, it is not possible to provide advance notice before a petition is
filed. Nonetheless, we are mindful that in establishing due dates for
submissions, Commerce must balance the interests of parties to submit
information and comment with Commerce's ability to consider fully such
information and comments and to make a decision on initiation supported
by evidence on the record.
With respect to the claim that there may be delays in obtaining
access to the petitions because the parties must first obtain APO
approval to access the BPI contained in such petitions, we do not
believe this will be an issue. First, based on Commerce's years of
experience with petitions and the arguments parties have advanced
against industry support in the past, we find that, in general, the
types of claims made against the petitioner's establishment of industry
support tend to focus on the scope of subject merchandise as defined in
petitions, the domestic like product, the methodology the petitioner
uses to calculate industry support, and whether U.S. producers within
the industry are left out of the industry support calculation. Our
experience has been that these types of arguments in opposition to the
petitioner's industry support claims generally can be advanced based on
the public information provided in the petitions. Therefore, obtaining
access to BPI is generally not needed for submission of comments and
information on the issue of industry support.
Second, in the instance in which APO access is needed in order for
parties to comment on the industry support claim contained in a
petition, we do not believe obtaining such access will be an impediment
to a timely submission of comments. We note that while obtaining APO
access has the potential to delay access to BPI, the APO/Dockets Unit
of Enforcement & Compliance issues an APO and routinely expedites the
approval process once an APO application is filed. We, therefore,
believe obtaining APO access to BPI will not be an impediment to
parties seeking to comment on industry support.
With respect to the comment as to how Commerce would take rebuttal
claims into account if due only two days before the scheduled date of
the initiation decision, we note that, under the current rule, Commerce
must take into account comments that are filed up to and including the
day of the scheduled decision. Thus, we believe the commenter's point
highlights the issue with the current situation and recognizes that a
procedural improvement is necessary, and one that is aimed at providing
Commerce with sufficient time to make an informed initiation decision
in accordance with the statute's 20-day period. Providing two days for
Commerce to consider any rebuttal comments is a significant improvement
over the current process which allows comments and rebuttal comments to
be submitted up to the close of business on the scheduled date of the
decision.
[[Page 52305]]
3. Additional Requirements
Two commenters suggest that Commerce include a regulatory provision
that requires parties objecting to industry support to: (1) If they are
domestic producers, provide their affiliation status and whether they
are related to a foreign producer; and (2) identify the sources of
industry data and indicate why the data is more accurate than the data
in the petition. Other commenters disagree with the suggested additions
to the proposed regulation and argue that, pursuant to the Act, the
petitioner bears the burden of establishing industry support, and not
for opposing parties to establish a lack of industry support.
Response:
We have not adopted the proposed additions. The suggestion to
impose new requirements on parties that object to a petition would
establish a substantive change beyond the scope of the procedural rule
Commerce has proposed. In addition, in our view, the suggested
requirement is unnecessary. The petitioners are responsible for
establishing industry support of the petition. To the extent industry
support is not established in accordance with the Act, or is unclear
from the evidence on the record, Commerce has authority to address
these situations as they arise, such as through polling the industry or
otherwise determining whether there is sufficient industry support to
initiate an AD or CVD investigation.
4. Pre-Initiation CVD Consultations
One commenter expressed concern that shortening the time period for
industry support comments may prevent parties from requesting pre-
initiation consultations pursuant to the SCM Agreement.
Response:
With respect to CVD consultations, we do not see how the new
procedural deadlines for comments ``may prevent parties from requesting
pre-initiation consultations'' under the SCM Agreement, nor did the
commenter explain the basis for its concern on this point. To clarify,
Commerce does not wait for the government of the exporting country to
make a request for consultations. Instead, in every instance in which a
CVD petition is filed, consistent with subsection 702(b)(4)(A)(ii) of
the Act, Commerce invites the government of the exporting country to
engage in consultations, if it wishes.
New Shipper Reviews--Sec. 351.214
After considering the comments and rebuttal comments, Commerce is
removing Sec. Sec. 351.214(b)(2)(iv)(A), 351.214(k)(3), and
351.214(k)(4). Commerce is also modifying Sec. 351.214(b)(2)(iv)(A)
and (B) of the Proposed Rule to clarify that the exporter or producer
requesting the new shipper review will provide certifications
pertaining to necessary information related to the unaffiliated
customer in the United States and the unaffiliated customer's
willingness to participate in the new shipper review, and provide
information relevant to the new shipper review, if requested by
Commerce or an explanation by the producer/exporter of why such
certification from the unaffiliated customer cannot be provided. With
the elimination of Sec. Sec. 351.214(k)(3) and (k)(4), Sec. Sec.
351.214(k)(5) and (k)(6) are now designated as Sec. Sec. 351.214(k)(3)
and (k)(4), respectively; and Sec. Sec. 351.214(k)(5) and (k)(6) are
eliminated.
In addition, Commerce is modifying Sec. 351.214(b)(2)(v)(B) by
adding the terms ``shipment'' and ``any'' to this provision, for
consistency with the language utilized in Sec. 351.214(b)(v)(C) and to
clarify that a new shipper is required to provide documentation
establishing the volume of any subsequent shipments where subsequent
shipments have occurred. Commerce is also modifying Sec.
351.214(b)(v)(C) by removing the ``and'' at the end of the clause and
placing it at the end of Sec. 351.214(b)(v)(D)(4) to grammatically
conform with the additions of Sec. 351.214(b)(v)(D) and (E) to the
regulation. Next, Commerce is modifying Sec. 351.214(b)(2)(v)(E)(4) by
replacing the term ``unrelated'' with the term ``unaffiliated'' to
conform more closely to the terms of sections 772(a) and (b) of the
Act.
Last, we note that in Sec. 351.214(k) of the Proposed Rule,
Commerce inadvertently cited to section 752(a)(2)(B)(iv) of the Act.
Commerce, however, intended to cite to section 751(a)(2)(B)(iv) of the
Act in this provision of the Proposed Rule. Accordingly, Commerce is
correcting this error in its final rule.
1. The Requirements for Requesting a New Shipper Review (Sec.
351.214(b))
(a) Certification Requirements for Unaffiliated Purchasers
To obtain a new shipper review, Sec. 351.214(b) of the Proposed
Rule sets forth documentation requirements for an exporter or producer
requesting a new shipper review. In particular, Sec.
351.214(b)(2)(iv)(A) and (B) of the Proposed Rule establish the
requirements that the producer or exporter requesting the review
provide certifications from the unaffiliated customer in the United
States certifying that (1) it did not purchase the subject merchandise
from the producer or exporter during the period of investigation; and
(2) it will provide necessary information requested by Commerce
regarding its purchase of subject merchandise.
Several commenters oppose Commerce's additional requirements. One
commenter asserts that these requirements are contrary to the intent of
the statute and Commerce's authority to conduct new shipper reviews.
Both this commenter and several others argue these requirements deprive
a requestor the option of filing a new shipper review where an
unaffiliated customer chooses not to certify.
Two commenters argue that requiring unaffiliated customer
certifications is burdensome and may discourage meritorious new shipper
claims. One commenter points out that the concern raised here is
similar to the concern Commerce articulated when it previously
considered and rejected a proposal to require unaffiliated customer
certifications in the 1997 Final Rule.\35\ The commenter further argues
that the requirement in Sec. 351.214(b)(2)(iv)(B) risks use of adverse
facts available if the customer is not forthcoming, particularly with a
requestor's limited control over an unaffiliated customer. Similarly,
another commenter argues that applying an adverse inference based on an
unaffiliated party's failure to cooperate is ``potentially unfair'' to
a respondent, while another commenter asserts this requirement is too
burdensome on a requestor. Another commenter argues there are
legitimate circumstances where a new shipper has no sales to
unaffiliated customers in the United States, such as when a
multinational company sells a component to its U.S. subsidiary for
purposes of later selling a downstream product.
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\35\ 1997 Final Rule, 62 FR 27296 at 27319 (discussing the
finalized new shipper review regulation).
---------------------------------------------------------------------------
By contrast, two commenters support the new standards and
documentation requirements for requesting new shipper reviews in the
Proposed Rule. One commenter asserts that other commenters have vastly
overstated the burden of providing customer certifications to
demonstrate bona fide sales because (1) no customer has commented that
it could not comply with Commerce's requirements; (2) providing
customer certifications is a limited burden given that often only a
[[Page 52306]]
small number of sales and customers are involved; and (3) the
certifications are limited to information pertaining to the customer's
purchase of the subject merchandise. The commenter, therefore,
concludes that Commerce's proposed certification requirements are not
unduly burdensome.
Response:
We have made changes to the Proposed Rule with respect to the
unaffiliated customer certifications. In particular, we have removed
the certification requirements contained in Sec. 351.214(b)(2)(iv)(A)
and (B) of the Proposed Rule and have replaced the certification
requirements with additional exporter or producer certifications, as
explained further below.
As an initial matter, we disagree with the commenters that assert
the certification requirements in Sec. 351.214(b)(2)(iv)(A) and (B)
are contrary to the intent of the statute and Commerce's authority to
conduct new shipper reviews. Section 751(a)(2)(B)(i) of the Act
provides that if Commerce receives a request from an exporter or
producer of subject merchandise establishing that the requestor (1) did
not export subject merchandise during the period of investigation, and
(2) is not affiliated with any exporter or producer who exported the
subject merchandise during the period of investigation, Commerce shall
conduct a new shipper review to establish an individual weighted
average dumping margin or countervailing duty rate. These certification
requirements are consistent with the requirements a new shipper review
requestor must satisfy in order for Commerce to conduct a new shipper
review, as identified in this section of the Act.
However, in the interest of eliminating unnecessary requirements,
the final rule modifies Sec. 351.214(b)(2) of the Proposed Rule by
removing the requirement in Sec. 351.214(b)(2)(iv)(A) that requires
the producer or exporter requesting the review to submit certifications
from the unaffiliated customer in the United States that it did not
purchase the subject merchandise from the producer or exporter during
the period of investigation. Upon further consideration, we find this
certification to be unnecessary given the certification requirement
from the requestor in Sec. 351.214(b)(2)(i) and (ii) that it did not
sell the subject merchandise to the United States during the period of
the investigation.
In response to comments concerning the burden of obtaining the
unaffiliated customer's certification, we have replaced both Sec.
351.214(b)(2)(iv)(A) and (B). The final rule replaces Sec.
351.214(b)(2)(iv)(A) of the Proposed Rule with the requirement that the
exporter/producer certify that it will provide during the course of the
new shipper review, and to the fullest extent possible, necessary
information related to the unaffiliated customer in the United States.
Additionally, the final rule modifies Sec. 351.214(b)(2)(iv)(B) of
the Proposed Rule to clarify that the exporter/producer will provide a
certification by the unaffiliated customer of its willingness to
participate in the new shipper review and provide information relevant
to the new shipper review, if such information is requested by the
Secretary. To the extent the unaffiliated customer cannot provide its
certification, the exporter/producer is required to provide, in the
alternative, an explanation of why the unaffiliated customer cannot
provide its certification.
Section 351.214(b) of the Proposed Rule provides further guidance,
consistent with section 751(a)(2)(B)(i) of the Act, on the requirements
necessary for Commerce to conduct a new shipper review. We consider the
new certification requirement in Sec. 351.214(b)(2)(iv)(B) of the
Proposed Rule to be a necessary supplement to a new shipper review
request that comports with the requirements in section 751(a)(2)(B)(i)
of the Act which requires a new shipper to establish that it did not
export subject merchandise during the period of investigation and that
such exporter or producer is not affiliated with any exporter or
producer who exported the subject merchandise to the United States
during the period of investigation. In particular, this requirement
addresses concerns that Congress expressly identified involving abuse
of the new shipper review procedures where a new shipper ``enter[s]
into a scheme to structure a few sales to show little or no dumping or
subsidization when those sales are reviewed . . . resulting in a low or
zero antidumping or countervailing duty rate for that producer or
exporter.'' \36\
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\36\ H.R. Rep. No. 114-114 at 89; see also Proposed Rule, 85 FR
49472 at 49473.
---------------------------------------------------------------------------
In response to commenters' concerns that the requirements in Sec.
351.214(b)(2)(iv)(A) and (B) are overly burdensome, we clarify that the
aim of these provisions is to ensure that Commerce can obtain the
necessary information for Commerce to determine whether the sales at
issue are bona fide, consistent with the intent of Congress pursuant to
section 751(a)(2)(B)(iv) of the Act. In balancing the aim of these
provisions consistent with the intent of Congress with the burdens
imposed, we have crafted these amended certifications in as least
burdensome a manner as possible, while ensuring that Commerce obtains
all of the necessary information to conduct the bona fide sale analysis
intended by Congress. As explained in the Proposed Rule, at the time
Commerce rejected the proposal to require such certifications in 1997,
Commerce had limited experience dealing with new shipper reviews.\37\
In light of the more than 20 years of agency experience involving new
shipper reviews, and in particular given concerns over abuse of
procedures expressed by Congress, as discussed in the Proposed Rule, we
believe these additions to the requirements are necessary to ensure
that Commerce is able to conduct a proper new shipper review consistent
with the intent of Congress.
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\37\ Proposed Rule, id. at 49474.
---------------------------------------------------------------------------
Further, one commenter expressed concern that there may be
legitimate circumstances in which an exporter or producer does not sell
subject merchandise to an unaffiliated customer and, therefore, cannot
obtain a certification from such a customer.
The aim of a new shipper review, however, is to establish an
individual margin of dumping or countervailing duty rate for each
qualified new shipper. To establish an individual margin, for example,
Commerce needs to obtain sales data pertaining to the sale from the
foreign exporter or producer to the first unaffiliated customer in the
United States in order to calculate the new shipper's margin of
dumping. Contrary to the commenter's contention, the sale to the first
unaffiliated customer is a necessary element for Commerce to provide a
new shipper with its own antidumping duty or countervailing duty rate.
(b) Documentation Requirements Related to the Issue of Whether Sales
Are Bona Fide
Sections 351.214(b)(2)(v)(A) through (E) of the Proposed Rule sets
forth specific documentation a requestor must provide to Commerce in
its request for a new shipper review. In particular, Sec.
351.214(b)(2)(v)(D) requires that a new shipper establish the
circumstances surrounding the sales, including the price, any expenses
arising from such sales, whether the subject merchandise was resold at
a profit, and whether such sales were made on an arms-length basis.
Section 351.214(b)(2)(v)(E) provides that a new shipper submit
documentation regarding the business
[[Page 52307]]
activities of the producer or exporter. These include the producer's or
exporter's offers to sell merchandise in the United States,
identification of the complete circumstances surrounding sales to the
United States, any home market, or third country sales, identification
of the producer or exporter's relationship to the first unrelated
United States purchaser, and with respect to non-producing exporters,
an explanation of the non-producing exporter's relationship with its
supplier.
Two commenters support the new documentation requirements in Sec.
351.214(b)(2)(v)(D) through (E) for a new shipper to obtain a review.
One commenter argues that Commerce should not require the documentation
in Sec. 351.214(b)(2)(v)(D) through (E) at the time of the new shipper
request, but rather Commerce should ask for more information from the
producers or exporters requesting a new shipper review before
determining whether to initiate. Similarly, one commenter argues that
requiring this additional documentation to establish a bona fide sale
is inconsistent with Article 9.5 of the AD Agreement \38\ because these
are additional preconditions to conducting a new shipper review that
expand beyond what was provided for in that agreement. Another
commenter opposes the Proposed Rule's new documentation requirements
for new shipper review requests which, the commenter argues, are likely
to unfairly discourage legitimate requests because ``new shipper
reviews are often the only alternative for producers and exporters who
would otherwise face high all other rates, separate rates, or country-
wide rates.''
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\38\ The Agreement on Implementation of Article VI of the
General Agreement on Tariffs and Trade 1994 (AD Agreement).
---------------------------------------------------------------------------
Response:
We have left unchanged Sec. 351.214(b)(2)(v)(D) through (E).
Commerce explained in the 1996 Proposed Rule that it was requiring
certain certifications from the requestor ``demonstrating that the
party is a bona fide new shipper.'' \39\ Consistent with this earlier
discussion, and in light of the concerns related to circumvention and
abuse of new shipper review procedures expressed by Congress in
enacting section 751(a)(2)(B)(iv) of the Act, the Proposed Rule limits
initiations of new shipper reviews to where there is a reasonable
likelihood of bona fide sales for Commerce to review. Further, as
clarified in section 1(e) below, normally, when a requestor of a new
shipper review submits all of the documentation necessary for Commerce
to perform a bona fide sales analysis, as outlined in the Proposed Rule
Sec. 351.214(b)(2)(i) through (v), and (vi) for countervailing duty
new shipper reviews, the requestor has demonstrated a reasonable
likelihood that there are bona fide sales for Commerce to base its
initiation of a new shipper review. These requirements, as contained in
Sec. 351.214(b)(2)(v)(D) through (E), are consistent with Commerce's
statutory obligation to provide new shipper reviews to those exporters
and producers with bona fide sales of subject merchandise to the United
States.\40\ The documentation requirements in Sec. 351.214(b)(2)(v)(A)
through (E) assist Commerce in determining whether a party qualifies as
a new shipper and whether a new shipper review should, therefore, be
conducted, consistent with Commerce's statutory obligation to calculate
a dumping margin or countervailing duty rate based solely on bona fide
United States sales.\41\ Accordingly, we find it reasonable for the
agency to require that a requestor for a new shipper review provide the
required bona fide sales documentation necessary for Commerce to
perform the bona fide sales analysis in the review.
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\39\ See 1996 Proposed Rule, 61 FR 7308 at 7317-18.
\40\ See section 751(a)(2)(B) of the Act.
\41\ See section 751(a)(2)(B)(iv) of the Act.
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For these reasons, we also disagree that this regulatory
modification is inconsistent with the United States' international
obligations under the AD and SCM Agreements.\42\ While Articles 9.5 and
19.3 of the AD and SCM Agreements, respectively, identify broad
qualifications for conducting a new shipper review, the requirements
identified in Sec. 351.214(b)(2)(v)(D) through (E) are consistent with
U.S. law, which is consistent with our obligations under the AD and SCM
Agreements.
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\42\ Agreement on Subsidies and Countervailing Measures (SCM
Agreement).
---------------------------------------------------------------------------
Further, historically, new shipper reviews have involved very few
sales. In such cases, Commerce must fully understand the circumstances
surrounding these limited number of transactions as these provide the
basis for a new shipper's future selling of subject merchandise into
the United States and the level of dumping or subsidization, if any.
(c) Documentation Requiring Volume of the Sale and Subsequent Sales
Paragraphs (B) and (C) of Sec. 351.214(b)(2)(v) of the Proposed
Rule require that a new shipper provide in its new shipper review
request information regarding the volume of its shipment(s), including
whether such shipments were made in commercial quantities, and the date
of sales to an unaffiliated customer in the United States.
One commenter argues that requiring documentation establishing that
sales are of ``commercial quantities'' in Sec. 351.214(b)(2)(v)(B) is
inconsistent with Article 9.5 and 19.3 of the AD Agreement and the SCM
Agreement, respectively, which only require that a new shipper not have
exported subject merchandise during the period of investigation and is
not related to any of the investigated exporters and/or producers.
Further, another commenter argues that the criteria requiring ``the
date of any subsequent sales'' when requesting a new shipper review is
``unrealistic in a commercial context'' because the commercial reality
renders few importers with the financial position to import multiple
shipments of products that are subject to high antidumping duty
margins.
Response:
With respect to the issue of requiring documentation pertaining to
whether the sales were made in commercial quantities under Sec.
351.214(b)(2)(v)(B), we disagree with the commenter's objection.
Section 751(a)(2)(B)(iv)(II) of the Act requires Commerce to consider,
depending on the circumstances surrounding such sales, whether the
sales were made in commercial quantities. Section 351.214(b)(v)(B) of
the Proposed Rule is intended to implement this provision of the
statute.
Regarding the commenters' concerns that Commerce is requiring
requestors to establish that ``subsequent shipments'' and ``subsequent
sales'' occurred under Sec. 351.214(b)(2)(v)(B) and (C) of the
Proposed Rule in order to obtain a new shipper review, these concerns
are misplaced. The Proposed Rule does not establish such requirements.
Rather, Commerce simply requires that a producer or exporter requesting
a new shipper review provide documentation of any subsequent sales or
shipments and the dates of such sales to the extent such sales or
shipments were made. Thus, there is no requirement to make subsequent
sales or shipments in order to obtain a new shipper review. In
addition, we note the requirement to provide such information was not
added to the Proposed Rule, but rather exists in the current
regulations. Under this same requirement, Commerce previously initiated
new shipper reviews where subsequent shipments or
[[Page 52308]]
sales did not occur.\43\ However, as identified above, for consistency
with the language utilized in Sec. 351.214(b)(v)(C) and for further
clarity, Commerce is modifying Sec. 351.214(b)(v)(B) for consistency
with the language utilized in Sec. 351.214(b)(v)(C) and to clarify
that a new shipper is required to provide documentation establishing
the volume of any subsequent shipments where subsequent shipments have
occurred.
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\43\ See, e.g., Polyethylene Terephthalate Film, Sheet and Strip
from India: Initiation of Antidumping Duty and Countervailing Duty
New Shipper Reviews, 75 FR 10758 (March 9, 2010); see also Hardwood
Plywood Products from the People's Republic of China: Initiation of
Antidumping New Shipper Review; 2019, 84 FR 44862 (Aug. 27, 2019).
---------------------------------------------------------------------------
(d) Proposal for Documentation Requiring Proof of Multiple Sales in the
New Shipper Request
Paragraph (b) of Sec. 351.214 outlines the requirements for
requesting a new shipper review. Several commenters propose that
Commerce amend Sec. 351.214(b) of the Proposed Rule to require that
requestors demonstrate they have made multiple bona fide sales, as
opposed to a singular ``sale'' in their request for purposes of
initiating a new shipper review. These commenters argue that by using
the plural term ``sales,'' as opposed to the singular term ``sale'' in
section 751(a)(2)(B)(iv), Congress expressed its clear intent to
require multiple bona fide sales as a pre-requisite to obtain a new
shipper review. In their view, such single-sale reviews should be
prohibited because Commerce lacks the statutory authority to conduct a
new shipper review based on a singular sale. To support their
interpretation of the statute, the commenters point out that only the
plural term ``sales'' is consistent with the legislative history and
language of the TFTEA, and section 751(a)(2)(B)(iv) of the Act. In
their view, Commerce should therefore clarify in the final rule that
proof of multiple bona fide sales is required to obtain a new shipper
review.
Response:
We disagree and have not accepted the suggested interpretation of
the statute or its legislative history, and, therefore, have left Sec.
351.214(b) unchanged with respect to this issue. The Proposed Rule
pertaining to new shipper reviews does not require proof of more than
one sale for a requestor to obtain a new shipper review. Declining to
create a regulatory bar to the new shipper review process for singular
sales is consistent with the proper construction of the TFTEA \44\ and
section 751(a)(2)(B)(iv) of the Act, as amended, in accordance with
federal law.
---------------------------------------------------------------------------
\44\ See Public Law 114-125, section 433, 130 Stat. at 171
(enacting modifications to the Act, including section
751(a)(2)(B)(iv), ``Determinations Based on Bona fide Sales,'' in
the context of new shipper reviews to address circumvention).
---------------------------------------------------------------------------
Interpretative canons guide statutory construction because the
language used by Congress in the making of laws is often ambiguous with
respect to meaning. Title 1 of the United States Code codified the
interpretative canons that govern the construction of federal statutory
law.\45\ Section 1 of Title 1 specifies that, ``[i]n determining the
meaning of any Act of Congress, [ . . . ] words importing the plural
include the singular[.]'' Id. The text, context, and structure of TFTEA
and section 751(a)(2)(B)(iv) do not compel a departure from this
interpretative canon.\46\
---------------------------------------------------------------------------
\45\ 1 U.S.C. 1.
\46\ See Life Techs. Corp. v. Promega Corp., 137 S. Ct. 734,
742. 580 US__(2017) (asserting that the Court's departure from 1
U.S.C. 1 that ``words importing the plural include the singular''
resulted from the statute's text, context and structure).
---------------------------------------------------------------------------
Therefore, although Congress used the word ``sales'' in section 433
of EAPA in the TFTEA, and as a result, the plural ``sales'' appears in
section 751(a)(2)(B)(iv) of the Act, the use of the plural form of the
word ``sale'' does not support the conclusion that the statute should
be construed to mean multiple sales are required for a new shipper
review. Pursuant to 1 U.S.C. 1, the plural ``sales'' includes the
singular ``sale.'' Congress has not indicated to Commerce that it
intended to exclude single sales with its use of plural ``sales'' and,
therefore, Commerce believes that a single sale could be subject to
review. Moreover, a single sale could, for example, include substantial
quantities such as thousands or even hundreds of thousands of units,
and thus does not, by itself, provide a basis to bar new shipper
reviews of such sales or create a per se rule that such sales are not
bona fide sales for purposes of the AD and CVD laws.
Consistent with federal law governing the construction of federal
statutes, Commerce's proposed new shipper review regulation does not
impose a regulatory bar to review of singular sales. While Commerce
will not act contrary to federal law in construing the meaning of a
statute, the agency believes that other practical considerations
support the position that a regulatory bar to new shipper reviews for
singular sales is unnecessary. First, the number of sales continues to
be a factor which Commerce considers in its bona fide sales analysis
conducted in a new shipper review. At the same time, as noted, Commerce
looks to the volume and quantity of the sales as a factor to consider
in the context of determining whether the sales or sale is bona fide
for purposes of the AD and CVD laws.
Historically, new shipper reviews have often involved the review of
few or singular sales because the new shipper review provides a path
for a new entrant to the U.S. market to receive its own rate based on
its individual activity on an expedited basis. Commerce's Proposed
Rule, as adopted in this final rule, does not intend to limit a new
shipper's eligibility for review based on whether the applicant can
demonstrate one (as opposed to more than one) sale, provided the sale
at issue is bona fide for purposes of the AD and CVD laws.
(e) The Appropriate Standard for Initiating New Shipper Reviews
One commenter requests that Commerce clarify whether the
``reasonable indication'' standard (i.e., the same standard applied by
the ITC in its preliminary material injury determinations) is intended
to be the legal threshold which respondents must satisfy in order to
obtain a new shipper review. This commenter requests that if Commerce
intends to use this legal standard, then Commerce should include
language that reflects that standard in the final rule.
Response:
We have left unchanged Sec. 351.214(b) with respect to this issue.
The Proposed Rule did not apply the ITC's ``reasonable indication''
standard for material injury determinations to the required showing for
the initiation of a new shipper review. Commerce intends to initiate
new shipper reviews, as stated in the Proposed Rule, where there is a
``reasonable likelihood that there ultimately will be a bona fide sale
for Commerce to review.'' \47\ Additionally, Commerce intends to
initiate new shipper reviews, as stated in the Proposed Rule, unchanged
in this final rule, where ``there is a reasonable likelihood that the
unaffiliated customer will participate in the review.'' \48\ Therefore,
the standard articulated by Commerce in the Proposed Rule is the
``reasonable likelihood'' standard which imposes a burden on the new
shipper review requestor to demonstrate that there is a reasonable
likelihood that the request for review involves bona fide sales. As
outlined in the Proposed Rule Sec. Sec. 351.214(b)(2)(i) through (v),
and (vi) for countervailing duty new shipper reviews, unchanged in this
final rule,
[[Page 52309]]
when a requestor of a new shipper review submits all of the
documentation necessary for Commerce to perform a bona fide sales
analysis, the requestor has demonstrated a reasonable likelihood that
there are bona fide sales for Commerce to base its initiation of a new
shipper review.
---------------------------------------------------------------------------
\47\ See Proposed Rule, 85 FR 49472 at 49474 (emphasis added).
\48\ Id. (emphasis added).
---------------------------------------------------------------------------
2. Enumerated Factors for Commerce's Bona Fide Sales Analysis (Sec.
351.214(k))
(a) Sections 351.214(k)(2), (k)(3), and (k)(4)
The elements outlined in Sec. 351.214(k)(2) through (4) identify
additional factors that Commerce shall consider in determining whether
a new shipper requestor's sales are bona fide, consistent with section
751(a)(2)(B)(iv)(VII) of the Act. These sections provide that Commerce
shall consider whether an exporter, producer, or customer has lines of
business unrelated to the subject merchandise; whether there is an
established history of duty evasion or circumvention with respect to
new shipper reviews under the relevant order; and whether there is an
established history of evasion or circumvention with respect to new
shippers under any order in the same or similar industry.
One commenter opposes Sec. 351.214(k)(2) of the Proposed Rule,
arguing that whether the producer, exporter, or customer has lines of
business unrelated to the subject merchandise is not relevant for a
bona fide sales analysis. Oppositely, another commenter supports
Commerce's proposed Sec. 351.214(k)(2), a factor to analyze a new
shipper's line of businesses that are not subject merchandise, because
new shipper reviews have been in the past misused to engineer low
dumping margins. This commenter argues that looking to whether the
subject merchandise is sold in the new shipper's existing line of
business can provide insight into whether the sale was made in the
normal course of business. Another commenter similarly opposes
Commerce's requirement that the ``full operations'' of a producer or
exporter requesting a new shipper review be examined as part of the
bona fide sales analysis. This commenter argues that Commerce should
limit its review to the actual sales transactions and relationship
between the requestor and importer.
Additionally, two commenters oppose factors related to the history
of duty evasion which Commerce will consider as part of the bona fide
sales analysis listed in Sec. 351.214(k)(3) and (4) of the Proposed
Rule.\49\ These commenters argue that whether there is an established
history of duty evasion with respect to new shipper reviews or
circumvention under the relevant antidumping or countervailing duty
order or any antidumping or countervailing duty order in the same or
similar industry is not relevant for a bona fide sales analysis. One of
these commenters asserts that unless Commerce finds collusion at play,
any wrongdoing that may have occurred in the past is not pertinent to
the review because there is no nexus between the current shipper and
any past wrongdoing. Contrary to this opposition, one commenter
supports the Proposed Rule which considers the history of duty evasion
of an antidumping duty order because it would prevent further harm to
the domestic industry, particularly in cases where Commerce has not
applied a circumvention ruling on a country-wide basis.
---------------------------------------------------------------------------
\49\ Id. at 49495.
---------------------------------------------------------------------------
Response:
We have modified the mandatory factors to be considered for
purposes of the final rule. First, Sec. 351.214(k)(2) is retained in
the final rule. Commerce's consideration of the lines of business in
which the producer, exporter, or customer is engaged can be telling as
to the bona fide nature of the sales involved in a new shipper review.
For example, Commerce's consideration of the lines of business
unrelated to the subject merchandise may indicate that sales of subject
merchandise are entirely unrelated to the company's primary business,
that it has little or limited knowledge and expertise in the subject
merchandise, and, thus, may be indicative of whether the sale or sales
are considered bona fide, in conjunction with other relevant factors.
Section 351.214(k)(2) of the Proposed Rule, unchanged in this final
rule, will assist Commerce in developing a consistent practice of
evaluating typical behavior of new shippers and more clearly
identifying unmeritorious claims of bona fide sales based on schemes to
engineer low dumping margins involving companies not engaged in the
relevant business for purposes of the AD and CVD laws.
While we have retained Sec. 351.214(k)(2), the factors pertaining
to the history of duty evasion found in paragraphs (k)(3) and (4) are
removed from the final rule solely on the ground that these factors
need not be considered in every case. However, where the evidence
compels consideration, Commerce continues to be authorized to consider
the issue of duty evasion under an order and industry-wide basis. While
the evidence may not be specific to the particular new shipper, and,
thus, cannot by itself be considered sufficient to determine whether
the sales at issue are bona fide, such evidence may be indicative of a
pattern of behavior under an order or in an industry that is generally
reflective of activity of a contrived nature and, thus, may contribute
to a finding of sales being non-bona fide for purposes of the AD and
CVD laws (e.g., where actors within an industry tend to engage in
similar conduct and are generally faced with similar facts and
circumstances, such as low barriers to entry, a high degree of changes
in ownership, or where an industry is typified by a high degree of
turnover of companies). In such cases, an established history of duty
evasion or circumvention may be relevant and, therefore, may be
considered by Commerce in making its determination. Because the
enumerated factors are not exhaustive, these types of factors, where
relevant, should be considered in determining whether the sales at
issue are bona fide for purposes of the AD and CVD laws.
(b) Section 351.214(k)(6)
Section 351.214(k)(6) provides that Commerce shall consider ``any
other factor'' it determines relevant with respect to the future
selling behavior of a new shipper, including indicia that the sale was
not commercially viable. Several commenters support the Proposed Rule
as reflecting the 2016 statutory changes in the TFTEA which require an
exporter or producer to demonstrate that its sale(s) is bona fide
pursuant to the bona fide sales factors in section 751(a)(2)(B)(iv) of
the Act. One commenter opposes Sec. 351.214(k)(6) of the Proposed
Rule, asserting that this section of the regulation provides ``vague
and unlimited authority'' to reject new shipper requests. Accordingly,
this commenter argues that Commerce should remove Sec. 351.214(k)(6)
from its final rule to ``ensure Commerce doesn't exceed its statutorily
granted authority'' or, in the alternative, define the circumstances in
the regulations as to the factors it may consider in determining
whether or not to reject a request for a new shipper review.
Response:
We have left unchanged Sec. 351.214(k)(6). Contrary to the
commenter's assertion that paragraph (k)(6) provides Commerce unlawful
and unlimited authority in analyzing a request for a new shipper
review, section 751(a)(2)(B)(iv) of the Act
[[Page 52310]]
provides that Commerce may consider ``any other factor'' it determines
relevant with respect to the future selling behavior of the producer or
exporter. This may include any other indicia that indicate whether the
sale was or was not commercially viable, and, thus, bona fide for
purposes of the AD and CVD laws. Accordingly, this section of the
Proposed Rule conforms to the intent of Congress for purposes of
examining whether the sales at issue are bona fide for purposes of the
AD and CVD laws.
Regarding the commenter's request that Commerce define the
circumstances in the regulations as to the factors it may consider in
determining whether it will initiate on a request for a new shipper
review, Commerce has three clarifications. First, regarding the request
to clarify what Commerce will consider in determining whether to
initiate a new shipper review, Commerce clarifies that normally
Commerce will initiate a new shipper review where a requestor submits
the required documentation necessary for Commerce to perform a bona
fide sales analysis, as outlined in Sec. 351.214(b)(2)(i) through (v),
and (vi) in the countervailing duty context. By providing such
documentation, the requestor is able to demonstrate a reasonable
likelihood that the sales subject to the review are bona fide sales for
purposes of initiation and that the unaffiliated customer will
participate in the review.
Second, Commerce notes that the factors enumerated in Sec.
351.214(k)(1) and (2) provide further clarity as to the other factors
Commerce will look to, pursuant to section 751(a)(2)(B)(iv)(VII) of the
Act.
Third, Commerce clarifies that, regarding the factors it may
consider beyond those enumerated in the final rule, such additional
factor or factors to be considered may vary based on the facts and
circumstances in a given case. Congress provided Commerce with the
authority to consider ``any other factor the administering authority
determines to be relevant as to whether such sales are, or are not,
likely to be typical of those the exporter or producer will make after
completion of the review,'' affording Commerce the flexibility to
evaluate additional factors based on the facts and circumstances of a
given case.\50\ Thus, consistent with its statutory authority, Commerce
will continue to consider factors that it determines, based on the
facts and circumstances in a given case, are relevant with respect to
the future selling behavior of the producer or exporter, including any
other indicia that the sales were not commercially viable.
---------------------------------------------------------------------------
\50\ See section 751(a)(2)(B)(iv)(VII) of the Act.
---------------------------------------------------------------------------
(c) Whether Commerce Should Require Documentation of Genuine
Negotiations and/or Order Inquiries From an Unrelated Purchaser
Several commenters propose that Commerce add an additional factor
to the bona fide sales requirements of Sec. 351.214(k) that would
require producers or exporters requesting a new shipper review to
provide documentation of ``genuine negotiations or order inquiries,''
such as emails or internal sales approval documentation from the
unaffiliated purchaser, to further ensure that new shippers have not
coordinated with purchasers to ``engineer'' lower margins.
Response:
We have not changed Sec. 351.214(k) with respect to the proposed
change. The Proposed Rule requires documentation establishing the
circumstances surrounding such sale(s), including the producer or
exporter's offers to sell merchandise in the United States under Sec.
351.214(b)(v)(E)(1). This includes the offers made to the unaffiliated
purchaser in the United States, along with information on price,
expenses, and whether such merchandise was resold at a profit under
Sec. 351.214(b)(v)(D). We believe the requirements established for a
new shipper review request are sufficient for purposes of the request.
In addition, Commerce is not precluded from requesting additional
documentation, as needed, during the course of the review, including
documents typically examined during verification. For these reasons,
Commerce's final rule captures the additional documentation we believe
necessary to prevent meritless new shipper review claims.
(d) Discussion of a Single or Low Number of Sales in the Bona Fide
Analysis
One commenter argues that Commerce should explain in the preamble
to the final rule that ``a single or low number of sales, particularly
a single sale, will rarely be found to be bona fide, unless the shipper
can establish that a low number of sales is typical for the merchandise
in question in the U.S. market for the period covered by a new shipper
review.'' Further, this commenter asserts that should Commerce find
that a ``multiple sales'' requirement cannot be implemented in every
case, Commerce should modify Sec. 351.214(k)(5) to read: ``the
quantity and number of sales; and . . . .''
Response:
We have not adopted the commenter's proposal that a single or low
number of sales will rarely be found to be bona fide or the commenter's
proposed modification to Sec. 351.214(k)(5) concerning the quantity
and number of sales. Commerce makes its bona fide sales determinations
on a case-by-case basis. Any statement, therefore, concerning the
frequency of affirmative or negative bona fide sales determination
would be inappropriate. However, Commerce clarifies that the language
in Sec. 351.214(k)(5) identifying ``the quantity of sales'' as a
factor Commerce will consider in accordance with section
751(a)(2)(B)(iv)(VII) of the Act, means the same as ``number of
sales.'' Therefore, the suggested change is unnecessary.
(3) Rescission of Initiated New Shipper Reviews
(a) Rescission if Information To Establish Multiple Sales Is Missing
From the Record
Section 351.214(f) of the Proposed Rule describes the circumstances
under which Commerce may rescind a new shipper review. One commenter
argues that Commerce should amend Sec. 351.214(f) to state that
Commerce shall rescind a new shipper review if it finds that
information to establish bona fide sales, plural, are missing from the
new shipper review request to alleviate administrative burdens.
Response:
As an initial matter, the commenter's position that rescission
based on lack of bona fide ``sales''--plural, is addressed at length in
comment 1(d). To reiterate, there is no statutory or regulatory bar to
the new shipper review process based on the existence of only one, as
opposed to more than one, bona fide sale. Therefore, Commerce declines
to adopt the commenter's proposal that Sec. 351.214(f) be amended to
reflect a requirement that multiple sales are required for a new
shipper review to proceed in regular course.
As Commerce explained in the Proposed Rule, the purpose of the
conforming amendments to Sec. 351.214 pertaining to new shipper
reviews is to implement the modifications to section 751(a)(2)(B) of
the Act enacted by Congress in 2016.\51\ Therefore, we do not amend the
Proposed Rule's rescission provision to require Commerce to rescind a
review where proof of multiple sales is absent from the record.
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\51\ See Public Law 114-125, section 433, 130 Stat. at 171.
---------------------------------------------------------------------------
[[Page 52311]]
(b) Rescission as a Bar to Future New Shipper Review Requests
One commenter requests that Commerce include in its final rule a
new paragraph (f)(5) that states: ``[i]f the Secretary rescinds a new
shipper review pursuant to Sec. 351.214(f)(3), then the party that
requested the rescinded new shipper review may not subsequently request
a further new shipper review, but must instead request an
administrative review as provided in Sec. 351.213(b)'' to prevent a
party from filing a new shipper review request if it failed to
establish its sales are bona fide.
Response:
We are not adopting this commenter's suggestion to add a new
paragraph (f)(5) to Sec. 351.214. To clarify, if Commerce rescinds a
review of specific sales pursuant to Sec. 351.214(f)(3), we will not
revisit that determination with respect to those particular sales as
there is finality with respect to Commerce's determinations. However, a
new shipper will not be barred from requesting a new shipper review,
consistent with Sec. 351.214(c), for later, unreviewed, sales made
within one year of the date referred to in Sec. 351.214(b)(2)(v)(A).
(4) Procedure for Parties To Challenge a Decision Not To Initiate a New
Shipper Review at the Administrative Level
One commenter argues that the Proposed Rule is not clear regarding
what a respondent is required to provide to Commerce in order to obtain
a new shipper review, and that the Proposed Rule grants ``unfettered
discretion'' to Commerce on whether to initiate a new shipper review.
This commenter argues that because the Proposed Rule indicates Commerce
will determine whether the information provided in a new shipper
request will reasonably indicate a bona fide sale occurred in order to
initiate a new shipper review, Commerce will open itself up to
litigation over any determination not to initiate. Therefore, this
commenter asserts that Commerce should amend its proposed regulation
and provide for a preliminary determination by Commerce on whether to
initiate a new shipper review, providing opportunities for parties to
comment and submit additional factual information, before making a
final decision on initiation. Relatedly, this commenter requests that
Commerce establish ``specific objective thresholds'' that a requestor
needs to satisfy in order to obtain a new shipper review.
Several commenters oppose the former commenter's proposal to
establish a preliminary determination, briefing, and comment process
regarding Commerce's decision whether to initiate a new shipper review
because, these commenters assert, doing so would needlessly use
additional Commerce resources and provide an avenue for arbitrary
appeals of Commerce's preliminary determinations to the CIT.
Response:
We have left unchanged Sec. 351.214 with respect to this issue.
Contrary to the commenter's concern that the Proposed Rule grants
``unfettered discretion'' to Commerce as to whether to initiate a new
shipper review, Commerce's determinations whether to initiate a new
shipper review are limited by the requirements identified in the final
rule, including whether the documentation submitted in a new shipper
review request indicates a reasonable likelihood of bona fide sales for
Commerce to review. Additionally, as clarified in this preamble, if a
new shipper review requestor provides Commerce with the documentation
identified in the proposed Sec. 351.214(b)(2)(i) through (v), and (vi)
in the countervailing duty context, then the requestor will normally be
able to demonstrate a reasonable likelihood that there ultimately will
be a bona fide sale for Commerce to review and base its determination.
Thus, in such cases, Commerce will initiate a new shipper review.
Further, the Proposed Rule provides additional clarity as to the
specific requirements of a producer and/or exporter when requesting a
new shipper review. Such clarity, as provided in Sec. 351.214(b)(iv)
and (v), offers producers and exporters ``specific objective
threshold'' requirements that a new shipper review requestor needs to
provide Commerce in order to seek a new shipper review. In addition,
the procedure we have adopted provides that Commerce will not initiate
a new shipper review where the information submitted with the request
pursuant to the documentation requirements outlined in Sec. 351.214(b)
is insufficient. In the event that Commerce determines that the
requirements for a request for a new shipper review have not been
satisfied, in denying the request, Commerce will provide a written
explanation of the reasons for the denial. In this way, the requestor
has an understanding of the deficiencies of the request and the basis
for Commerce's decision. We see no reason to add further procedural
steps. These decisions are analogous to the requirement that Commerce
not initiate an AD or CVD investigation where the petition fails to
provide support for the necessary elements for initiation. In those
cases, Commerce determines not to initiate the investigation. Here,
where a request for a new shipper review fails to meet the requirements
outlined in Sec. 351.214(b), Commerce expects to deny the requestor a
new shipper review.
(5) Whether the Proposed Rule Permits Commerce Up to 6 Months To
Initiate a New Shipper Review
Promulgated in 1997 with the new shipper review regulations, Sec.
351.214(d)(1) outlines the specific times when Commerce will initiate a
new shipper review under a relevant order: In the calendar month
immediately following the anniversary month or in the calendar month
immediately following the semiannual anniversary month, depending on
when a new shipper request is received.\52\
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\52\ 1997 Final Rule, 62 FR 27296 at 27395.
---------------------------------------------------------------------------
One commenter requests that Commerce confirm whether the Proposed
Rule will continue to permit up to six months for Commerce to initiate
a new shipper review and whether the goods would be subject to the
residual duty during this period.
Response:
The Proposed Rule makes no change to the current regulation
pertaining to the time limits for the initiation of a new shipper
review (with the exception of a minor grammatical edit in paragraph
(d)(2)). As required by the current and proposed Sec. 351.214(d)(1),
Commerce will initiate a new shipper review in the calendar month
immediately following the anniversary month or the semiannual
anniversary month if the request for the review is made during the six-
month period ending with the end of the anniversary month or the
semiannual anniversary month (whichever is applicable).\53\ The
regulation thus requires Commerce to initiate a new shipper review
pertaining to an order during two months in a calendar year: (1) In the
month after the order's anniversary month; and (2) in the month after
the order's semiannual anniversary month. Given that the two months in
which Commerce may initiate a new shipper review are separated by six
months, the rule does permit six months for Commerce to initiate a new
shipper review. However, the time permitted depends on when the new
shipper requests a review. For example, the rule provides for a much
shorter time period for the initiation of a new shipper review based on
the proximity to the anniversary and semiannual anniversary of the
relevant order.
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\53\ See Proposed Rule, 85 FR 49472 at 49494.
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[[Page 52312]]
With respect to the comment to confirm whether the merchandise
would be subject to a duty, in accordance with Sec. 351.214(e) of the
Proposed Rule, Commerce will direct the suspension or continued
suspension of liquidation for any unliquidated entries of subject
merchandise from the relevant exporter or producer at the applicable
cash deposit rate upon its initiation of the new shipper review.
(6) Whether the New Documentation Requirements Identified in Sec.
351.214(b) of the Proposed Rule Applies to Expedited Reviews
One commenter requests that Commerce clarify that expedited reviews
in CVD proceedings for non-investigated exporters do not impose the new
documentation requirements listed in the Proposed Rule pertaining to
the initiation of a new shipper review. This commenter asserts that
there is no reason to apply such requirements to expedited reviews
based on the current language of Sec. 351.214(l)(3).
Response:
The Proposed Rule addressed new shipper review requests, and was
not intended to, and does not, impose new documentation requirements
for requesting expedited reviews. Apart from the request, however, in
the context of an expedited review, as with administrative reviews, a
respondent may be subject to a bona fide sales analysis, where the
facts or circumstances warrant examination.
Scope--Sec. 351.225
Section 351.225 covers procedures in which Commerce addresses
scope-related matters following the issuance of an AD or CVD order,
most frequently through a scope inquiry and scope ruling. We received
many comments and rebuttal comments on the proposed provisions under
this regulation. Below, we briefly discuss each provision, address any
comments received, and, where appropriate, explain any changes to the
Proposed Rule in response to comments. In addition, we explain
additional modifications to the Proposed Rule where we have determined
that such amendments brought Sec. 351.225 into greater conformity with
circumvention and covered merchandise regulations Sec. Sec. 351.226
and 351.227, or otherwise provided greater clarity to these
regulations.
1. Section 351.225(a)--Introduction
Section 351.225(a) is the general provision set forth in the
beginning of the scope regulations, in which Commerce has explained
that it will conduct a scope ruling at the request of an interested
party or on Commerce's initiative. One of the proposed modifications is
the addition of Commerce's understanding that a scope ruling that a
product is covered by the scope of an order is a determination that the
product in question has always been covered by the scope of that order.
Commerce also explained in the preamble to the Proposed Rule that it
was removing the term ``clarify'' from the existing regulations because
scope inquiries are ``intended to cover a wide variety of scope
questions, and are not intended to be restrictive to only those
scenarios in which certain language in the scope requires
`clarification.' '' \54\
---------------------------------------------------------------------------
\54\ Id., at 49476-77.
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Commerce received multiple comments on this provision. Several
commenters express complete support for the provision as written,
emphasizing that concerns about evasion and duty collection should be
one of the primary drivers Commerce considers in designing and
implementing its revised scope regulations. Those commenters also
stress that the Federal Circuit has issued multiple holdings which
support Commerce's interpretation of its scope rulings that a
determination in a scope ruling that a product is covered by the scope
of an order means that a product has always been covered by the scope
of an order.\55\
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\55\ See, e.g., Bell Supply Co. v. United States, 888 F.3d 1222,
1229 (Fed. Cir. 2018) (Bell Supply) (stating that extending the
reach of a scope determination backwards is consistent with the
Federal Circuit's finding that a determination of origin of imported
merchandise for the purposes of a scope ruling necessarily precedes
a circumvention inquiry); AMS Associates, Inc. v. United States, 737
F.3d 1338, 1343-1344 (Fed. Cir. 2013) (AMS); Sunpreme, 946 F.3d at
1316-1322; United Steel and Fasteners, Inc. v. United States, 947
F.3d 794, 801-803 (Fed. Cir. 2020) (Fasteners).
---------------------------------------------------------------------------
Other commenters challenge that understanding of scope coverage.
They argue that such an interpretation of a scope ruling would have an
unfair effect on importers and sureties, with one commenter citing to a
1999 scope ruling in which Commerce modified a scope after a scope
ruling, as an example in which importers were unfairly forced to pay
duties when they did not believe their entries were subject
merchandise, and could not have been expected to know their merchandise
was covered by an order.\56\
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\56\ See Notice of Scope Rulings and Anticircumvention
Inquiries, 65 FR 41957, 41958 (July 7, 2000) (``pasta in packages
weighing (or labeled as weighing) up to and including five pounds,
four ounces is within scope; May 24, 1999.''); see also Certain
Pasta From Italy: Final Results of Antidumping Duty Administrative
Review, 65 FR 77852, 77853 (Dec. 13, 2000) (``On October 26, 1998,
the Department self-initiated a scope inquiry to determine whether a
package weighing over five pounds as a result of allowable industry
tolerances is within the scope of the antidumping and countervailing
duty orders. On May 24, 1999 we issued a final scope ruling finding
that, effective October 26, 1998, pasta in packages weighing or
labeled up to (and including) five pounds four ounces is within the
scope of the antidumping and countervailing duty orders.'').
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In rebuttal comments, some challenge Commerce's removal of the word
``clarify'' and argue that scope rulings should only apply
retroactively when the scope is ``clear'' and not ``ambiguous,'' while
others disagree that importers would be penalized by the proposed
modifications to the regulations. It was pointed out that in the 1997
Final Rule, Commerce expressed concerns that ``[i]t would be extremely
unfair to importers and exporters to subject entries not already
suspended to suspension of liquidation and possible duty assessment
with no prior notice and based on nothing more than a domestic
interested party's allegation,'' \57\ but that such concerns never came
to fruition, and, in fact, the primary users of scope proceedings have
been importers and foreign exporters. Those commenters went on to argue
in their rebuttal comments that any arguments based on the innocence of
importers is misplaced, as concerned importers have appropriate tools
available to them through scope rulings to determine whether a product
may be covered by the order.
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\57\ 1997 Final Rule, 62 FR 27296 at 27328.
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Response:
When Commerce initiates a scope inquiry, the purpose of that
inquiry is to determine whether a product is covered by the language of
the scope of an AD/CVD order. The scope of an order (i.e., the
description of the class or kind of merchandise subject to the order)
is established during the investigation and published in the Federal
Register notice of the final determination and order.\58\ As explained
further below in the discussion of Sec. 351.225(l), the publication of
the scope of an order in the Federal Register generally provides notice
to producers, exporters, and importers that their products may be
covered by the scope of the order. The fact that an importer did not
declare merchandise as subject to an AD and/or CVD order for a period
of time before Commerce issued a scope ruling, for whatever reason,
does not mean the product was not covered by the scope up until the
scope ruling was issued. If a product is found to be covered by the
language of the scope, then the product has always been covered by that
language. As some commenters note, the
[[Page 52313]]
Federal Circuit has stated through a variety of cases that the current
regulations do not adequately acknowledge this fact.\59\ Accordingly,
we are adopting proposed paragraph (a), with some minor modifications
to more clearly emphasize this point.
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\58\ See section 706(a)(2) of the Act; section 736(a)(2) of the
Act; section 771(25) of the Act.
\59\ AMS, 737 F.3d at 1343-1344; Sunpreme, 946 F.3d at 1316-
1322; Fasteners, 947 F.3d at 801-803.
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Further, as discussed above, the statute is silent regarding the
procedures and standards that Commerce may apply in issuing a scope
ruling. In the absence of any such statutory guidance, Commerce's
position is that a factual determination that a product is covered by
the scope of the order amounts to a determination that the product has
always been covered by the scope of the order. With respect to issues
concerning the application of such a determination to certain entries
of products and notice to exporters and importers, those issues are
addressed below in response to comments under Sec. 351.225(l). As
discussed below, the purpose of these modifications is not to penalize
companies acting in good faith, but to ensure that scope rulings are
properly applied to products that are covered by the scope of an order.
Additionally, as we also explained in the preamble to the Proposed
Rule, Commerce's scope rulings frequently do more than merely clarify
the language of a scope, and we do not believe the degree of ambiguity
or clarity of the coverage of a particular product in the language of a
scope should support or detract from the fact that a product which is
determined to be covered by an order has always been covered by an
order, and a product which Commerce determines is not covered by the
scope of an order was not covered by the scope of that order before the
scope ruling was issued.
Furthermore, we agree with the commenters who explain that any
concerned importer who believes a scope is unclear or is uncertain
whether its entries may be covered by an AD/CVD order has the
appropriate tools available to it, through these regulations, to
request a scope ruling.
With respect to the 1999 scope ruling raised by one of the
commenters which modified the text of a scope, the Federal Circuit in
several subsequent holdings explained that Commerce does not have the
authority to outright change the scope of an order through
reinterpretation in a scope ruling.\60\ There are other means, such as
changed circumstances reviews under section 751(b) of the Act, through
which the scope may be modified, but with respect to scope rulings,
Commerce will not modify the text of a scope in the context of a scope
inquiry.\61\ In addition, Commerce may conduct a circumvention inquiry
under section 781 of the Act to determine whether certain types of
products are covered by the scope of the order.
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\60\ See Notice of Scope Rulings and Anticircumvention
Inquiries, 65 FR 41957, 41958 (July 7, 2000) (``pasta in packages
weighing (or labeled as weighing) up to and including five pounds,
four ounces is within scope; May 24, 1999.''); Certain Pasta From
Italy: Final Results of Antidumping Duty Administrative Review, 65
FR 77852, 77853 (Dec. 13, 2000); Duferco Steel, Inc. v. United
States, 296 F.3d 1087, 1095 (Fed. Cir. 2002) (Duferco) (``Commerce
cannot `interpret' an antidumping order so as to change the scope of
that order, nor can Commerce interpret an order in a manner contrary
to its terms.'') (citing Eckstrom Indus., Inc. v. United States, 254
F.3d 1068, 1072 (Fed. Cir. 2001)).
\61\ This is distinguished from a scope clarification, found in
the new provision section 225(q). A scope clarification does not
change the scope of an order but does clarify the scope--frequently
through a footnote to the scope of the order.
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Finally, to bring this provision into conformity with language used
in other provisions under Sec. 351.225, as well as language which was
already contained in proposed Sec. 351.225(a), we have replaced
references to a product being ``within'' the scope of an order to a
description of the product at issue being ``covered by the scope of an
order.'' This change is made only to use consistent terminology, and
not to modify the meaning of the provision.
2. Section 351.225(b)--Self-Initiation of Scope Inquiry
Section 351.225(b) addresses Commerce's authority to self-initiate
a scope ruling. In the Proposed Rule, Commerce indicated that if it
self-initiated a scope inquiry, it would notify all parties on the
annual inquiry service list. The only comments that Commerce received
on this provision pertained to notice of the agencies' decision to
initiate. Specifically, commenters worry that producers, exporters,
importers, sureties, and foreign governments who were not on the annual
inquiry service list might not get sufficient notice under that
procedure should Commerce self-initiate a scope ruling. They,
therefore, suggest that Commerce publish its self-initiation in the
Federal Register.
Response:
In response to those comments, we have revised our notice
requirements for self-initiation. The regulation now provides that if
Commerce self-initiates a scope inquiry, it will publish a notice of
initiation in the Federal Register, as suggested by certain commenters.
We believe this will satisfy all notice concerns raised by the
commenters pertaining to this provision.
3. Section 351.225(c)--Scope Ruling Application
Section 351.225(c) sets forth the requirements for an interested
party \62\ to submit a standardized scope ruling application. This is a
significant change from Commerce's current procedures, which do not
require a detailed standardized application. Commerce explained in the
preamble to the Proposed Rule that it was now requiring an application,
with specific information required in that application, as a result of
various concerns, including the fact that ``scope ruling requests do
not always include the requisite sufficient description and supporting
information necessary for Commerce to complete an analysis.'' \63\
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\62\ The term ``interested party'' is defined in section 771(9)
of the Act, and pertains, for example, to ``foreign manufacturers,''
``producers,'' ``exporters,'' or ``United States importers'' ``of
subject merchandise.'' However, the nature of a scope ruling is to
determine whether the merchandise produced, imported by, or exported
by a party is subject to an AD or CVD order. Thus, in many cases,
the question of whether a party is an ``interested party'' depends
in part on whether the merchandise at issue is subject merchandise.
Accordingly, for purposes of these scope regulations, the term
``interested party'' includes a party that would meet the definition
of ``interested party'' under section 771(9) of the Act, if the
merchandise at issue in the scope inquiry is in fact in-scope. This
clarification of the term ``interested party'' for purposes of this
regulation is in no way intended to weaken the requirement that the
product is, or has been, in actual production as of the filing of
the scope ruling application, as required by paragraph (c)(1).
\63\ Proposed Rule, 85 FR 49472 at 49477.
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Several commenters indicate their strong support for the
standardized application procedure, and both they, and other
commenters, provide suggestions to modify the application requirements.
One commenter argues that Commerce should provide further guidance on
what the phrase ``to the extent reasonably available'' means, while
others complain that requests for ``narrative history of the production
of the product'' and the ``volume of annual production of the product
for the most recently completed fiscal year'' would be too burdensome
for certain parties. Others complain that the application would seem to
require more data from producers, exporters, and importers of certain
merchandise than a requesting domestic industry, and one claims that
Commerce seemed to request unnecessary or ``superfluous'' data, such as
``past models of products.''
Certain commenters also suggest that the application require
further detailed quantity and value data, including a disclosure of how
much scope inquiry merchandise was imported or shipped to the United
States without the payment of duties. Further, they argue
[[Page 52314]]
that Commerce should request the identity of an importer's U.S.
customer or customers if the product was already imported into the
United States. They argue that the provision of the quantity and value
information, as well as the customer lists, would provide further
enforcement tools to Commerce in administering and implementing its
scope rulings.
In addition, another commenter argues that Commerce should require
that a scope applicant indicate in the application if any of its
imports are currently subject to suspension of liquidation and cash
deposits.
Another commenter suggests that Commerce insert this clause at the
end of Sec. 351.225(c)(2)(i)(C): ``. . . and copies of any Customs
rulings relevant to the tariff classification,'' because it claims that
such additional information would permit Commerce and other interested
parties to verify the scope requestor's classification as accurate. The
same commenter also voices concerns about Commerce's proposed
requirement of a ``concise public description of the product,'' in
Sec. 351.225(c)(2)(ii), without any details about what would be
included in that description, claiming that the lack of clarity in that
respect could lead to confusion, manipulation by the party filling out
the application, and litigation concerns.
Furthermore, another party expresses its concerns that once a
certain number of years have passed since an investigation or earlier
administrative review segments, and certain proprietary versions of the
requested information once available to the requestor are no longer
available to interested parties under the terms of an APO, Commerce
should consider adopting a procedural mechanism to allow parties access
to such data, or at least provide a procedure by which Commerce itself
could place the proprietary versions of documents on the record of the
scope inquiry.
In rebuttal comments, one commenter disagrees that Commerce should
request additional quantity and value information, or customer lists,
noting that such information requests would be unduly burdensome to
respond to and completely unnecessary to Commerce's determination if a
product is subject to an AD or CVD order.
Response:
We have considered all of the comments received on this provision
and have determined to make certain modifications to the proposed Sec.
351.225(c); some in response to the comments raised and others to
clarify the information which Commerce needs from a requestor to
initiate a scope inquiry.
First, as explained in more detail in the discussion of Sec.
351.225(j) below, Commerce continues to recognize that, in addressing
country of origin issues in the context of Commerce proceedings,
Commerce is not bound by the country of origin determinations of other
agencies, such as CBP.\64\ That said, such determinations may be
informative to our analysis, and are identified as relevant secondary
interpretive sources under Sec. 351.225(k)(1), discussed below.
Therefore, we agree with the commenter that proposes requesting copies
of any Customs rulings relevant to a given tariff classification. Such
rulings would be beneficial to our analysis, and we have included that
request in our regulation.
---------------------------------------------------------------------------
\64\ While the ``Department may consider the decisions of
Customs, it is not obligated to follow, nor is it bound by, the
classification determinations of Customs. . . .'' Wirth Ltd. v.
United States, 5 F. Supp. 2d 968, 973 (CIT 1998) (Wirth)
(``Commerce, not Customs, has authority to clarify the scope of AD/
CVD orders and findings.'').
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Second, we also agree with the same commenter that there should be
some clarification as to the requirements of the concise public
summary, and have modified the regulation to reflect that the physical
characteristics of the product, the countries where the product is
produced and from which it is exported, the declared country of origin
(if imported and known to the requestor), and the product's tariff
classification should all be included in that concise public summary of
the product's description. Because Commerce sometimes conducts scope
inquiries on merchandise that is already in commercial production but
has not yet been exported to the United States, we recognize that there
may be cases in which there is no declared country of origin to report
under Sec. 351.225(c)(2)(i)(B).
Third, we realize that the proposed regulations neglected to note
that we need parties to identify the countries of production, export,
and declared origin, both in the detailed description of the product,
as well as the concise public summary of the product's description, for
our scope inquiry analysis. Accordingly, we have added those
requirements to the list of necessary information requested in the
application.
Fourth, we are no longer requiring the names and addresses of the
producers, exporters, and importers in the public summary, but we still
need such information in the detailed description of the product in the
application, so we have modified the language to reflect that change.
Fifth, we recognize that the term ``physical characteristics'' is a
term used in Commerce's current regulations, and includes not only
chemical and technical characteristics, but dimensional
characteristics, as well (such as the height, length, circumference,
and width of a product). We have, therefore, revised the regulations to
once again use the term ``physical characteristics'' and noted that the
term ``physical characteristics'' includes all of those additional
descriptive terms. It is our understanding that the term ``technical
characteristics,'' which is not defined, covers a wide array of
characteristics, such as the mass or weight of the product, the volume
of the product, the buoyancy, conductivity, and aerodynamic properties
of product, and even various mechanical characteristics and properties
of the product, such as elasticity, tensile strength, elongation,
ductility, brittleness, malleability, plasticity, and hardness of the
product. Furthermore, we wish to be clear that by using the term
``including'' in this description, we are expressly indicating that we
do not believe these descriptors are exhaustive. Frequently, the
physical characteristics relevant to a scope ruling are almost entirely
dependent on the language used in the scope of an order to describe the
particular product, as well as the additional descriptions provided in
the petition or during the underlying investigation. Accordingly, our
use of this term is meant to be broadly interpreted and adaptable to
the facts of a given scope and inquiry.
Sixth, and finally, we have clarified in Sec. 351.225(c)(2)(vi)
that, for imported merchandise that an importer has declared to be
subject to an order, or for merchandise which has been determined by
CBP to be subject to an order, we need the applicant to provide an
explanation for either situation in the application. The language
provided in proposed Sec. 351.225(c)(2)(v) was unclear in that regard,
appearing to only request information if CBP had determined the entry
was covered by the scope of the applicable order and not if the
importer had declared it to be subject to an order upon importation.
On the other hand, we do not believe that quantity and value data,
or customer lists, should be provided to Commerce in every scope
application, as requested by certain domestic producers. Although we
agree that such information might be of value to Commerce's analysis in
certain situations, we do not believe that in most scope rulings such
information would inform our determination as to whether a product at
issue is covered by
[[Page 52315]]
the scope of an order. Instead, in those cases in which Commerce
determines that quantity and value data, or customer lists, might be of
value to Commerce's analysis, Commerce retains the authority to request
that information of the applicant or other interested parties to the
scope inquiry. Accordingly, we will not include this additional data
request in the scope application.
In addition, although we do request that an applicant making a
request for a scope inquiry on a product already imported into the
United States as of the date of the scope ruling application indicate
whether an entry of the product has been declared by an importer, or
determined by CBP, as subject to an order, under Sec.
351.225(c)(2)(vi), we do not believe it is necessary to also request
that the applicant inform us if imports of the merchandise at issue are
currently subject to suspension and cash deposits. We agree with the
commenter that such information might be relevant at some point in our
inquiry, for example, for purposes of our CBP instructions under Sec.
351.225(l).\65\ However, for purposes of evaluating a scope application
to determine if a product is covered, or not covered, by the scope of
an AD/CVD order, it is only whether the product has been previously
declared by an importer, or determined by CBP, as subject to an order
which is relevant to our analysis under Sec. 351.225(k). Notably, if a
producer, exporter, or petitioner is the party filing the scope inquiry
application, unlike the importer, they may not even know if the product
at issue is currently subject to suspension and cash deposits.
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\65\ As discussed further below, Commerce is modifying Sec.
351.225(l) to provide that Commerce normally will apply a scope
ruling that a product is covered by the scope of an order to
unliquidated entries not yet suspended which entered prior to the
date of initiation of the scope inquiry, with certain exceptions.
One of those exceptions would allow for a party to timely request
that Commerce consider whether to direct CBP to suspend liquidation
and collect cash deposits at an alternative date. Such request must
be based on a specific argument supported by evidence establishing
the appropriateness of that alternative date, as explained further
below.
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In response to the concerns expressed by some of the commenters
that they would be unable to obtain all of the information listed, that
is the reason we have included the words ``to the extent reasonably
available to the applicant'' in this paragraph. Whether or not
information is reasonably available to an applicant will be a
determination made on a case-by-case basis. We understand that
interested parties requesting a scope ruling may not have access to all
the information that is listed, and despite the criticisms of some of
the commenters, it is a fact that domestic industries will likely have
less information about a particular exporter and its production
experience, for example, than the producer, exporter, and possibly
importer of that product. Accordingly, Commerce will allow applicants
to explain the reasons they do not have certain information when
filling out the scope application. Further, Commerce retains the
authority to either issue supplemental questions about those
explanations if necessary, or reject a scope ruling application
entirely, if Commerce determines that it cannot conduct a scope inquiry
in the absence of the missing information at issue.
Accordingly, the information identified in the Proposed Rule for
the scope application has remained largely the same in this final rule,
as we believe those data requests, including information as to the
history of earlier versions of the product if this is not the first
model of the product under Sec. 351.225(c)(2)(C)(iv), are important to
our scope analysis. Again, if a party is unable to provide certain
information, and can provide a reasoned explanation as to why those
data are unavailable, Commerce will consider such claims in determining
whether to accept or reject an application or issue supplemental
questionnaires.
Finally, with respect to the request that Commerce create a
procedure to place proprietary information on the record of a scope
inquiry from proceedings which are a few years old, or make such data
generally available to a scope applicant, we have determined not to
implement such a procedure in these regulations. To the extent that
information is relevant for a scope application, we believe public data
will likely usually suffice. We do not believe that Commerce should
establish a whole new regulatory exception to the APO procedures for
what we foresee as a rare occurrence in which an interested party seeks
access to proprietary data no longer available for use in a scope
application.
4. Section 351.225(d)--Initiation of a Scope Inquiry and Other Actions
Based on a Scope Ruling Application
Section 351.225(d) of the modified regulations provides for the
process by which a scope inquiry may be initiated based on a scope
application. Certain commenters indicate that they support Commerce's
determination to deem a scope inquiry automatically initiated if no
further action is taken within 30 days, while another commenter
requests that Commerce publish notice of its scope applications and
initiations in the Federal Register to provide notice to interested
parties who may not be on the annual inquiry service list. In addition,
another commenter argues that Commerce should provide surety companies
with notice of scope initiations so that they can participate in scope
inquiry proceedings that are relevant to their interests.
In related comments, several commenters argue that Commerce should
allow interested parties an opportunity to submit comments and factual
information prior to initiation of a scope inquiry.
Response:
As explained above, Commerce has modified its self-initiation
procedures under Sec. 351.225(b) to publish notice of the self-
initiation in the Federal Register. However, given deadlines and
complications in scope inquiry procedures initiated pursuant to a scope
application, consistent with our current procedures, we will not
publish notices of initiations of scope inquiries in the Federal
Register under Sec. 351.225(d). Instead, we will, as requested by a
commenter, under Sec. 351.225(d)(2), publish on a monthly basis a
notice in the Federal Register that lists scope applications from the
past couple of months filed with Commerce. It is our expectation that
usually that list will reflect most, if not all, of the scope
applications filed over the past month, but we also recognize that
given certain timing constraints, issues frequently arise which make
that goal impractical--such as when an application has been filed after
the monthly notice has been sent to the Federal Register for
publication. In that situation, it would be understood that the scope
application would be included in the following month's Federal Register
notice.
We have added this requirement to ensure adequate notification is
provided via the Federal Register to interested parties not on the
annual inquiry service list. By listing the applications received by
Commerce requesting a scope inquiry, it is our expectation that the
descriptions of the applications will give all interested parties an
opportunity to consider if the scope inquiry request is relevant to
them and their interests, and allow them the opportunity to file a
notice of appearance with Commerce on the record of that scope inquiry.
To the extent that surety companies wish to have notice of Commerce's
scope inquiries, although they are not interested parties under section
771(9) of the Act (as discussed further below regarding Sec.
351.225(l), comment 12(f)),
[[Page 52316]]
this monthly published list will also provide them with that notice.
It is our expectation that the Federal Register list will include,
where appropriate, for each scope application the following data: (1)
Identification of the AD and/or CVD orders at issue; (2) a concise
public summary of the product's description, including the physical
characteristics (including chemical, dimensional and technical
characteristics) of the product; (3) the country(ies) where the product
is produced and the country from where the product is exported; (4) the
full name of the applicant; and (5) the date that the scope application
was filed with Commerce. We anticipate that Commerce may include
additional information in the monthly Federal Register list at its
discretion and may leave off the list references to applications which
have been rejected and not properly resubmitted.
In addition, Commerce has revised Sec. 351.225(d) to explain that
deemed initiation will only occur if Commerce has neither rejected the
scope application nor initiated the scope inquiry at an earlier date,
and that after 30 days the scope application will be deemed accepted
and the scope inquiry will be deemed initiated.
In response to complaints that Commerce should permit parties a
greater amount of time in which they can submit comments on the scope
application before initiation, we have declined to modify our
regulations in that manner. Interested parties on the annual inquiry
service list, as provided under Sec. 351.225(n), will be
electronically notified soon after an application is filed with
Commerce, and the applicant will otherwise serve the application on
those interested parties in accordance with Sec. 351.225(c) and (n).
Those parties will, therefore, have an opportunity to file arguments
with Commerce before initiation.\66\ Nonetheless, even if they do not
file comments on the application before it is deemed accepted and the
scope inquiry is initiated, they will also have an opportunity
afterward to comment on the application and provide responsive facts
and arguments on the record, in accordance with Sec. 351.225(f). This
is true for interested parties who received notice of the filing of the
scope application in the Federal Register as well, as described in this
provision.
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\66\ Given the short turn-around of scope initiations, at its
discretion, Commerce may, but is not required to, consider such
arguments before a scope inquiry is initiated.
---------------------------------------------------------------------------
We recognize that under Commerce's current practice, interested
parties frequently submit comments prior to the initiation of a scope
inquiry in order to provide Commerce with additional factual
information that rebuts or clarifies a scope ruling request. However,
we believe that, under the new scope inquiry procedures, the need for
such an opportunity to submit comments/additional factual information
pre-initiation will be largely alleviated with Commerce's proposed
standardized scope ruling application because use of the scope ruling
application should result in more fulsome and complete information
being filed at the outset.
We continue to believe that requiring a more fulsome standardized
scope application (rather than what is required in the current
regulation), and having a scope application deemed accepted and a scope
inquiry commenced after 30 days, is reasonable and will speed up
Commerce's scope ruling procedures. If we were to extend that time
longer, as requested by several commenters, that goal would be less
likely to be achieved. Therefore, we have made no modification to the
timetable spelled out in Sec. 351.225(d) from that set forth in the
Proposed Rule.
Finally, we have also added a provision to Sec. 351.225(d) that if
Commerce determines upon review of a scope ruling application that the
scope issue should be addressed in another, ongoing segment of the
proceeding, such as a circumvention inquiry, then Commerce will notify
the applicant, within 30 days after the scope ruling application has
been filed, that the agency will not initiate the scope inquiry, but
address the scope issue in that other segment.
5. Section 351.225(e)--Deadlines for Scope Rulings
Section 351.225(e) provides that Commerce shall issue a final scope
ruling within 120 days after the date on which the scope inquiry was
initiated, although it may be extended up to an additional 180 days for
good cause (for a fully-extended total of 300 days). This was a change
from the 45-day deadline in the current regulations, which Commerce
explained in the preamble to the Proposed Rule has been a ``difficult
and frequently unworkable deadline.'' \67\ Commerce explained that the
shorter deadline led to ``unnecessary delay and questions on the part
of outside parties,'' and if Commerce had to solicit and ``receive new
factual information and comments from numerous parties,'' it left
``little time to consider the evidence and arguments and reach a well-
reasoned decision within the time allotted.'' \68\ Therefore, Commerce
frequently had to extend deadlines in a large number of its scope
inquiries. Accordingly, Commerce revised these regulations to provide
for a more realistic and manageable timetable.
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\67\ Proposed Rule, 85 FR 49472 at 49478.
\68\ Id.
---------------------------------------------------------------------------
We received many comments and rebuttal comments on this provision.
One commenter argues that the current 45-day deadline is already too
long for certain simple and non-controversial scope rulings. If
Commerce has the authority to extend the 45-day deadline for good
cause, the elimination of the importers' ability to obtain a scope
ruling within 45 days is unnecessary because the agency can already
achieve a short delay when necessary under its current regulations. The
same commenter also opposes removing the distinction between an
informal and formal scope ruling under the current regulations, arguing
that, in fact, such a change would slow down the scope ruling process
rather than speed it up and the 120-day deadline would become the
automatic default in every case. That commenter, therefore, argues
Commerce should make no changes to its scope inquiry procedures in the
modified regulations.
Other commenters argue that Commerce should not just have a
deadline for final scope rulings, but should also have a deadline for
preliminary scope rulings, i.e., when Commerce determines to issue a
preliminary scope ruling. They express concern that there could be a
period of time between the initiation and the preliminary scope ruling
where potential subject merchandise is being liquidated without regard
to duties, given that entries are deemed liquidated by operation of law
after one year. The commenters suggest that Commerce should establish a
deadline for preliminary scope rulings of no later than 150 days after
initiation. They argue that this would be consistent with Commerce's
proposed circumvention regulations, which identify a 150-day deadline
for preliminary circumvention determinations.
Furthermore, one commenter argues that Commerce should inquire into
whether an importer has entries of the merchandise at issue subject to
suspension of liquidation or cash deposit requirements under the AD or
CVD order at issue, and if that entity's imports are not currently
being suspended or subject to cash deposits, the regulations should
mandate that Commerce issue a preliminary scope ruling no later than
120 days after
[[Page 52317]]
initiation of the scope inquiry, to ensure relief to the injured
domestic industry.
In addition, two other commenters express concern over the fully
extended deadline of 300 days. They argue that such a deadline is
excessive, inconsistent with other provisions in the proposed
regulations, and that providing Commerce with six more months to
consider a scope ruling request would increase burdens on U.S.
companies in terms of legal and business uncertainty.
In their rebuttal submissions, certain commenters agree with the
request for a 150-day deadline for preliminary scope rulings, and
strongly disagree with the argument that Commerce should retain its 45-
day deadline. They point out that the proposed regulations do not
preclude Commerce from issuing its scope ruling before the 120-day
deadline, only that the 120-day deadline is a maximum deadline. Indeed,
certain domestic industry commenters state that they believe that the
120-day deadline will result in more predictable, and possibly shorter,
deadlines than under the current system, where they claim there have
been too many extensions, and that each day Commerce does not initiate
or issue a scope ruling is another day where injury to the domestic
industry occurs.
Further, in their rebuttal submissions, certain commenters
challenge the idea that the length of a scope inquiry is unfair to
importers, arguing that if an importer conducts proper due diligence,
it will have the appropriate tools to analyze whether its product may
or may not be covered by an order, and if it does not, it should
request a scope ruling sooner rather than later. Due diligence, they
argue, is a best practice and should not be seen as an unreasonable
burden or unfairness to importers.
Response:
After considering the submitted comments regarding scope segment
deadlines, we have determined not to modify the deadlines set forth in
the proposed Sec. 351.225(e). For all of the reasons we explained in
the preamble to the Proposed Rule, the current system is unwieldy and
forces Commerce to issue multiple extensions. We also disagree that the
current system of an informal and formal scope ruling dichotomy is a
preferable way to conduct our scope rulings. As we also explained in
the Preamble to the Proposed Rule, the distinction between those two
procedures sometimes causes confusion and adds unnecessary delay to our
proceedings; accordingly, we believe the burden resulting from the
current system outweighs the benefit of a simpler, single scope inquiry
procedure.\69\
---------------------------------------------------------------------------
\69\ Id. at 49478.
---------------------------------------------------------------------------
Furthermore, we believe the use of a standardized scope application
and a 120-day deadline is reasonable, and if a case is complicated and
good cause exists to warrant an extension, allowing Commerce to extend
its scope inquiry proceedings up to an additional 180 days is also
reasonable. As one of the commenters argues, this does not mean that
Commerce will always take 120 days to issue scope rulings, especially
when a scope ruling is fairly simple, straightforward, and/or
uncontested. In those cases, it is not unreasonable to expect that
Commerce might issue a scope ruling in a shorter time frame. Similarly,
it does not mean that every time Commerce extends the proceeding, it
will automatically extend the full 180 days.
Moreover, we do not agree with the commenter who argues that
Commerce should be mandated by the regulations to: (1) Request that
every applicant that imports the product subject to the scope inquiry
inform us whether liquidation of its entries of the particular product
are currently being suspended and if it is paying cash deposits on
those entries; and (2) if the requestor responds that the imports at
issue are not being suspended or that the importer is not paying cash
deposits on those entries, Commerce must issue a preliminary scope
ruling within 120 days after initiation of the scope inquiry. We do not
believe such a requirement is appropriate. We agree with the commenter
that such information might be relevant at some point in our inquiry,
for example, for purposes of our CBP instructions under Sec.
351.225(l), but, for the reasons explained above in the discussion of
Sec. 351.225(c), such information normally is not relevant for our
scope analysis under Sec. 351.225(k).
In addition, we do not agree with the parallels drawn to
preliminary circumvention determinations. Preliminary circumvention
determinations are issued in every circumvention inquiry, but Commerce
does not issue a preliminary scope ruling in all scope inquiries. When
Commerce determines that a preliminary scope ruling is warranted, we do
not believe it should be restricted by a specific deadline in the
regulations. Instead, we believe that Commerce should have the
flexibility to determine when to issue a preliminary scope ruling and
request comments from participating interested parties. Thus, it would
be unreasonable to require Commerce to issue a preliminary scope ruling
when the facts on the record are simple and clear enough for Commerce
to issue a final scope ruling before or on 120 days after initiation of
the scope inquiry. Therefore, we have not modified Sec. 351.225(e) to
mandate the issuance of preliminary scope rulings within 120 days, or
even 150 days as suggested by some, after initiation of the scope
inquiry.
We also disagree with the commenter expressing concerns regarding
the prolonged uncertainty for U.S. importers as to the ultimate status
of products subject to a scope inquiry under the 300-day deadline, when
coupled with the potential for retroactive suspension of liquidation.
As other commenters have argued, all importers of merchandise to the
United States are required to conduct their business affairs with due
diligence and should be informed as to the potential trade remedies
that may be applied to imported merchandise when they decide to import
that merchandise. If a party is concerned that its products might be
covered by an AD or CVD order, it is the party's responsibility to
request a scope ruling at the earliest possible time. We do not believe
the potential 120-day or fully-extended 300-day deadlines set forth in
Sec. 351.225(e) are unnecessarily lengthy or burdensome on importers,
and we do not believe that the firm deadlines in the regulations will
result in uncertainty or unpredictability, as some commenters asserted.
In fact, we find the opposite to be true. Commerce will now be required
by regulation to issue scope rulings no later than 300 days after
initiation--a requirement not found in the current regulations.
Finally, we have revised the heading of this section to ``Deadlines
for scope rulings'' from ``Time limits,'' to better reflect the
provisions covered by this section of the regulation, and we have moved
the provision allowing for alignment of scope rulings with other
segments of a proceeding from proposed Sec. 351.225(i)(2) to this
section to clarify that all of the deadlines described in this section
may be adjusted if the scope inquiry is aligned with another segment.
6. Section 351.225(f)--Scope Inquiry Procedures
Section 351.225(f) provides the deadlines for rebuttal comments and
factual information and other procedural matters. We received multiple
comments specifically on the various deadlines contained within the
proposed procedures. All of those comments requested more time,
claiming that the deadlines as proposed were too short for interested
parties and
[[Page 52318]]
Commerce to effectively analyze questionnaire responses and other
submissions prior to the deadline for responses and rebuttal
submissions.
Furthermore, one commenter argues that Commerce should not indicate
in Sec. 351.225(f)(3) that it may limit issuance of questionnaires to
a reasonable number of respondents, because such a limitation would
also have the effect of limiting verification of those respondents to
whom questionnaires had been issued. That commenter argues that it
would be inappropriate to decline gathering information via
questionnaire from all potential respondents.
Finally, certain commenters express their support for Sec.
351.225(f)(6), which acknowledges that Commerce maintains the ability
to rescind a scope inquiry if it determines it is appropriate to do so.
One of those commenters points to the Proposed Rule where Commerce
explained that it might ``rescind a scope inquiry, for example, if an
interested party has failed to provide information necessary for
Commerce to issue a scope ruling,'' \70\ in ``instances in which a
scope matter may be addressed in another segment of a proceeding'' or
in ``instances in which a new scope inquiry or scope ruling is
unnecessary because of a related or prior scope ruling.'' \71\ That
commenter requests that Commerce codify those examples in the
regulation. Further, that same commenter notes that Commerce stated in
a footnote in the preamble to the Proposed Rule that it ``maintains the
discretion to apply facts available pursuant to section 776 of the Act,
as appropriate, rather than rescind a scope inquiry,'' and argues that
Commerce should, therefore, codify its authority to apply facts
available with an adverse inference when an interested party has failed
to supply requested necessary information.
---------------------------------------------------------------------------
\70\ Id. at 49479.
\71\ See id.
---------------------------------------------------------------------------
Response:
Upon consideration of the various comments about Commerce's
proposed deadlines, as well as consideration of our own practice in
other circumstances, we have determined to modify our proposed
deadlines under Sec. 351.225(f) to allow interested parties additional
time to provide responses and new factual information as follows:
<bullet> Under Sec. 351.225(f)(1), parties will have 30 days,
rather than 20 days, to submit comments and factual information after
Commerce self-initiates a scope inquiry;
<bullet> Under Sec. 351.225(f)(1), parties will have 14 days,
rather than 10 days, to submit comments and factual information to
rebut, clarify, or correct factual information submitted by the other
interested parties;
<bullet> Under Sec. 351.225(f)(2), parties will have 30 days,
rather than 20 days, to submit comments and factual information after
Commerce initiates a scope inquiry pursuant to a scope application;
<bullet> Under Sec. 351.225(f)(2), the applicant will have 14
days, rather than 10 days, to submit comments and factual information
to rebut, clarify, or correct factual information in response to the
interested parties' submissions;
<bullet> Under Sec. 351.225(f)(3), interested parties will have 14
days, rather than 10 days, to submit comments and factual information
to rebut, clarify, or correct factual information contained in a
questionnaire response;
<bullet> Under Sec. 351.225(f)(3), the original submitter will
have seven days, rather than five days, to submit comments and factual
information to rebut, clarify, or correct factual information submitted
in the interested party's rebuttal, clarification, or correction;
<bullet> Under Sec. 351.225(f)(4), interested parties will have 14
days, rather than 10 days, after the preliminary scope ruling to submit
comments; and
<bullet> Under Sec. 351.225(f)(4), interested parties will have
seven days, rather than five days, to submit rebuttal comments
thereafter.
With respect to the commenter's argument that we should codify our
ability to apply facts available, pursuant to section 776(a) of the
Act, and an adverse inference, pursuant to section 776(b) of the Act,
we have declined to do so because Commerce already has the authority to
apply adverse facts available when an interested party fails to provide
necessary information in all of its proceedings, including scope
inquiries.
Furthermore, we have also declined to list the scenarios under
which Commerce would rescind a scope inquiry in Sec. 351.225(f)(6)
because such a determination to rescind a scope inquiry is made on a
case-by-case basis, and, although the examples provided in the preamble
of the Proposed Rule were illustrative, they were by no means
exhaustive. Accordingly, we do not believe it would be beneficial in
this case to codify a non-exhaustive list of examples in the final
regulations in which we would rescind a scope inquiry. We acknowledge
that we have provided some common examples in the circumvention inquiry
(Sec. 351.226) and covered merchandise inquiry (Sec. 351.227)
regulations in which we may rescind those inquiries, but again, even
those examples are not exhaustive.
With respect to Commerce's authority to rescind a scope inquiry, we
have made some additional changes to conform this section with parallel
or similar language in the circumvention inquiry (Sec. 351.226) and
covered merchandise inquiry (Sec. 351.227) regulations. Specifically,
we have edited Sec. 351.225(f)(6) to clarify that rescission of scope
rulings can be in whole or in part. This is consistent with Commerce's
current practice. For example, Commerce may conduct a scope inquiry in
which a single importer has filed six scope applications covering six
different products from the same producer and exporter. Commerce may
determine in that situation to conduct a single segment of the
proceeding covering all six products, but then later in the combined
scope inquiry segment determine to rescind the inquiry with respect to
three or four of the products. In another example, Commerce may
determine to consider and analyze in one segment of the proceeding
scope inquiries covering products with the same physical
characteristics produced and exported by different entities and
imported by different importers. As with the segment covering multiple
products, Commerce may rescind in whole or in part a segment covering
different combinations of producers, exporters, and/or importers. The
language of Sec. 351.225(f)(6) is meant to cover various scenarios,
including examples such as these.
In response to the commenter's argument that Commerce should not be
permitted to limit issuance of questionnaires to a reasonable number of
respondents under Sec. 351.225(f)(3), we disagree. In the context of a
scope inquiry, such situations most frequently arise when a domestic
producer requests a scope ruling covering certain products produced and
exported by multiple entities. If Commerce had unlimited resources, we
agree that the best-case scenario would have Commerce never limiting
the number of questionnaires it issues and respondents that it
considers. However, in reality, Commerce conducts its administrative
proceedings with limited resources and under specific time constraints.
Accordingly, and in consideration of Commerce's authority to limit
respondents under section 777A(c)(2) of the Act for investigations, we
continue to believe that it is appropriate to retain the language in
our regulations that clarifies that we may limit the issuance of
questionnaires to a reasonable number of respondents if the record of
[[Page 52319]]
the scope inquiry warrants such a limitation.
Finally, for greater clarity, we have made some minor edits to
Sec. 351.225(f)(7) to explain that Commerce can both alter or extend
time limits if it determines it is appropriate to do so on a case-by-
case basis.
7. Section 351.225(g)--Preliminary Scope Ruling
Section 351.225(g) would authorize Commerce to issue a preliminary
scope ruling as to whether there is a reasonable basis to believe or
suspect that the product is covered by the scope of the order.
Additionally, Sec. 351.225(g) would continue to allow Commerce to use
its discretion in issuing a preliminary scope ruling at the same time
Commerce initiates a scope inquiry. Pursuant to Sec. 351.225(n)(4),
Commerce will notify interested parties on the segment-specific service
list of the issuance of the preliminary scope ruling.
One commenter argues that notification of a preliminary scope
ruling only to the parties participating in the scope inquiry is
insufficient and might be inconsistent with U.S. obligations under the
AD and SCM Agreements. The commenter, therefore, argues that Commerce
should publish its preliminary scope ruling in the Federal Register,
rather than just notify the parties on the segment-specific service
list.
In their rebuttal comments, several commenters disagree with this
argument, arguing that Commerce's implementation and use of an annual
inquiry service list and segment-specific service list is fully
consistent with U.S. international obligations, and that Commerce is
not required to publish preliminary scope rulings in the Federal
Register.
Response:
As explained above, Commerce is modifying its regulations under
Sec. 351.225(b) and (d), such that we will publish in the Federal
Register notices of self-initiation and monthly lists describing scope
applications which have recently been filed with Commerce. We believe
both types of those Federal Register notices, which we anticipate will
identify the product, AD or CVD order, and country of production and
export (the latter where the product has already been imported), will
provide adequate notification to the public. Following such
publication, however, it will be incumbent upon interested parties to
take the necessary steps to participate in Commerce's proceedings in
accordance with Sec. 351.225(n)(4) by filing an entry of appearance to
stay apprised of the status of a scope inquiry. The final rule is in
compliance with U.S. international obligations under the AD and SCM
Agreements, and we do not believe there is any additional requirement
that Commerce publish preliminary scope rulings in the Federal
Register. Accordingly, we have declined to make the commenter's
suggested modification to our regulations.
8. Section 351.225(h)--Final Scope Ruling
Under proposed Sec. 351.225(h), Commerce would convey final scope
rulings to interested parties who are parties to the scope inquiry
proceeding in accordance with the requirements of section
516A(a)(2)(A)(ii) of the Act. Such interested parties would be required
to have legal standing to appeal the final scope ruling. Additionally,
under proposed Sec. 351.225(n), all parties on the segment-specific
service lists would be notified of the final scope ruling through
Commerce's electronic ACCESS system.
One commenter observes that currently scope mailings are
``conveyed'' by first class mail, and advocates that Commerce revise
that requirement in its regulations to have ``conveyance'' be made
solely through ACCESS.
Response:
With respect to the commenter's request, we agree that conveying
our scope rulings to interested parties who are parties to the scope
inquiry proceeding through first class mail or common carriers, such as
Federal Express, is largely superfluous and unnecessary in light of the
notification they receive through ACCESS. However, section
516A(a)(2)(A)(ii) of the Act states that judicial review of ``class or
kind'' determinations, such as scope rulings, are based off the ``date
of mailing'' of the determination.\72\ The CIT has explicitly held that
it ``refuses to extend the definition of `mailing' to include email
messages,'' faxes, or other such electronic conveyances for purposes of
this provision.\73\ For that reason, we believe that Commerce is
required to continue to convey its final scope rulings through first
class mail or common carriers at this time. Should Congress eventually
modify this statutory provision and allow for conveyance of scope
rulings through electronic means, our use of the term ``conveyance'' in
the modified regulation will allow us to convey scope rulings through
electronic means, without further revision of the regulation.
---------------------------------------------------------------------------
\72\ Id. at 49479.
\73\ Medline Industries, Inc. v. United States, 911 F. Supp. 2d
1358, 1361 (CIT 2013); see also Bond St., Ltd. v. United States, 521
F. Supp. 2d 1377, 1381 (CIT 2007).
---------------------------------------------------------------------------
Additionally, we note that Commerce's current regulations under
part 356 of Title 19 (current Sec. Sec. 356.6 and 356.7) contain
specific notification requirements for ``scope determinations'' made by
Commerce applicable to producers and exporters from a free trade
agreement (FTA) country to the governments of those FTA countries. We
have, therefore, added a clause to Sec. 351.225(h) in the final
regulations which acknowledges that scope rulings applicable to FTA
countries are governed, where relevant, by those provisions.
9. Section 351.225(i)--Other Segments of the Proceeding
Section 351.225(i) recognizes that Commerce may make a scope
determination in the context of another segment of the proceeding, such
as an administrative review under section 751(a) of the Act, and
acknowledges the flexibility Commerce has to modify deadlines and other
actions to ensure that its scope analysis is complete in those other
segments.
One commenter indicates its support for this provision, and
stresses the importance of Commerce's ability to request further
information concerning a product subject to a scope inquiry in other
segments of the proceeding, set forth in proposed Sec. 351.225(i)(3).
Another commenter requests that Commerce clarify how it will notify
entities when it opts to address scope issues within the context of a
segment of the proceeding that is not a scope inquiry, and suggests
that Commerce do so by notifying entities on the annual inquiry service
list under Sec. 351.225(n)(3).
Response:
Section 351.225(i)(1), which has been slightly modified, applies to
at least two scenarios in which Commerce might address a scope issue in
another segment of the proceeding. First, if a scope issue is raised
for the first time in the context of another segment and we determine
that it would be illogical to self-initiate a new scope inquiry under
Sec. 351.225(b), Commerce may address the scope issue in that other
segment without following the procedures of a scope inquiry under Sec.
351.225. This could happen, for instance, in a circumvention inquiry
under Sec. 351.226, a covered merchandise inquiry under Sec. 351.227,
or in an administrative review under Sec. 351.213. The parties to that
segment of the proceeding would be notified of the pending scope issue
[[Page 52320]]
through a variety of means. For example, the issue would likely be
raised by the parties, and they would have the opportunity to provide
new factual information or comment, as appropriate, or Commerce may
request additional information of the parties. In addition, parties not
already participating in that segment of the proceeding would be
notified of the scope issue in Commerce's preliminary results (in the
case of an administrative review under Sec. 351.213) or preliminary
determination (in the case of a circumvention inquiry under Sec.
351.226 or a covered merchandise inquiry under Sec. 351.227), which
would be published in the Federal Register. At that time, interested
parties not yet participating in that segment of the proceeding could
file a notice of appearance and submit case briefs.\74\
---------------------------------------------------------------------------
\74\ In addition, if those interested parties wished to submit
new factual information, they would follow the procedures in Sec.
351.301 to request permission to do so.
---------------------------------------------------------------------------
Second, where a scope inquiry has already been initiated and is
ongoing, but Commerce determines that it would be best addressed in
another segment which is also ongoing or just beginning, Commerce would
rescind the scope inquiry under Sec. 351.225(f)(6) and conduct its
scope analysis solely in that other segment and notify interested
parties.
Additionally, Sec. 351.225(i)(2) (proposed Sec. 351.225(i)(3))
provides that during the pendency of a scope inquiry or upon issuance
of a final scope ruling, Commerce may take any further action, as
appropriate, with respect to another segment of the proceeding. As
referenced by a commenter, this means that Commerce has the ability to
request further information concerning a product subject to a scope
inquiry in other segments of the proceeding, such as an administrative
review under Sec. 351.213.
Furthermore, at any point during an ongoing segment of a
proceeding, Commerce retains the ability to self-initiate a separate
scope inquiry in accordance with Sec. 351.225(b), rather than address
the scope issue in the context of the other segment of the proceeding.
Finally, as already noted above, to provide clarity with regard to
scope ruling deadlines, we have moved what was proposed Sec.
351.225(i)(2) to Sec. 351.225(e)(3), and as a result of that
modification, prior Sec. 351.225(i)(3) is now Sec. 351.225(i)(2).
10. Section 351.225(j)--Country of Origin Determinations
Section 351.225(j) addresses Commerce's country of origin analysis,
and in particular provides the factors Commerce considers when applying
its ``substantial transformation'' test. Each scope contains a
description of the physical class or kind of merchandise covered by
that order, while Commerce's country of origin analysis determines at
what point in the production and processing of the product the country
of origin of the class or kind of merchandise is established. The
country of origin determined through this analysis applies to all
merchandise in the production and processing chain of the product
meeting the physical descriptions of the scope originating in that
country, regardless of the point in the production and processing chain
of the product at which the country of origin is established. We
received several comments on this provision.
One commenter points out that Commerce indicates that it ``may''
consider relevant factors on a case-by-case basis in the regulation,
rather than stating that it ``will'' consider the listed factors in
every case. That commenter stresses that Commerce should state clearly
that not all of the numbered factors are necessarily required to be
considered in every case.
A second commenter suggests that Commerce should take into
consideration the activities of tollers in the production chain when it
conducts a substantial transformation analysis. That commenter argues
that Commerce does not consider tollers to be ``manufacturers'' or
``producers'' if they do not acquire ownership and control the relevant
sale of subject merchandise, but nothing prevents exporters or
importers from declaring foreign processors to be tollers, thereby
evading Commerce's country of origin analysis. That commenter argues
that to prevent such manipulation of Commerce's country of origin
analysis, Commerce should codify a consideration of whether or not a
toller is a toller or foreign processor as part of its substantial
transformation test.
Other commenters express concerns that Commerce does not explain in
its regulations the scenarios in which it will use an alternative to
the substantial transformation test, and appears to give Commerce wide
discretion in applying the factors in the regulation when determining
the country of origin of a product. They request that for both the
substantial transformation and the alternative options, Commerce codify
further guidance in the regulations.
The proposed regulation states that Commerce is not ``bound'' by
the country of origin ``determinations of any other agency.'' One
commenter argues that Commerce should be required to justify its
determination when it departs from the country of origin determinations
of CBP or other agencies.
That same commenter also argues that Commerce should not conduct a
country of origin analysis in a scope ruling, but instead should
conduct that analysis in its third country processing circumvention
analysis, under Sec. 351.226(i). That comment appears to reflect a
misunderstanding of the relationship between Commerce's country of
origin analysis pursuant to investigations, administrative reviews and
scope rulings, and the separate analysis conducted pursuant to third
country processing circumvention inquiries. Accordingly, we address
this argument below, with respect to comments on Sec. 351.226(i).
In rebuttal submissions, some commenters respond that Commerce's
country of origin analysis is fundamental to determining if a
particular product is covered by the scope of an order, that the
Proposed Rule simply codifies Commerce's longstanding use of the
substantial transformation test, and that the Proposed Rule recognizes
that on a case-by-case basis Commerce should retain the flexibility to
address other case-specific factors or the need for an entirely
different test when the facts on the record warrant such an analysis.
They argue that because country of origin determinations can be
complex, especially when complicated global supply chain sourcing
issues arise, the language as proposed in Sec. 351.225(j) should not
be changed, as that language provides Commerce with the tools to
adequately determine the country of origin based on relevant
characteristics of the particular product at issue.
In addition, in their rebuttal submissions, certain parties
challenge the idea that Commerce must justify its determinations when
those determinations come to a different conclusion as to the country
of origin from CBP. The commenters argue that, just as the proposed
language states, Commerce is not bound by the determinations of other
agencies when conducting a country of origin analysis, since Commerce's
analysis is ultimately made independently of CBP and is based upon the
information on the record of the proceeding.
Finally, in their rebuttal submissions, some commenters express
their
[[Page 52321]]
agreement that Commerce should add consideration of the facts
surrounding reported toll processors as a factor to the substantial
transformation test, stressing that foreign producers have increasingly
used toll processors to escape affiliation issues and avoid duties,
such as contracting with tollers that are former employees or tollers
that are located within their own facilities.
Response:
We have made changes from the language published in the Proposed
Rule. First, we have adopted minor renumbering changes. Second, we have
revised the terminology of Sec. 351.225(j)(1)(ii) to cover ``physical
characteristics (including chemical, dimensional and technical
characteristics)'' to bring that language into conformity with other
provisions of the regulations. Third, we have turned the listed five
factors into six factors, separating the intended end-use of the
downstream product from the physical characteristics factor. We believe
this better reflects the distinct factors which Commerce considers when
applying its substantial transformation analysis.
With respect to the comments we received on this provision, we
agree with those commenters who explain that the factors listed in the
proposed regulation are not exhaustive. We understand the arguments
that it would bring more certainty to certain parties if we set forth
definitive factors that we would apply in every case, but as some
commenters explain, every product is different and every supply chain
and production process is different, as well. Accordingly, the listed
factors are not exhaustive, because Commerce must retain the
flexibility to adjust its country of origin analysis when the facts on
the record warrant such an adjustment. The listed factors represent the
factors we normally apply in most cases, but as we explained in the
preamble to the Proposed Rule, there have been ``different iterations''
of Commerce's substantial transformation analysis and Commerce has
``considered other factors in applying its substantial transformation
analysis when necessary.'' \75\
---------------------------------------------------------------------------
\75\ Proposed Rule, 85 FR 49472 at 49480.
---------------------------------------------------------------------------
Furthermore, as Commerce also explained in the preamble to the
Proposed Rule, this provision states that Commerce ``may'' conduct its
substantial transformation analysis, but is not required to apply that
analysis if it determines ``for some reason'' that ``the substantial
transformation test is not appropriate for purposes of determining the
country of origin of a particular product.'' \76\ In those
circumstances, as the Federal Circuit has affirmed, Commerce continues
to have the authority to apply a different, reasonable test to
determine the country of origin of a particular product.\77\
---------------------------------------------------------------------------
\76\ Id.
\77\ See Canadian Solar, 918 F.3d at 918-20. At issue in
Canadian Solar was a situation in which Commerce applied its
substantial transformation test in one investigation, and as a
result, exporters evaded the payment of duties by shifting the
country of production of solar cells to a third country. Thus, in
the context of the second investigation claiming solar panels
continued to cause the petitioners injury, Commerce determined the
use of its substantial transformation test again would be ill-
advised, as it would not provide a meaningful remedy to the injured
petitioners. Accordingly, Commerce applied a second test, which the
Federal Circuit affirmed as in accordance with law, focusing on the
country where solar panels were completed, thereby granting the
injured petitioners relief from dumped and subsidized Chinese solar
panels. Id., 918 F.3d at 915-20.
---------------------------------------------------------------------------
With respect to the argument that Commerce must justify its country
of origin determinations when they differ from that of CBP's country of
origin analysis, conducted pursuant to 19 CFR 134.1(b), it is well
established that different Federal agencies apply different country of
origin tests, depending on the context and purpose of the test.
Commerce's country of origin analysis in the context of AD and CVD
proceedings differs from that of CBP in its own proceedings.
As the CIT explained in Venus Wire Industries,\78\ Commerce has
applied its own country of origin analysis for over 40 years. It is an
analysis which has been litigated and upheld by the Federal
Circuit.\79\ That Commerce has a different county of origin analysis
from CBP is not surprising, given that Commerce's analysis has a
different purpose from that of CBP and is applied specifically to
determine the relevant point in a production and processing chain where
the country of origin of the products described in AD/CVD orders is
established.\80\ If there is tension between the two analyses, for
purposes of Commerce's proceedings, Commerce's analysis applies. As the
Federal Circuit held in Mitsubishi (1994),\81\ CBP's role in
liquidating AD duties is ``ministerial'' and CBP ``cannot modify
Commerce's determinations, their underlying facts, or their
enforcement.'' Accordingly, we disagree with the commenter which argued
that if Commerce determines the country of origin of a product for
purposes of an AD or CVD order in a scope ruling, and that
determination is different from the country of origin established by
CBP for its purposes, Commerce must take an additional step to justify
the distinction. Such an additional analysis in making a country of
origin determination is generally unnecessary and unwarranted.
---------------------------------------------------------------------------
\78\ Venus Wire Industries Pvt. Ltd. v. United States, 471 F.
Supp. 3d 1289, 1299 (CIT 2020) (Venus Wire Industries).
\79\ See, e.g., Bell Supply, 888 F.3d at 1227.
\80\ To be clear, physically described products in the scope
produced or processed in the country of origin, whether produced or
processed before or after the point at which the country of origin
is established, are subject to the scope of an AD/CVD order.
\81\ Mitsubishi Electronics America, Inc., 44 F.3d 973, 977
(Fed. Cir. 1994) (Mitsubishi (1994)). See also Wirth, 5 F. Supp. at
973 (``Commerce, not Customs, has authority to clarify the scope of
AD/CVD orders and findings. Although the Department may consider the
decisions of Customs, it is not obligated to follow, nor is it bound
by, the classification determinations of Customs . . .'').
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In addition, it would be illogical for Commerce to remove its
country of origin analysis from these scope regulations. As other
commenters have noted, Commerce frequently conducts a country of origin
test as a part of its scope rulings, and there is no reason to change
this practice. As we have explained, the commenter who argued for this
change cites to Commerce's third country processing circumvention
proceedings in relation to Sec. 351.226(i) and we have, therefore,
addressed its arguments in this regard with our response to other
comments on that provision below.
Finally, we understand the arguments from the various commenters
that in certain cases Commerce may need to consider toll processors,
the role of tollers in the production and supply chain, and the
affiliations and relationships of those tollers with other processers,
in considering the country of origin of a particular product. However,
we do not believe it is necessary to codify such a requirement in this
final rule. Based on experience, most prior scope rulings/substantial
transformation analyses have not involved tollers or toll processors.
In addition, Commerce's primary focus in a country of origin analysis
is the location of the production and/or processing of the product in
an effort to determine the specific point in the production chain where
the product's origin is established, regardless of whether the
production and/or processing are conducted by a toller, and regardless
of whether the toller is affiliated with the producer or processor. We
do not wish to overwhelm our country of origin analysis in most cases
with processor and toller affiliation analyses if such an analysis is
not helpful to determining the country of origin of a particular
product. Furthermore, nothing in the final regulation prevents Commerce
from conducting such an analysis if warranted.
[[Page 52322]]
11. Section 351.225(k)--Scope Rulings
Section 351.225(k) provides the analysis Commerce utilizes in the
conduct of a scope inquiry to determine whether a product at issue is
covered by the scope of an order. We received many comments and
rebuttal comments on this provision, which we address herein.
Furthermore, we have determined to make certain edits to the proposed
regulation to provide greater clarity to this provision.
The comments which Commerce received on Sec. 351.225(k) focused on
topics relevant to individual paragraphs (k)(1) through (3).
(a) Section 351.225(k)(1)
In the proposed revision of Sec. 351.225(k), Commerce
significantly revised Sec. 351.225(k) introductory text and (k)(1).
Commerce added a chapeau to the beginning of the provision which
articulated that Commerce will first and foremost consider the language
contained in the scope of an AD or CVD order in determining whether or
not a product is covered by that AD or CVD order. Commerce explained
that it was adding this language to Sec. 351.225(k) to reflect an
additional analysis that Commerce had applied in multiple cases, and
was then affirmed by the Federal Circuit, which is that `` `a predicate
for the interpretive process is language in the order that is subject
to interpretation.' The scope of the order can be clarified but it
cannot be changed by the interpretive process'' and that scope ``orders
are interpreted under [Sec. 351.225(k)] with the aid of the
antidumping petition, investigation, and preliminary order.'' \82\
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\82\ See Tak Fat Trade Co. v. United States, 396 F.3d 1378,
1382-1383 (Fed. Cir. 2005) (citing Duferco, 296 F.3d at 1097).
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In the preamble to the Proposed Rule, Commerce explained that other
traditional interpretive tools, such as industry usage of a particular
word or phrase, dictionaries or other record evidence, could be used to
interpret a scope as well, but, ``in the event of a conflict between
these interpretive tools or other record evidence and the sources
identified in paragraph (k)(1), Commerce would adopt the interpretation
supported by the (k)(1) sources.'' \83\
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\83\ Proposed Rule, 85 FR 49472 at 49481.
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Notably, there appear to be differing views in the Federal Circuit
as to whether the sources under the current Sec. 351.225(k)(1) are
used to interpret the ``plain meaning'' of the text of the scope,\84\
or whether the plain meaning analysis comes first, and only once a
determination on the plain meaning is determined, then the current
Sec. 351.225(k)(1) sources are considered.\85\ Those differing views
appear to be reflected, as well, in the comments that we received on
this paragraph. Accordingly, we have modified this provision to provide
greater clarity on this point in this final rule.
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\84\ See Fedmet Res. Corp. v. United States, 755 F.3d 912, 918
(Fed. Cir. 2014) (Fedmet). Under the Federal Circuit's holding in
Fedmet, because the plain language is ``paramount,'' in ``reviewing
the plain language of a duty order,'' ``Commerce must consider the
descriptions of the merchandise contained in the petition, the
initial investigation, and the determinations of the Secretary
(including prior determinations) and the Commission.'' See id.
\85\ See OMG, Inc. v. United States, 972 F.3d 1358, 1363-66
(Fed. Cir. 2020) (OMG).
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Several commenters in their comments and rebuttal comments indicate
their support for Commerce's inclusion in the proposed Sec. 351.225(k)
that the language of the scope is paramount in its scope analysis. They
also agree with Commerce that, in most straightforward cases, the
agency is not required to consider the four listed (k)(1) interpretive
sources if such an analysis would waste agency time and resources.
One commenter argues that Commerce should apply the four sources
listed under paragraph (k)(1) in every case, no matter the
straightforward nature of the language in the scope, because such an
application would bring predictability to Commerce's scope rulings.
That commenter objects to Commerce's removal of the language ``will
take into account'' from the current paragraph (k)(1). Several
commenters in their rebuttal comments disagree with this argument,
saying consideration of those sources in simple cases would be a waste
of time and resources for everyone.
With respect to the arguments about secondary interpretive sources,
such as Customs rulings and industry usage, one commenter points out
that subsequent to Commerce's issuance of the proposed regulations, the
Federal Circuit issued its holding in OMG, which interpreted the
current regulation in the reverse--finding that under the current
regulatory hierarchy, dictionaries and other traditional interpretive
tools should be considered in interpreting the scope of an order before
the sources in the current paragraph (k)(1).\86\ The commenter stresses
that such an interpretation ignores the intentions of those who have
initially drafted the scope language and the petition--the injured
domestic producers, as well as the understandings of Commerce, the ITC,
and the domestic producers expressed throughout the underlying
investigation. Accordingly, it advocates that, rather than just mention
the hierarchy of interpretive sources in the preamble, Commerce should
codify that hierarchy in the regulation itself. The commenter argues
that the ``primacy of the (k)(1) factors over other interpretive tools
should be clearly articulated in the revised'' Sec. 351.225(k)(1) ``to
avoid any confusion among parties as to the importance of other
interpretive tools in defining a scope and to provide clarity for
courts of review of Commerce's intended policy in scope inquiries.''
The commenter states that if Commerce does not codify such a hierarchy,
a court might ignore the fact that terms defined in a dictionary or
other interpretive tools might not align with the interpretation of
those terms as used in the industry at issue.
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\86\ See OMG, 972 F.3d at 1363-66.
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In their rebuttal submissions, several other commenters voice their
agreement that Commerce should codify its hierarchy of interpretive
tools in the regulation, so that in the future, scopes will not be
``voided by dictionary definitions and trade usage, contrary to the
plain language of the scope and (k)(1) sources.'' They argue that such
an interpretation would be consistent with the Federal Circuit's
rejection of the primacy of ``external interpretive tools'' such as a
dictionary over the (k)(1) sources in Meridian Products, where the
Federal Circuit held that the lower court improperly narrowed the scope
of the antidumping order by relying on its own findings as to the
``common and commercial meaning'' of the term ``fastener'' using the
dictionary.\87\
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\87\ See Meridian Prods., LLC v. United States, 890 F.3d 1272,
1280-1281 (Fed. Cir. 2018) (Meridian Products).
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Finally, another commenter in its rebuttal comments challenges the
majority of commenters who recommend codifying the hierarchy of
interpretive sources in the regulation, arguing that the ``dictionary
definitions and industry usage'' should be given more weight, not less,
than the (k)(1) interpretive sources, as they ``ensure'' an ``objective
assessment of the manner in which the trade community understands the
product subject to the Order.'' They note that sometimes the proposed
scope language in a petition is not the same as the ultimate language
memorialized in an AD or CVD order, and that if that language is given
greater weight by Commerce in a scope inquiry than the actual language
of the scope, as interpreted by a dictionary, such an analysis would
allow domestic producers to create an ``alternate
[[Page 52323]]
reality,'' arguing interpretations of the scope language which were not
adopted by Commerce in the scope of the order.
Response:
We agree with the commenters that Commerce should have the
discretion to not consider the current Sec. 351.225(k)(1) sources in
cases in which it determines that the language of the scope is clear
and dispositive. However, we also agree with the commenters who argue
that in most scope inquiries the language of the scope is written in
more general or broad terms, and, therefore, in the majority of scope
inquiries, it is likely that the current (k)(1) sources would be
considered by Commerce in determining if a product is covered by the
scope of an order in a scope ruling. It is Commerce's understanding
that the sources listed in current Sec. 351.225(k)(1) were always
intended to be interpretive tools to understand the plain meaning of
the scope, recognizing that terms that may have been plain at the time
they were drafted and adopted upon the issuance of the order could be
interpreted differently at some later point.
With respect to the need for codifying the hierarchy of
interpretive sources, we agree with the commenters who warn that absent
such codification, a court might rely on a secondary source, such as a
dictionary definition, to interpret a word or phrase in a manner which
is inconsistent with the meaning used by the injured domestic industry
in drafting the proposed scope and petition, and the collective
interpretation of Commerce, the industry, and the ITC of that term
expressed in the underlying investigation. We agree with the commenters
that if we do not incorporate the hierarchy into our regulations, the
use by courts of ``external interpretive tools,'' rather than the
current (k)(1) sources, in analyzing Commerce's scope rulings could
potentially weaken or even undermine the effectiveness of Commerce's
orders. The purpose of an AD or CVD order is to provide a remedy to
offset the harm caused by unfairly traded merchandise. Therefore, the
intentions and interpretations of Commerce, the ITC, and the injured
domestic parties themselves at the time of the underlying investigation
should be given primary consideration in defining and interpreting the
scope of the order.
On the other hand, we agree with the commenter that argues that a
proposed scope or petition may differ from the language ultimately
adopted by Commerce in the final scope of an order, and, under a
situation such as that one, Commerce may determine that it must not
only consider the current (k)(1) sources, but additional, secondary
sources as well.
In light of all of these comments, we have, therefore, made several
modifications to the proposed Sec. 351.225(k)(1) provision. First, we
have moved the proposed chapeau language, which states that the
language of the scope is dispositive, to paragraph (k)(1). This is
because it is our belief that the traditional (k)(1) sources were never
intended by Commerce to be separate from the initial analysis of the
scope language, but were instead intended to be interpretive tools that
could be considered by Commerce, at its discretion and under
consideration of the arguments on the administrative record, to
determine the meaning of the scope of the order.
Second, we have modified the numbering of the paragraph and
incorporated the hierarchy of the interpretive sources into the
regulation itself. Specifically, using language from the current
regulations, paragraph (k)(1) now states that, if Commerce determines
that the language of the scope is not itself dispositive (i.e., it is
not dispositive using no interpretive tools whatsoever), Commerce may
take into account the identified primary interpretive sources, which
are the traditional (k)(1) sources, in determining if the language is
dispositive and the scope covers the product at issue. Those sources
(in paragraph (k)(1)(i)) are then followed by a paragraph (paragraph
(k)(1)(ii)) which states that Commerce may consider secondary
interpretive sources such as other Commerce or ITC determinations not
included in the primary interpretive sources, Customs rulings or
determinations, industry usage, dictionaries, and any other relevant
record evidence. This language provides clarity in that it
distinguishes primary interpretive sources from secondary interpretive
sources, and affirmatively acknowledges that Commerce may consider
secondary sources in its scope inquiries under certain scenarios. The
revised language uses the terms ``may'' and ``discretion'' to be clear
that Commerce is not required to consider any of these sources in this
manner if it believes the record does not warrant such a hierarchical
consideration. We recognize that Commerce has always had the authority
under the AD and CVD laws to consider secondary sources in interpreting
the scope of AD and CVD orders, but we believe in light of our
experience over the last 20 years that it is better to include
reference to those sources in the regulations to avoid the possibility
of confusion going forward and to describe the hierarchy of
interpretive sources clearly.
Third, we have also codified language in this final rule which
addresses a conflict between the primary and secondary interpretive
sources, providing that the primary interpretive sources will normally
govern in determining whether a product is covered by the scope of the
order at issue. We have used the word ``normally'' in this provision
because, as one commenter points out, there may be limited scenarios in
which, under a certain set of facts, Commerce might elect to give
greater weight to certain secondary sources. For example, a commenter
has provided a hypothetical in which the proposed scope and petition
contain language different from that of the ultimate order, and the
other current (k)(1) sources provide no further guidance. Under those
hypothetical facts, Commerce might determine it acceptable to give more
weight to a secondary source, presuming that the secondary source is
informative.
Finally, in making these modifications, Commerce also determined
that it would be beneficial to provide some clarity on the descriptions
of the (k)(1) sources. For paragraphs (k)(1)(i)(A), (B), and (D), we
have added language to clarify that the petition language,
investigation language, and ITC determinations considered under (k)(1)
all pertain to the order at issue. While this may seem obvious, we have
concluded that it is appropriate to add that language to distinguish
those sources from paragraph (k)(1)(i)(C), which includes
determinations not always applicable to the order at issue.
Specifically, we have modified paragraph (k)(1)(i)(C) to clarify that
both previous or concurrent Commerce scope determinations may be
considered by Commerce as part of its analysis, including prior scope
rulings, memoranda, or clarifications which pertain to both the order
at issue, as well as other orders with the same or similar language as
that of the order at issue. This change reflects Commerce's practice
and interpretation of that provision over the years, and shows that
unlike the other three primary sources, this primary source includes
scope determinations, such as scope rulings and scope clarifications,
from other proceedings addressing similar language used in the scopes
of different orders that sometimes cover the same or similar physical
merchandise from other countries. We have found it valuable over the
years to consider such determinations as part of our scope inquiry
analysis.
[[Page 52324]]
(b) Section 351.225(k)(2)
Section 351.225(k)(2) describes the factors Commerce considers if
it finds that the sources listed under Sec. 351.225(k)(1) are still
not dispositive as to whether or not the particular product is covered
by the scope of an order. In the preamble to the Proposed Rule,
Commerce explained that under Sec. 351.225(k)(2), it was ``Commerce's
intent that the first factor--the characteristics of the product,
including the technical, physical, or chemical characteristics of the
product--may be given greater weight than the other factors.
Nonetheless, Commerce should consider each of the factors in making its
determination under paragraph (k)(2).'' \88\ One of the commenters
objects to this ``change'' and argues that Commerce should consider all
of the factors equally, and that ``placing more importance on one
factor skews'' Commerce's scope analysis.
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\88\ Proposed Rule, 85 FR 49472 at 49481.
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Response:
We have made some changes to the language of Sec. 351.225(k)(2) to
clarify that Commerce will conduct its analysis under this paragraph
only if the (k)(1) factors are not dispositive. Further, we have also
modified the paragraph (k)(2)(i) factor to bring the term ``physical
characteristics'' into conformity with the way it is used in other
parts of the regulation (i.e., physical characteristics (including
chemical, dimensional, and technical characteristics)). In addition, we
have adopted minor numbering changes.
In addition, we have revised Sec. 351.225(k)(2)(i)(B) to clarify
that Commerce considers the expectations of the ultimate users, instead
of the expectations of the ultimate purchasers. This is because we have
found in our practice that there are sometimes cases in which it is not
the expectations of purchasers, but the expectations of the ultimate
users of a product which inform whether or not a product was intended
to be included in the scope of an order. There are several reasons an
entity might purchase a product, including (for example) as an
investment or as a gift, but in neither of those scenarios would the
purchaser's activities necessarily inform whether or not the product is
subject to an order. On the other hand, as Sec. 351.225(k)(2)(i)(C)
(the ultimate use of the product) informs us, it is the expectations of
the ultimate user which better informs us as to whether or not a
product was intended to be included in the scope of an order. We also
note that Sec. 351.225(k)(2)(i)(B) and (C) are distinguishable
because, as a factual matter, the expectations of a user do not always
align with the actual, ultimate use of the product.
In response to the comment on our prioritization of the first
(k)(2) factor, we disagree that such an interpretation is inconsistent
with our current practice. Indeed, when there is a conflict between the
five factors listed under (k)(2), it has been Commerce's consistent
practice to give greater weight to our analysis of the physical
characteristics of the particular product. This is because the scopes
of orders are generally written to cover products with certain physical
characteristics, and it is an established principle in our scope
practice that the objective characteristics of merchandise, including
the physical descriptions of merchandise, should be given greater
weight in case of a conflict between the factors under consideration.
This is distinguishable from other factors, such as the expectations of
the ultimate users under (k)(2)(i)(B) or the manner in which a product
is advertised, and displayed under (k)(2)(i)(E), which might
incorporate elements such as ``intended end use'' or ``design'' into
Commerce's analysis, but also by their nature lend themselves to a more
subjective outcome. Nonetheless, although this is Commerce's general
practice, we also recognize that there could be scenarios in which
Commerce considers and determines that the physical characteristic
factor should not be given greater weight in its analysis. Thus, it is
our policy to ``normally,'' but not always, give greater weight to the
physical characteristics factor as part of our (k)(2) analysis if there
is a conflict between the five listed factors.
Because this comment suggests that Commerce's practice in this area
may not be well-known or understood, we have, therefore, added to
paragraph (k)(2)(ii) a sentence which clarifies that in the event of a
conflict between the five listed factors under paragraph (k)(2)(i),
paragraph (k)(2)(i)(A) will normally be allotted greater weight than
the other factors.
(c) Section 351.225(k)(3)
Commerce proposed a codification of its analysis of component parts
of larger products, colloquially referred to as its ``mixed-media
analysis'' (i.e., subject merchandise assembled or packaged with non-
subject merchandise), in a new Sec. 351.225(k)(3) in the Propos
[…truncated; see source link]Indexed from Federal Register on September 20, 2021.
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