Treasury, Customs Publish Interim “ENFORCE/PROTECT ACT” Regulations

Hard on the heels of a General Accountability Office (GAO) report showing that the Federal Government is owed some $2.3 billion in uncollected antidumping duties and countervailing duties, the Treasury Department and United States Customs and Border Protection have published interim final regulations implementing the “ENFORCE/PROTECT ACT” provisions of the recently enacted Trade Facilitation and Trade Enforcement Act of 2016 (TFTEA). The new regulations, effective immediately, set out procedures whereby interested parties may formally petition CBP to conduct investigations of suspected antidumping and countervailing duty evasion, and take both interim and final measures to combat it. 

Both domestic producers of goods subject to antidumping and countervailing duty orders, and competing importers have long complained that competitors are unlawfully evading special duties – for instance, by mis-describing goods on invoices and Customs entry forms, or by transshipping goods through third countries to misrepresent their origin. The ‘ENFORCE AND PROTECT ACT” (EAPA) gives these entities a new mechanism to formally petition CBP to investigate suspected evasion, as well as an opportunity to seek judicial review of CBP’s decisions. 

Background of the “ENFORCE/PROTECT ACT”

While the United States’ “retrospective” system of assessing antidumping and countervailing duties has yielded the $2.3 billion deficit noted by the GAO, there are concerns that even more special duties are being evaded by illicit practices. Recent years have seen a number of high-profile fraud cases prosecuted by the government, as well as a rise in private “whistleblower” suits brought under the Federal False Claims Act, in which competitors or opportunists have charged importers with evading these duties, and have secured large judgments or settlements. 

Section 421 of the TFTEA establishes a new Section 517 of the Tariff Act of 1930, dealing with Procedures for Investigating Claims of Evasion of Antidumping and Countervailing Duty Orders. Known colloquially as the ‘ENFORCE/PROTECT ACT” or EAPA, Section 517 provides a procedure whereby “interested parties”, including domestic producers or competing importers may submit to CBP evidence of claimed antidumping or countervailing duty evasion. 

Under EAPA within 15 business days of receiving a properly filed “request for investigation” (or referral from another Federal agency) which “reasonably suggests” that merchandise covered by an AD/CVD order “has entered the customs territory of the United States through evasion”, CBP will formally initiate an investigation of the allegations.  Upon initiating an investigation, CBP will have 300 days (360 in “extraordinarily complicated” cases) to complete its investigation and determine whether, on the basis of the record before the agency,  “whether there is substantial evidence that merchandise covered by an AD/CVD order was entered into the customs territory of the United States through evasion”.  If CBP makes an affirmative determination, it will extend liquidation of entries of suspected merchandise, suspend liquidation of current and future entries of such merchandise, and may require single entry bonds or cash deposits of estimated antidumping or countervailing duties.  In addition, CBP may take other action, including the initiation of civil penalty actions under Section 592 of the Tariff Act of 1930 [19 U.S.C. §1592] or the referral of the matter to Immigration and Customs Enforcement (ICE) for the institution of civil or criminal investigations.

If, during the course of the investigation, CBP makes an interim determination whether there “exists reasonable suspicion that covered merchandise subject to an allegation was entered through evasion”, the agency can take interim action, including the suspension of liquidation of entries, and the imposition of single bonding or cash deposit requirements.

EAPA authorizes CBP to investigate allegations of dumping evasion by any means possible, including the issuance of questionnaires to importers, foreign manufacturers and exporters, and to draw “adverse inferences” if any of those parties are deemed not to be complying with the requests to the best of their abilities. 

Investigations will be carried out by CBP’s new Trade Remedy Law Enforcement Directorate (TRLED).

Key dates in an EAPA proceeding are as follows:

Date	Event	Potential Remedies
1	Initiation of investigation (15 business days after acceptance of request for determination
90	Preliminary determination of whether a "reasonable suspicion" exists that merchandise was entered through evasion	Suspension/extension of liquidation of entries; single entry bonding and/or cash deposits of estimated AD/CVD required
95	Notification of preliminary determination to interested parties
300 (360 in extraordinarily complicated cases)	Final determination of whether “substantial evidence” exists that covered merchandise was entered into United States through evasion	Suspension/extension of liquidation of entries; notification to Commerce Department; single entry bond or cash deposit requirements; possible referral for 19 USC §1592 investigation, referral to ICE for civil, criminal investigations
330 (390 in extraordinarily complicated cases)	Interested party that sought investigation or subject of investigation may seek de novo administrative review of determination
390 (420 in extraordinarily complicated cases)	CBP must issue final determination of de novo administrative review	Final determination in EAPA investigation
420 (450 in extraordinarily complicated cases)	Deadline for seeking review of final determination in United States Court of International Trade	CIT procedures for initiation of suit still being developed.

Summary of the EAPA Regulations

Who Can File an EAPA Request for Investigation?

The regulations define the various “interested parties” who may submit a request for investigation [19 C.F.R. §165.1]:

    (1) A foreign manufacturer, producer, or exporter, or any importer (not limited to importers of record and including the party against whom the allegation is brought), of covered merchandise or a trade or business association a majority of the members of which are producers, exporters, or importers of such merchandise;

    (2) A manufacturer, producer, or wholesaler in the United States of a domestic like product;

    (3) A certified union or recognized union or group of workers that is representative of an industry engaged in the manufacture, production, or wholesale in the United States of a domestic like product;

    (4) A trade or business association a majority of the members of which manufacture,produce, or wholesale a domestic like product in the United States;

    (5) An association a majority of the members of which is composed of interested parties described in paragraphs (2), (3), and (4) of this definition with respect to a domestic like product;

    or,

    (6) If the covered merchandise is a processed agricultural product, as defined in 19 U.S.C. 1677(4)(E), a coalition or trade association that is representative of any of the following: processors; processors and producers; or processors and growers.

The definition of “interested party” is broader than that used in the antidumping and countervailing duty statutes, and includes competing importers.

Petitions may be filed by a principal of an interested party, or by an attorney at law engaged to act for the party. Petitions may also be filed by non-attorney agents of an interested party, provided such agents are appointed through a Power of Attorney. The POA may either give the agent power to file, sign and submit the request for investigation, or grant the agent unlimited authority [19 C.F.R. §165.3]

What Entries are Subject to a Request for Investigation?

A request for investigation must cover Customs entries made within one year prior to the date a request for investigation is submitted. [19 C.F.R. §165.2]. The purpose of the “one year” requirement is to ensure that allegations are not stale, and involve current entries on which CBP may act. However, Customs reserves the authority to investigate other entries, and Section 592 of the Tariff Act [19 U.S.C. §1592] allows Customs to pursue entries made up to 5 years earlier, in most cases.

Is Confidential Information Protected in an EAPA Investigation?

Interested parties making submissions in connection with EAPA investigations may request confidential treatment for business and proprietary information which, if released, might cause them competitive harm. Submitters are also required to provide public versions or all submissions for the public file. However, certain categories of information may not be designated as confidential, specifically:

    (1) Name of the party to the investigation providing the information and identification of the agent filing on its behalf, if any, and e-mail address for communication and service purposes;

    (2) Specification as to the basis upon which the party making the allegation qualifies as an interested party as defined in § 165.1;

    (3) Name and address of importer against whom the allegation is brought;

    (4) Description of covered merchandise; and

    (5) Applicable AD/CVD orders.

Parties must also submit Certifications that the information they provide in connection with an investigation is true and correct.

Information placed on the investigative record by CBP will either be public data, or if confidential, will be accompanied where possible by a non-confidential summary.

Role of “Adverse Inferences” in EAPA Investigations

An important aspect of EAPA investigations will be “adverse inferences”. Under the interim regulations [19 C.F.R. §165.5] if any party to the investigation – whether the person who filed an allegation, the importer, or the foreign producer or exporter of goods – fails to “cooperate and comply to be best of its ability” with a CBP request for information, such as a questionnaire, CBP may draw an “adverse inference” based on that failure. An adverse inference could, depending on whom it is drawn against, result in a negative determination on an allegation, or the imposition of interim or final remedies against an importer. 

How Are EAPA Allegations Brought?
    
Interested parties may file allegations of AD/CVD evasion electronically through a portal on CBP’s on-line e-Allegations system, or through any other method designated by CBP. Each allegation must be limited to a single importer, but an interested party may file multiple allegations. Each allegation must contain, at a minimum, the following information:

    (1) Name of the interested party making the allegation and identification of the agent filing on its behalf, if any, and the e-mail address for communication and service purposes;

    (2) An explanation as to how the interested party qualifies as an interested partypursuant to § 165.1;

    (3) Name and address of importer against whom the allegation is brought;

    (4) Description of the covered merchandise;

    (5) Applicable AD/CVD orders; and

    (6) Information reasonably available to the interested party to support its allegation that the importer with respect to whom the allegation is filed is engaged in evasion.

19 C.F.R. §165.11. The submission must be signed and certified. An allegation is considered to be “received” by CBP when the agency provides acknowledgment of receipt of a properly-filed allegation, and assigns a control number to it. CBP has 15 days from receipt and assignment of a number ot decide whether to initiate an investigation under the EAPA. 19 C.F.R. §165.12. 

Multiple allegations against a one or more importers may be consolidated into a single investigation at CBP’s discretion. 19 C.F.R. §165.13. 

Other Federal agencies may also request an investigation be conducted under EAPA by filing with CBP allegations containing substantially identical information. 19 C.F.R. §165.14. 

Initiation of Investigations
                                            
CBP will determine whether to initiate an investigation within 15 business days after a properly filed allegation is received, or a request is received from another Federal agency. If CBP lacks information sufficient to determine whether goods in question are covered by an AD/CVD order, it may refer the matter to the Commerce Department for a determation. EAPA investigative time limits are tolled while Commerce makes its determination [19 C.F.R. §§165.15, 165.16.]

CBP will notify interested parties of its decision to initiate an investigation no later than 95 calendar days after the determination is made. 

What Record Will be Maintained in an EAPA Investigation?

CBP will maintain an admistrative record of investigations, and the record will include materials obtained by CBP in the course of its investigation, factual information submitted by interested parties, information resulting from any verification performed by the agency, materials received from other agencies during the investigation, written arguments submitted by interested parties, and summaries of oral discussions with interested parties. [19 C.F.R. §165.21]. 

CBP will complete its investigation within 300 days after initiating it, except in extraordinarily complicated cases where the deadline may be extended by 60 days. Factors included in determining whether an investigation is “extraordinarily complicated” include the number and complexity of the transactions to be investigated, the novelty of the issues presented, and the number of entities to be investigation [19 C.F.R. §165.22]. 

During the course of the investigation, CBP may request information from interested parties, which must be submitted within deadlines set by the agency. If CBP places new factual information on the record after the 200th calendar day following initiation of an investigation interested parties have ten calendar days to provide new rebuttal information.  Voluntary submission of information may be made within the first 200 calendar days of the investigation. 

What Interim Measures May be Imposed?

Within 90 days after initiating an investigation, CBP will take interim measures if there is a “reasonable suspeicion that the importer entered covered merchandise into the Customs terroritory of the United States through evasion”. 19 C.F.R. §165.24. Interim measures may include suspension of liquidation of unliquidated entries, extension of liquidation periods for unliquidated entries, requiring single entry bonds for imports, or requiring cash deposits of estimated antidumping or countervailing duties. Id. 

CBP may, in its discretion, conduct verifications in the United States or abroad of information submitted in the course of an EAPA investigation, and will place the results of the verification on the record. 19 C.F.R. §165.25.

What Rights Do Interested Parties Have to Comment?

Interested parties may submit written arguments to CBP regarding the determination of possible evasion based solely on information already on the administrative record in the proceeding. Other parties may respond. Arguments and responses must be served on all parties to the investigation. 19 C.F.R. §165.26.

How Does CBP Make Final Determintions as to Evasion?

Within 300 days after initiating an investigation (360 days in more complex cases), CBP will make a final determination concerning whether “substantial evidence” shows that covered merchandise was entered into the Customs Territory of the United States by evasion. Notice of the decision and a public version will be circulated within 5 days thereafter.  If the determination is affirmative, the agency can impose remedial measures, or continue interim measures already in effect. If the determination is negative, interim measures will be discontinued. [19 C.F.R. §161.27].

Customs will also notify the Department of Commerce of its determination, and seek information concerning the appropriate antidumping or countervailing duty rates to apply. 19 C.F.R. §161.28.

May Parties Seek Administrative Review of CBP’s Final Determination?

Within 30 business days after issuance of CBP’s evasion determination, interested parties may file a request for CBP review of that decision. The request for review must be based solely upon the facts on record, must contain a statement of reasons why the determination should be reversed or affirmed, must be properly certified, and must be served on other interested parties. CBP will have 60 business days to complete its review, measured from the date a properly submitted request is submitted. 19 C.F.R. §165.41. Interested partied will be permitted to respond to review requests and provide reasons in opposition of the request. 19 C.F.R. §165.42.

Requests for review, and responses thereto, will remain part of the administrative record and cannot be withdrawn. 19 C.F.R. §165.43. CBP may request additional information from the parties during the course of a review, and will render its final determination based on whether substantial evidence on the record supports its determination. 19 C.F.R. §165.45. CBP will take any action consistent with its final determination. 

CBP’s final determination is subject to review in the United States Court of International Trade. 

Regardless of the ourcome of an EAPA proceeding, CBP reserves the right to seek penalties and take other enforcement actions. 19 C.F.R. §161.47.

Additional information and assistance regarding the EAPA is available from our offices. Please contact us at (212) 635-2730 or (202) 861-2959 if you have questions.