# Regulations To Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/fr%3A2021-17861

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** September 20, 2021
- **Citation:** 86 FR 52300

## Text

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.

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 §§ 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 §§ 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

• Amendments to § 351.203 apply to segments of the proceeding for which a petition is filed on or after October 20, 2021.

• Amendments to § 351.214 apply to new shipper reviews for which a new shipper review request is filed on or after October 20, 2021.

• Amendments to § 351.225 and corresponding amendments to §§ 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 § 351.225(l), please see section 12 in the preamble under “Scope—§ 351.225.”

• Added § 351.226 and corresponding amendments to § 351.103(d) and § 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 § 351.226(l), please see section 12 in the preamble under “Circumvention—§ 351.226.”

• New § 351.227 and corresponding amendments to § 351.103(d) and § 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 § 351.227(l), please see section 8 in the preamble under “Covered Merchandise Referrals—§ 351.227.”

• Added § 351.228 is applicable on or after October 20, 2021.

• Amendments to § 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.

1

Regulations to Improve Administration and Enforcement of Antidumping and Countervailing Duty Laws,
85 FR 49472 (August 13, 2020) (
Proposed Rule
).

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

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.”).

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

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.

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

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.

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 § 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 § 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 § 351.214, which are adopted in this final rule. The modifications to § 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.

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.

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

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).

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

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.

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

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, § 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 § 351.225, many of which are further revised or adopted in this final rule.

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.”)

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, § 351.226, to address circumvention inquiries and determinations. After making some revisions from the
Proposed Rule,
Commerce is adopting § 351.226 in this final rule.

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
)).

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 § 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 § 351.227 in this final rule.

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)).

Regarding certifications, in the
Proposed Rule,
Commerce proposed to adopt § 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 § 351.228 in this final rule.

Another form of certifications relates to importer reimbursement certifications as provided for under § 351.402(f)(2). In the
Proposed Rule,
Commerce proposed to amend § 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 § 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 § 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 § 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

relevant segment. With a minor revision, these changes are adopted in this final rule. Additionally, § 351.103(d) contains a cross-reference to the service list procedures for scope ruling applications, which are further described in § 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 § 351.226(n).

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).

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 § 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.

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).

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.

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.

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.

34

Proposed Rule,
85 FR 49472 at 49472-73.

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—§ 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 § 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

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.

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—§ 351.214

After considering the comments and rebuttal comments, Commerce is removing §§ 351.214(b)(2)(iv)(A), 351.214(k)(3), and 351.214(k)(4). Commerce is also modifying § 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 §§ 351.214(k)(3) and (k)(4), §§ 351.214(k)(5) and (k)(6) are now designated as §§ 351.214(k)(3) and (k)(4), respectively; and §§ 351.214(k)(5) and (k)(6) are eliminated.

In addition, Commerce is modifying § 351.214(b)(2)(v)(B) by adding the terms “shipment” and “any” to this provision, for consistency with the language utilized in § 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 § 351.214(b)(v)(C) by removing the “and” at the end of the clause and placing it at the end of § 351.214(b)(v)(D)(
4
) to grammatically conform with the additions of § 351.214(b)(v)(D) and (E) to the regulation. Next, Commerce is modifying § 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 § 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 (§ 351.214(b))

(a) Certification Requirements for Unaffiliated Purchasers

To obtain a new shipper review, § 351.214(b) of the
Proposed Rule
sets forth documentation requirements for an exporter or producer requesting a new shipper review. In particular, § 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 § 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.

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

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 § 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 § 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 § 351.214(b)(2) of the
Proposed Rule
by removing the requirement in § 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 § 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 § 351.214(b)(2)(iv)(A) and (B). The final rule replaces § 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 § 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 § 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

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 § 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.

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, § 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

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 § 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 § 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.”

38
The Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 (AD Agreement).

Response:

We have left unchanged § 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
§ 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 § 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 § 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.

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.

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 § 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.

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 § 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 § 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 § 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 § 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

sales did not occur.
43

However, as identified above, for consistency with the language utilized in § 351.214(b)(v)(C) and for further clarity, Commerce is modifying § 351.214(b)(v)(B) for consistency with the language utilized in § 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.

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 § 351.214 outlines the requirements for requesting a new shipper review. Several commenters propose that Commerce amend § 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 § 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 § 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
§§ 351.214(b)(2)(i) through (v), and (vi) for countervailing duty new shipper reviews, unchanged in this final rule,

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 (§ 351.214(k))

(a) Sections 351.214(k)(2), (k)(3), and (k)(4)

The elements outlined in § 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 § 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 § 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 § 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, § 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 § 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 § 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 § 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 § 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

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 § 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 § 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 § 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 § 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 § 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 § 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 § 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 § 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 § 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 § 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 § 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 § 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.

51

See
Public Law 114-125, section 433, 130 Stat. at 171.

(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 § 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 § 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 § 351.214. To clarify, if Commerce rescinds a review of specific sales pursuant to § 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 § 351.214(c), for later, unreviewed, sales made within one year of the date referred to in § 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 § 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 § 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 § 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 § 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 § 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, § 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

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 § 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.

53

See Proposed Rule,
85 FR 49472 at 49494.

With respect to the comment to confirm whether the merchandise would be subject to a duty, in accordance with § 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 § 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 § 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—§ 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 § 351.225 into greater conformity with circumvention and covered merchandise regulations §§ 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.

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

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

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.”).

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.

57

1997 Final Rule,
62 FR 27296 at 27328.

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 § 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

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.

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.

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 § 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.

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.

Finally, to bring this provision into conformity with language used in other provisions under § 351.225, as well as language which was already contained in proposed § 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

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.

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

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 § 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 § 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 § 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 § 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 § 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.”).

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 § 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 § 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 § 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

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 § 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 § 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 § 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.

65
As discussed further below, Commerce is modifying § 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.

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 § 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 § 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 § 351.225(d). Instead, we will, as requested by a commenter, under § 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

[Text truncated at 120,000 characters. The full text is on the page linked above.]

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2021-17861. Public record. Not legal advice.