# Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws

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URL: https://www.frixlaw.com/law-library/documents/fr%3A2024-05509

## Record

- **Collection:** Federal Register
- **Document type:** Rule
- **Published:** March 25, 2024
- **Citation:** 89 FR 20766

## Text

DEPARTMENT OF COMMERCE
International Trade Administration
19 CFR Part 351
[Docket No. 240307-0075]
RIN 0625-AB23
Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws

AGENCY:

Enforcement and Compliance, International Trade Administration, Department of Commerce.

ACTION:

Final rule.

SUMMARY:

Pursuant to its authority under the Tariff Act of 1930, as amended (the Act), the U.S. Department of Commerce (Commerce) is amending its regulations to enhance, improve and strengthen its enforcement and administration of the antidumping duty (AD) and countervailing duty (CVD) laws. Specifically, Commerce is revising some of its procedures, codifying certain areas of its practice, and enhancing certain areas of its methodologies and analyses to address price and cost distortions, as well as certain countervailable subsidies, in different capacities.

DATES:

These amendments are effective April 24, 2024.

FOR FURTHER INFORMATION CONTACT:

Scott McBride, Associate Deputy Chief Counsel, at (202) 482-6292, Ian McInerney, Attorney, at (202) 482-2327, Hendricks Valenzuela, Attorney, at (202) 482-3558, or Ariela Garvett, Senior Advisor, at
Ariela.Garvett@trade.gov
.

SUPPLEMENTARY INFORMATION:

General Background

On May 9, 2023, Commerce proposed amendments to its existing regulations, 19 CFR part 351, to improve, strengthen and enhance its enforcement of the AD and CVD laws.
1

Relevant to this final rule are the AD/CVD statutory and regulatory provisions in general, as well as those pertaining to filing requirements, scope, circumvention, and covered merchandise inquiries, the use of new factual information, the CVD facts available hierarchy, surrogate value and CVD benchmark selections, particular market situations (PMS), and certain types of countervailable subsidies, which we summarize below.

1

See Regulations Improving and Strengthening the Enforcement of Trade Remedies Through the Administration of the Antidumping and Countervailing Duty Laws,
88 FR 29850 (May 9, 2023) (
Proposed Rule
).

Title VII of the Act vests Commerce with authority to administer the AD/CVD laws. In particular, 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 the U.S. International Trade Commission (ITC) finds material injury or threat of material injury to that industry in the United States. 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 when the ITC finds that material injury or threat of material injury to that industry in the United States.
2

2
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.

On September 20, 2021, Commerce revised its scope regulations (19 CFR 351.225) and issued new circumvention (19 CFR 351.226) and covered merchandise (19 CFR 351.227) regulations.
See Scope and Circumvention Final Rule,
86 FR 52300 (September 20, 2021) (
Scope and Circumvention Final Rule
).
See also Scope and Circumvention Proposed Rule,
85 FR 49472 (August 13, 2020) (
Scope and Circumvention Proposed Rule
). These revised and new regulations became effective November 4, 2021. On September 29, 2023, after publication of the May 2023
Proposed Rule,
Commerce identified some technical issues in those scope, circumvention, and covered merchandise referral regulations, and amended those regulations to address those issues.
3

We have incorporated those changes into these final revised regulations.

3

See Administrative Protective Order, Service, and Other Procedures in Antidumping and Countervailing Duty Proceedings,
88 FR 67069, 67077-78 (September 29, 2023) (
APO and Service Final Rule
).

As we explained throughout the preamble to the
Proposed Rule,
the purpose of these modifications and additions to our regulations is to improve, strengthen and enhance the enforcement and administration of the AD/CVD laws, make such enforcement and administration more efficient, and to address factors which distort costs and prices—factors that make the “playing field” less “level” for domestic interested parties and can contribute to unfair trade. In order to achieve the purpose of those regulations, Commerce may at times need to request further documentation from interested parties that clarifies the record to better understand the facts of a particular case. Other times, Commerce may need to extend the deadline to issue a determination so that its decision is fully informed and complete. To address unfair trade adequately and appropriately, Commerce may need to remove unnecessary restrictions in its regulations to address updated challenges, like the agency's withdrawal of the prohibitive transnational subsidies regulation. Commerce recognizes that in the year 2024, there are complexities and challenges in international trade which did not exist, or did not exist in the same manner or to the same degree, when previous regulations were issued. Accordingly, Commerce has determined that revisions and updates to Commerce's trade remedy regulations are warranted.

Section 516A(b)(2) of the Act provides a definition of Commerce's administrative record in AD/CVD proceedings and § 351.104(a)(1) describes in greater detail the information contained on the official record. Nonetheless, interested parties sometimes make the mistake of merely citing sources, or placing Uniform Resource Locator (URL) website information, or hyperlinks, in their submissions to Commerce, and then later presuming the information contained at the source documents is considered part of the record. This becomes a problem, for example, when parties submit their case briefs and rebuttal briefs on the record pursuant to § 351.309 and quote from, or otherwise rely on, information or data derived from the cited sources that were never submitted on the official record. Commerce therefore proposed adding clarification on this point to § 351.104(a)(1) in the
Proposed Rule.
4

Commerce also proposed listing documents which do not need to be

placed on the record, but can merely be cited, in the
Proposed Rule.
5

We received a large number of comments on these proposals, and as we describe in greater detail below, we have revised § 351.104 to provide greater clarity on these issues.
6

4

See Proposed Rule,
88 FR 29852-53.

5

Id.

6
Commerce also proposed a change to § 351.301(c)(4), which deals with the use of record information as well. However, the comments Commerce received were overwhelmingly opposed to such a change. Accordingly, Commerce is not making a change to the existing provision as proposed.

In the
Proposed Rule,
Commerce proposed language to be added to the regulations addressing scope, circumvention, and covered merchandise inquiries pertaining to filing deadlines, clarification requests, merchandise not yet imported but commercially-produced and sold, extensions of time, regulatory restrictions covering new factual information, and scope clarifications.
7

Commerce subsequently received comments from several interested parties on each of its suggestions. In response to those comments, for the reasons we explain below, Commerce has made certain modifications to its final regulations—primarily on the language pertaining to scope clarifications.

7
See Proposed Rule,
88 FR 29853-57.

There are times when interested parties seek to file Notices of Subsequent Authority with Commerce, in which a party argues in a given segment of a proceeding that a new Federal court or Commerce decision supports, contradicts, or undermines particular arguments before the agency. However, Commerce's current regulations do not address the timing for submitting Notices of Subsequent Authority, responsive comments to a Notice of Subsequent Authority, and new factual information regarding the filing of a Notice of Subsequent Authority, nor the content requirements of a Notice of Subsequent Authority. Commerce, therefore, proposed an addition to § 351.301, at paragraph (c)(6), to provide guidance for future Notices of Subsequent Authority.
8

We received comments on that proposal, and as we describe in greater detail below, we have provided some additional language to clarify this provision in response to those comments.

8
Id.,
88 FR 29857.

Section 776(d) of the Act provides that in circumstances in which Commerce is applying adverse facts available (AFA) in selecting a program rate pursuant to sections 776(a) and (b) of the Act, it may use a countervailable subsidy rate determined for the same or similar program in a CVD proceeding involving the same country. Alternatively, if there is no same or similar program, Commerce may instead use a countervailable subsidy rate for a subsidy program from a proceeding that Commerce considers reasonable to use, including the highest of such rates. Commerce developed its practice of applying its current hierarchy in selecting AFA rates in CVD proceedings over many years, preceding its codification into the Act, to effectuate the statutory purpose of section 776(b) of the Act to induce respondents to provide Commerce with complete and accurate information in CVD proceedings in a timely manner. For purposes of these regulations, Commerce chose to codify that hierarchy in a new paragraph of § 351.308.
9

We received comments on that proposal in response to the
Proposed Rule,
and in response to those comments we have modified certain language pertaining to the CVD hierarchy in investigations.

9
Id.,
88 FR 29858.

In the
Proposed Rule,
Commerce acknowledged that both government action and government inaction can benefit producers or exporters.
10

For example, when a government issues a fee, fine, or penalty to a company, yet never collects the payment, that revenue forgone is considered a financial contribution pursuant to section 771(5)(D)(ii) of the Act. Accordingly, Commerce proposed a new regulation at § 351.529, which codifies its practice in countervailing such a subsidy.
11

In addition, Commerce proposed considering nonexistent, weak, or ineffective property (including intellectual property), human rights, labor, and environmental protections which may distort costs of production in selecting surrogate values in accordance with section 773(c)(1) of the Act in § 351.408.
12

Likewise, in determining if a product has been sold for less than adequate remuneration, Commerce proposed considering the distortive effect of those same factors on prices and costs in selecting a benchmark country price or prices, in § 351.511.
13

Finally, Commerce proposed that those factors might be the foundation of a cost-based PMS, and proposed two examples in the
Proposed Rule
to reflect those factors, to be codified in § 351.416.
14

We received numerous comments on those proposals, and although we have made no changes to the fees, fines, and penalties and less than adequate remuneration proposed regulations, and only minor edits to the surrogate value proposed regulation, we have made some changes to the PMS regulation, for the reasons provided.

10
Id.,
88 FR 29858-61.

11
Id.

12
Id.

13
Id.

14
Id.

On November 18, 2022, Commerce issued an advanced notice of proposed rulemaking indicating that it was considering issuing a regulation that would address the steps taken by Commerce to determine the existence of a PMS that distorts the costs of production.
See Determining the Existence of a Particular Market Situation That Distorts Costs of Production; Advanced Notice of Proposed Rulemaking,
87 FR 69234 (November 18, 2022) (hereinafter,
PMS ANPR
). Commerce received 19 comments in response to that notice and addressed or incorporated many of those comments into its proposed regulation at § 351.416 in the
Proposed Rule.
15

In addition, Commerce proposed regulatory provisions addressing both a sales-based PMS, as well as a cost-based PMS.
16

Its proposed regulation described information that Commerce would normally consider in determining the existence of a PMS, set forth information that Commerce would not be required to consider in every case, and explained that under certain factual situations, Commerce could determine that a cost-based PMS contributed to the existence of a sales-based PMS.
17

In addition, Commerce set forth 12 examples of circumstances that reflect a PMS that is likely to result in a distortion to costs.
18

The PMS regulation was the primary issue Commerce received comments on in response to the
Proposed Rule,
and for the reasons described below, Commerce has revised some of the language throughout § 351.416 for clarity and consistency in response to many of those comments.

15
Id.,
88 FR 29861-67.

16
Id.

17
Id.

18
Id.

In addition, Commerce proposed modifications to several of its CVD regulations, including those covering benefit (§ 351.503), loans (§ 351.505), equity (§ 351.507), debt forgiveness (§ 351.508), direct taxes (§ 351.509), export insurance (§ 351.520), and the attribution of subsidies to products in its CVD calculations (§ 351.525). We received several comments in response

to some of those regulation changes and have made some revisions to certain regulations in response, as set forth below.

Finally, in awareness of changes in the world economy, Commerce proposed eliminating the current regulation prohibiting the countervailing of certain transnational subsidies, § 351.527, and instead reserving it for future consideration.
19

We received numerous comments on this change to our regulations as well and have determined to make no changes from the
Proposed Rule,
for the reasons explained below.

19

Id.,
88 FR 29870.

Explanation of Modifications From the Proposed Rule to the Final Rule and Responses to Comments

In the
Proposed Rule,
Commerce invited the public to submit comments.
20

Commerce received 53 submissions from interested parties providing comments, including domestic producers, domestic industrial users, exporters, importers, foreign governments, and foreign entities. We have determined to make certain modifications to the
Proposed Rule
in response to certain issues and concerns raised in those submissions. We considered the merits of each submission and analyzed the legal and policy arguments in light of both our past practice, as well as our desire to improve, strengthen, and enhance the administration and enforcement of our AD/CVD laws.

20

Id.,
88 FR 29850-51.

The preamble to the
Proposed Rule
provides background, analysis, and explanation which are relevant to these regulations. With some modifications, as noted, this final rule would codify those proposed on May 9, 2023. Accordingly, to the extent that parties wish to have a greater understanding of these regulations, we encourage not only considering the preamble of these final regulations, but also a review of 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(s), a summary of the comments we received, and Commerce's responses to those comments. In addition, these sections contain explanations of changes Commerce made to the
Proposed Rule,
either in response to comments or that it deemed appropriate for conforming, clarifying, or providing additional public benefit.

1. Commerce has revised § 351.104(a)(1) and added § 351.104(a)(3) through (7) to clarify the information sources that may be cited in submissions without placing them on the official record and the information sources that must be placed on the official record for Commerce to consider them.

In the
Proposed Rule,
Commerce explained that it was updating § 351.104(a), which describes in detail the information contained on the official record, to reflect Commerce's long-standing interpretation that mere citations and references (
e.g.,
hyperlinks and website URLs) do not incorporate the information located at the cited sources onto the official record. Commerce explained that this was true whether the citation is to sources such as textbooks, academic or economic studies, foreign laws, newspaper articles, or websites of foreign governments, businesses, or organizations.
21

Commerce explained that if an interested party wished to submit information on the record, it would be required to submit the actual source material in a timely manner and not merely share internet links or citations to those sources in its questionnaire responses, submissions, briefs, or rebuttal briefs.

21

Id.,
88 FR 29852-53. Commerce provided reasons that such an update to the regulation was necessary, including to avoid the time and resources it takes for Commerce to make filers remove submissions from the record and resubmit them without arguments relying on websites and URLs. Another reason for the policy is that information on websites can, and frequently does, change. At the time a weblink is placed on the record, the website might contain certain information, but later in the segment of the proceeding, that website and the information contained therein might change.

Commerce also explained, however, that there are exceptions to this rule which it adopted over the years, and set forth those exceptions in the proposed regulations at § 351.104(a)(1). Specifically, Commerce identified the following as sources which parties could cite and rely upon, without placing the sources on the record: U.S. statutes and regulations; published U.S. legislative history; U.S. court decisions and orders; certain notices of the Secretary and ITC published in the
Federal Register
, as well as decision memoranda and reports adopted by those notices; and the agreements identified in § 351.101(a).
22

22

Id.,
88 FR 29871.

Commerce explained that Commerce-authored “Issues and Decision Memoranda,” included in that list of excepted citation sources, were adopted by
Federal Register
notices and were “not the separate calculation and analysis memoranda that Commerce frequently uses in its proceedings.”
23

Commerce stated in the preamble that “{c}alculation and analysis memoranda” included “initiation checklists, respondent selection memoranda, new subsidy allegation memoranda, and affiliation/collapsing memoranda from other proceedings or other segments of the same proceeding.” Commerce provided that all of those documents would not be considered to be on the official record “unless they have been placed on the record by Commerce or one of the interested parties to the proceeding.”
24

Furthermore, Commerce explained that remand redeterminations, determinations issued pursuant to section 129 of the Uruguay Round Agreements Act (URAA) (section 129 determinations), and scope rulings must “each be submitted on the official record of another segment or proceeding” for Commerce to consider the contents and analysis of those determinations in that segment or proceeding.
25

23

Id.,
88 FR 29853.

24

Id.

25

Id.

A. The revised regulation addresses documents not originating with Commerce, published in the

Federal Register
,
containing proprietary information, or not associated with an ACCESS barcode number.

Commerce received several comments on both the proposed regulation language, as well as Commerce's description of its practice in the preamble to the
Proposed Rule.
One commenter expressed concerns with Commerce's restrictions on citations and references (
e.g.,
hyperlinks and website URLs) to documents not originating with Commerce. That commenter suggested that if documents and information (
e.g.,
academic publications) were previously placed on the record in other segments or proceedings, then parties should be able to cite those documents using Enforcement and Compliance's Antidumping Duty and Countervailing Duty Centralized Electronic Service System (ACCESS) barcode numbers, without placing the sources anew on the record of the immediate segment. However, there is no question that factual information that has been filed by interested parties with Commerce originating outside of the agency meets the definition of factual information under § 351.102(b)(21). Furthermore, § 351.301(c) requires that new factual information be submitted on each

segment of the record under specific deadlines and in a certain form. Accordingly, as each segment is composed of a separate record, and information from outside of the agency should be placed on the record for consideration, we will continue to maintain that requirement as it applies to documents not originating with Commerce.

Certain commenters also expressed concerns that Commerce's list of documents that it allows to be cited without placing the information on the record was incomplete. Specifically, one party pointed out that Commerce frequently allows citations to dictionary definitions without requiring them to be separately placed on the record. Another commenter noted that parties frequently cite World Trade Organization (WTO) panel and appellate body (hereinafter the Panel and Appellate Body, respectively) decisions, as well as North American Free Trade Agreement dispute Panel decisions, without submitting those decisions on the record. That party also suggested that Commerce should allow for all Federal Government determinations and notices published in the
Federal Register
(
e.g.,
Presidential proclamations, Executive orders, and United States Trade Representative (USTR) section 301 determinations,
etc.
) to be cited without submitting them on the record. We agree with all of those comments and have modified the proposed regulation to include references to dictionary definitions, dispute settlement determinations arising out of international agreements cited in § 351.101 (§ 351.104(a)(3)(ii)), and
Federal Register
citations in general (§ 351.104(a)(5)).

In addition, one party suggested that Commerce should also include various U.S. Customs and Border Protection (CBP) rulings, including those pertaining to the Harmonized Tariff Schedule of the United States (HTSUS), on the list of documents not subject to the requirements of § 351.301. Many such rulings are on the CBP website, but it is as time consuming for Commerce as it is for the interested parties to research the rulings of other agencies not published in the
Federal Register
. Accordingly, because interested parties bear the burden to provide sources not originating with Commerce or published in the
Federal Register
on the record, we have decided not to include CBP rulings or unpublished determinations of any other agency, except for the ITC in AD and CVD proceedings, on the list of sources excluded from the filing and timing requirements of § 351.301.

In revising the proposed regulations at § 351.104(a) for this final rule, Commerce has included new paragraphs (a)(3) through (7) to further clarify which documents may be cited without submitting information on the record under § 351.301. Specifically, Commerce has revised § 351.104(a)(1) to largely reflect the current regulatory language, but adds language that states that scope, circumvention, or covered merchandise inquiries will be conducted on the record of the AD segment of a proceeding when there are companion orders.

Commerce has made no changes to § 351.104(a)(2) but has added an additional paragraph (a)(3) which specifically addresses “filing requirements for documents not originating with the Department.” This provision clarifies that if a document does not originate with Commerce, it must be placed on the record, with the exception of the aforementioned list of citations Commerce has historically permitted to be cited without submitting such documents on the record. Notably, the reference to Commerce memoranda and
Federal Register
notices and determinations initially referenced in the
Proposed Rule
has been removed from this listing because it is addressed elsewhere in the revised regulation. This provision explains that unless a document not originating with Commerce appears on the list of exceptions, the procedural and timing requirements of § 351.301 apply.
26

It also explains that each citation must be cited in full, and that Commerce may decline to consider information sources in its analysis or determination if those citations are not cited in full.

26
We note that the term “the Department” has been applied for these provisions to clarify application to documents authored by all Commerce employees distinct from the Secretary's determinations.

In the new § 351.104(a)(4), Commerce has clarified that even though parties may take proprietary, privileged, and classified information from other segments of the same proceeding and place them on the record of another segment, they cannot do so with mere citations. All documents, even those originating with Commerce, which contain business proprietary information must be placed on the official record in their entirety in accordance with the filing and timing restrictions of § 351.301.

Furthermore, new § 351.104(a)(5) clarifies that all of Commerce's
Federal Register
notifications and determinations may be cited by parties in submissions on the record without the requirement that they be submitted on the official record, as long as those notices and determinations are cited in full. If they are not cited in full, Commerce may decline to consider those notifications or determinations in its analysis. This is consistent with Commerce's longstanding practice, and the provision states clearly that the procedural and timing requirements of § 351.301 do not apply to such documents.

Finally, § 351.104(a)(7) states that public versions of documents originating with Commerce from other segments or proceedings, but which are not associated with an ACCESS barcode number for whatever reason, including those documents issued before ACCESS was established, must be filed on the record in their entirety to be considered by Commerce in its analysis. Otherwise, the record would be incomplete because other interested parties would not have access to the cited documents. Therefore, the provision explains that the procedural and timing requirements of § 351.301 apply to such documents.

B. Public versions of unpublished documents originating with Commerce and associated with an ACCESS barcode number.

The record issue which foreign exporters, foreign governments, U.S. importers, U.S. consumers, and domestic industries all agreed upon involved Commerce's treatment of unpublished Commerce determinations associated with an ACCESS barcode number. Every commenter on Commerce's treatment of the record in the
Proposed Rule
disagreed with Commerce that public versions of draft and final remand redeterminations, preliminary and final section 129 determination memoranda, and scope ruling memoranda from other segments and proceedings, that are associated with an ACCESS barcode number, should be required to be placed on the administrative record of the segment before it. Several commenters claimed that those sources do not meet the five definitions of “factual information” in § 351.102(b)(21), and therefore, should not be subject to the filing and timing requirements for new factual information in § 351.301.

Instead, those commenters claimed that each of these documents is an agency legal determination that should be treated like other agency legal determination documents which are unpublished but are not required to be submitted on the record of other segments or proceedings (
e.g.,
preliminary decision memoranda and final issues and decision memoranda in investigations and administrative reviews). They suggested that the mere

fact that those particular documents were not published in the
Federal Register
does not make them any less agency legal determinations.

With respect to remand redeterminations in particular, some commenters expressed confusion with how Commerce could conclude that agency determinations issued pursuant to a Federal court proceeding and then eventually affirmed and discussed in a public Federal court holding could be treated as “new factual information,” incapable of citation and reference in a subsequent Commerce proceeding without submitting it on the segment of an administrative record. One commenter pointed out that all remand redeterminations are publicly available on the Public Access to Court Electronic Records (PACER) website,
27

as well as on ACCESS, and courts are free to consider documents from both sources, which the commenter stated undercut a claim that this information was “new” or merely “factual.”

27

See Public Access to Court Electronic Records,
available at
https://pacer.uscourts.gov
.

In addition to those documents, however, all commenters expressed concerns that the issue was much more extensive than just those three examples. They suggested that every unpublished public analysis document originating with Commerce and associated with an ACCESS barcode number should be citable without submitting the agency analysis document on the record. The commenters expressed concerns that there was no factual or legal distinction between other AD or CVD analysis memoranda and the preliminary and final issues and decision memoranda which Commerce has permitted to be cited in arguments, briefs, and rebuttal briefs without requiring them to be submitted on each record. The commenters noted that ACCESS is Commerce's filing system and Commerce analysis teams have the ability to retrieve any of the cited documents from any segment instantly, as long as they have the appropriate barcode number. Therefore, they suggested that Commerce should provide a uniform citation for all submitters in using an ACCESS barcode in their filings and apply that to all Commerce-authored documents.

To the extent that Commerce explained in the
Proposed Rule
that preliminary and final issues and decision memoranda could be cited without placement on the record because those were adopted by reference in a published
Federal Register
document, several commenters stated their belief that there was no rational legal distinction between those incorporated by a
Federal Register
document and those not incorporated by a
Federal Register
document. However, even if there was a legal distinction between the two types of memoranda based on reference in the
Federal Register
, many commenters pointed out that Commerce frequently cites many of its other analysis memoranda, such as post-preliminary memoranda and new subsidy allegation memoranda in
Federal Register
documents, yet the record information policy described in the
Proposed Rule
would not allow any of those to be cited without submitting them on the record.

Some commenters claimed that Commerce's historical treatment of citations to various public and unpublished analysis memoranda was, at times, inconsistent. In addition, they suggested that Commerce was incorrect in treating any of those analysis memoranda as new facts because just as the five definitions of “factual information” in § 351.102(b)(21) do not apply to remand redeterminations, section 129 determination memoranda, and scope rulings, they equally do not apply to the rest of Commerce's other public analysis memoranda. They acknowledged that each of those public memoranda analyze facts, just like the aforementioned preliminary and final issues and decision memoranda, but also recognized that the more important aspect of those memoranda was that Commerce was making an analysis of those facts and issuing policy and legal determinations based on those facts. They expressed concerns that nothing in § 351.102(b)(21) suggests that the new factual information regulations were intended to apply to Commerce analysis and calculation memoranda, and nothing in the regulation was drafted with the intent of prohibiting parties from citing past Commerce practice and relying on that practice for support of arguments before the agency. In short, several of the commenters stated that none of these memoranda are “factual information,” but are instead the very basis for Commerce's policies and practices, and therefore, interested parties should be able to cite them in all documents, including briefs and rebuttal briefs, without having to submit them on the record under certain timelines and certain procedures as “new factual information,” pursuant to § 351.301.

One commenter pointed out that in Commerce's 1997 regulations, in responding to comments on § 351.301, Commerce described the information which could be relied upon in briefs and rebuttal briefs, and stated that in “making their arguments, parties may use factual information already on the record or may draw on information in the public realm to highlight any perceived inaccuracies . . . .”
28

That commenter noted that all of the public memoranda issued by Commerce are in the public realm, and therefore, consistent with its previous comments, Commerce should allow all of its public analysis memoranda from other segments and proceedings to be cited without being required to submit those memoranda on the record prior to the drafting and submission of briefs and rebuttal briefs. Another commenter agreed with this idea, noting that public versions of Commerce's documents are “just as available to the public as Commerce's issues and decision memoranda” because anyone with an ACCESS account can obtain those documents.

28

See Antidumping Duties; Countervailing Duties; Final Rule,
62 FR 27295, 27332 (May 19, 1997).

Furthermore, several commenters found the approach described by Commerce in the
Proposed Rule
to agency-authored documents to be problematic with respect to post-preliminary determination and results documents. Some commenters expressed concerns that adopting a wholesale rule that prohibits parties from demonstrating in a case or rebuttal brief that Commerce has taken a position in a preliminary determination or administrative results that is inconsistent with the agency's position in another segment or proceeding would result in Commerce being unable to address inconsistencies in its approach across reviews and likely lead to increased judicial oversight. Yet another commenter explained that interested parties are confronted with a predicament when they prepare case briefs, because, at the time that they answered Commerce's questionnaires, they did not include in their submissions all relevant Commerce memoranda that would aid Commerce in its decision-making process. Therefore, because Commerce prohibits citations to other relevant Commerce public determination memoranda in briefs and rebuttal briefs, interested parties cannot provide Commerce with necessary public references that would better inform Commerce's final determinations. In addition, certain commenters argued that the alleged “new” rule forced interested parties to identify and submit all relevant memoranda 30 days prior to a preliminary determination or results,

even if it later became evident that it might be beneficial to the agency for the interested parties to cite to other Commerce memoranda. Such restrictions, they stated, would lead to unnecessary inconsistencies in Commerce's policies and practice.

Finally, another commenter expressed concerns that Commerce's proposal is unlawful because it would deprive interested parties of a transparent process and, for importers in particular, it would deprive them of their due process rights under the Fifth Amendment of the United States Constitution. That commenter suggested that Commerce's proposal contradicts fundamental principle of transparency in administrative law, citing
Slater Steels Corps.
v.
United States,
279 F. Supp. 2d 1370, 1379 (CIT 2003) and
MacLean-Fogg Co.
v.
United States,
100 F. Supp. 3d 1349, 1362 (CIT 2015) for the concept that there is a fundamental public interest in transparency in government. That commenter explained that all of the public versions of Commerce-originated documents at issue, including calculation and analysis memoranda, are publicly available, and Commerce's issues and decision memoranda frequently rely on such documents to complete the rationale underlying the agency's determinations. The commenter noted that in
Chefline Corp.
v.
United States,
219 F. Supp. 2d 1303, 1309 (CIT 2002), the U.S. Court of International Trade (CIT) recognized that when “credible evidence from outside the record indicates a significant error in the agency's determination,” it would take judicial notice of that information. Thus, the commenter advocated that Commerce allow parties to cite past analysis documents in their briefs and rebuttal briefs and avoid the inevitable litigation which would otherwise follow under the approach suggested in the
Proposed Rule.

In addition, that commenter expressed concerns that Commerce's proposed changes to its regulation would also violate an importer's due process rights under the Fifth Amendment. It stated that a fundamental requirement of due process is for parties to have the “opportunity to be heard at a meaningful time and in a meaningful manner,” citing
Mathews
v.
Eldridge,
424 U.S. 319, 332 (1976) and
Young
v.
Dep't of Housing and Urban Dev.,
706 F. 3d 1372, 1376 (Fed. Cir. 2013). Further, the commenter pointed to a U.S. Court of Appeals for the Federal Circuit's (Federal Circuit) holding which held that “the arbitrary administration of law is subject to judicial intervention” and that parties are “due a fair and honest process” (
NEC Corp
v.
United
States, 151 F. 3d 1361, 1370-71 (Fed. Cir. 1998)). The commenter explained that the relevant deadlines for the submission of factual information occur prior to Commerce's preliminary determinations, but that in many instances, Commerce's reasoning or methodological choices are not clear until it releases its preliminary determination. The commenter explained that if an interested party is prohibited from referencing a publicly available document in its case brief unless that document has already been submitted on the record or is a preliminary or final issues and decision memorandum, it is caught in an unfortunate situation because interested parties could not know if certain memoranda were relevant until after the preliminary determination or results were issued, after the deadline for submitting information on the record had passed. Thus, according to that commenter, this is a clear deprivation of those parties' due process rights to be heard in a meaningful manner.

Commerce's Response:

In response to all of the above comments, Commerce has decided to make a substantial revision to its regulations. Pursuant to § 351.104(a)(6), interested parties may, in all submissions, cite certain public preliminary and final issues and decision memoranda in the following segments, without the timing and filing restrictions of § 351.301, as long as they are fully cited and accompanied by an ACCESS barcode number in the citation: investigations, pursuant to §§ 351.205 and 351.210; administrative reviews, pursuant to § 351.213; new shipper reviews, pursuant to § 351.214; changed circumstances reviews, pursuant to § 351.216; sunset reviews, pursuant to § 351.218; and circumvention inquiries, pursuant to § 351.226. Commerce has historically allowed all of these documents to be cited without requiring them to be placed on the record of other segments or proceedings, and Commerce will codify that practice in these regulations.

In addition, the same citation allowance will also be applied to public versions of preliminary and final scope rulings pursuant to § 351.225, and covered merchandise inquiries pursuant to § 351.227, draft and final redeterminations on remand, and draft and final redeterminations issued pursuant to section 129 of the URAA. After consideration of the arguments pertaining to scope rulings, remand redeterminations, and section 129 determinations from multiple commenters, we agree that those documents should also be able to be cited without the requirement that those documents be placed on the administrative record. Like the other documents listed above, they are statutory and regulatory public and final determinations made by Commerce in individual segments of a proceeding.

Furthermore, Commerce has determined that four additional types of documents argued by interested parties should also be able to be cited without the requirement that those documents be placed on the administrative record: initiation decision documents, such as initiation checklists; memoranda which describe and analyze new subsidy allegations; scope memoranda issued in an investigation; and post-preliminary determination or results memoranda which address issues for the first time after the preliminary determination or results has been issued and before the final determination or results is issued. In the first two types of documents, Commerce is making a determination to initiate, or not initiate, based on certain information, while in the third document Commerce is conducting an analysis on whether a product is, or is not covered by the scope of an investigation. Finally, in the fourth document, Commerce is making a determination for the first time upon which parties may file comments. We find each of these documents serves a unique purpose in the agency's proceedings and is largely self-contained (
i.e.,
they do not require Commerce employees to look outside of the four corners of the document to understand the analysis). Accordingly, we determine that Commerce and interested parties should be able to cite to those documents in other segments or proceedings without separately placing them on the record.

We emphasize that all citations must be cited in full. Commerce can only consider and rely on a cited information source if it is able to retrieve that information source, which may not be possible if the citation to the information source is incomplete. Furthermore, we also emphasize that unlike in past cases, the regulations will now require that all of these document citations include reference to the associated ACCESS barcode numbers. The inclusion of the associated ACCESS barcode numbers in the citation is an additional requirement from what was permitted before, but one that most commenters indicated would be an improvement for parties both outside and within Commerce to easily retrieve the documents and consider them in making preliminary and final determinations. If the citations are not

cited in full, including the associated ACCESS barcode numbers, the regulation states that Commerce may decline to consider the cited information sources in its analysis or determination.

With respect to the other public documents authored by Commerce and argued by the comments, it is important to stress that the conduct of an administrative proceeding is a time-intensive, resource-intensive, and fact-intensive endeavor. Although several commenters stated that collapsing memoranda or calculation memoranda, for example, taken from other segments or other proceedings are not “factual information” under the regulatory definition of the term in § 351.102(b)(21), we disagree with that assessment. A collapsing determination, under § 351.104(f) requires that Commerce first determine if two entities were affiliated during a particular period of investigation or review, and then determine whether there is a significant potential for the manipulation of prices or production between the two entities such that they should be treated as one collapsed entity. Likewise, when Commerce issues calculation memoranda, its calculations are based upon the record and data before it in that particular segment of a proceeding. Thus, although we agree with the commenters who noted that each collapsing and calculation memoranda is a legal analysis and decision by the agency, each of those memoranda also reflect conclusions based on the facts unique to the segment of the proceeding in which they were issued. Each document is publicly available, accessible on ACCESS, potentially relevant to a segment or proceeding before Commerce, and contains factual information being introduced on the record of the ongoing segment or proceeding for the first time.

When Commerce employees are considering such submissions on the record, they frequently must review the record of the segment from which the memoranda at issue originated and review further information on those records pertaining to those agency decisions to understand the broader facts and context in which the decisions at issue were made by the agency. It is a time-consuming exercise and, depending on the complexity of the facts and the record of the other segment or proceeding, can be difficult and may require that Commerce employees put even more documents from those other segments or proceedings on the record. This problem becomes even more profound when one recognizes that there are dozens of decision memoranda issued by Commerce on a monthly basis in various segments, with some of those documents being more descriptive of the facts under consideration and self-contained than others. Accordingly, for many decision memoranda not listed in § 351.104(a)(6), Commerce has determined that it would be best to continue its practice of requiring interested parties pointing to those analysis and decision memoranda from other segments and proceedings to submit those documents on the record of the segment to which the parties are arguing that those memoranda are relevant. We appreciate that some interested parties explained that it would be easier for them to simply cite all public Commerce decision memoranda, but their points do not take into consideration the time and effort Commerce employees already devote to analyzing the information placed on the record unique to the segment before the agency. If Commerce were required to independently review the details and context of the records of numerous additional segments in each case, it would quickly become unmanageable.

In response to the arguments that Commerce has tried to prohibit references to past practices and policies in issuing these regulations (
i.e.,
deprived interested parties of a transparent process or deprive importers of their due process rights under the Fifth Amendment of the United States Constitution) we disagree. Commerce believes, in fact, that there is no support for such contentions. Interested parties may, in fact, cite all of Commerce's public decision memoranda from other segments and proceedings and rely on those memoranda for purposes of their arguments in every case. There is no regulation that restricts such citation or argument, and nothing in the
Proposed Rule
suggested that Commerce would prevent reliance on such documents in any given segment. These regulations merely require that when interested parties cite public documents originating with Commerce, and where those documents are not listed under § 351.104(a)(6), then the interested party must submit a copy of that public decision document on the record of the segment in which it is participating. If the interested party is already citing that document to support its claims, then the interested party will naturally have access to the document and should be easily able to take the additional step and submit the document on the record of the segment at issue. If anything, Commerce concludes that this additional step creates a procedure which is more, and not less, transparent, than the practice advocated by the commenters, and in no way deprives importers or any other party of their due process rights under the Fifth Amendment of the United States Constitution.

Finally, with respect to the statements made by commenters on post-preliminary determination and results submissions, we recognize that parties may cite any of the documents listed in section § 351.104(a)(6) to argue that Commerce acted inconsistently with its practices or procedures in a preliminary Commerce determination. There is no question that collapsing and calculation memoranda, for example, from other segments might provide greater factual detail on certain policies or practices, as suggested by some of the commenters. However, it is the very factual specificity of the data in such documents which we believe also warrants the provision of such documents and data on the record for consideration in accordance with the timing and filing requirements of § 351.301. The inclusion of such documents on the record allows analysts and interested parties to consider that information in detail in determining the relevance of those previous Commerce decisions to the facts on the record before the agency.

2. Commerce will not revise § 351.301(c)(4), as proposed.

Section 351.301(c) is the provision in Commerce's regulations that provides timelines and procedures for parties to place new factual information on the official record, and allows other interested parties the opportunity to respond to those submissions. Section 351.301(c)(4), in particular, pertains to Commerce and its ability to submit new factual information on the record. In light of multiple cases in which parties have filed unrelated and irrelevant new factual information on the record in response to Commerce's placement of a calculation document on the record, Commerce proposed an exception to § 351.301(c)(4) in the
Proposed Rule,
which would allow Commerce to place a calculation or analysis memorandum from another segment or proceeding on the record to clarify its practice in response to the parties' arguments in their briefs and rebuttal briefs, while interested parties could respond with comments, but not with further new factual information.
29

29

See Proposed Rule,
88 FR 29857.

Commenters were universally opposed to Commerce's proposal to amend § 351.301(c)(4) and to allow the agency to place agency analysis and calculation memoranda on the record in

response to arguments made in briefs and rebuttal briefs without allowing interested parties an opportunity to submit other agency analyses or calculation memoranda in response. Certain commenters expressed concerns that merely allowing responsive arguments, but not responsive evidence, would severely limit interested parties' ability to meaningfully respond to the documents placed on the record by Commerce, and would prohibit interested parties from being able to provide additional information showing that Commerce's past practice and policies were inconsistent with that being claimed by the agency, or, at minimum, clarifying minute distinctions between cases in which those policies and practices were applied.

Several other commenters clarified that they were not opposed to a restriction on unrelated, irrelevant, and non-responsive factual information from interested parties, and some even indicated they would support such limited restrictions, but those commenters stated that a wholesale prohibition on responsive factual information was unreasonable.

Commerce's Response:

In light of the comments received by Commerce in response to the
Proposed Rule
on both the proposed changes to §§ 351.104(a) and 351.301(c)(4), Commerce has determined that it agrees that the regulation change, as proposed, would not provide interested parties with sufficient opportunity to respond to information placed by Commerce on the record late in a segment of a proceeding. Accordingly, Commerce will not adopt the changes proposed to § 351.301(c)(4) in the
Proposed Rule.

3. Commerce has made certain revisions to the proposed amendments to §§ 351.225, 351.226, and 351.227.

A. Commerce will accept responsive arguments pre-initiation in scope and circumvention inquiries in §§ 351.225(c)(3) and 351.226(c)(3), and allow responsive factual information pre-initiation in circumvention inquiries.

In 2021, Commerce revised its regulations covering scope inquiries at § 351.225 and created new regulations addressing circumvention inquiries pursuant to section 781 of the Act.
30

The revisions were extensive, and the reasons behind many of the changes were numerous. One of the significant changes was the requirement that if an interested party requested a scope ruling, the party must file a standardized scope application. Section 351.225(c) provides a listing of all of the required information for a scope ruling,
31

and § 351.226(c) largely incorporates the same requirements for a circumvention inquiry request.
32

Commerce explained in the
Scope and Circumvention Final Rule
that it hoped that by listing criteria and standardizing the filing requirements in scope and circumvention inquiries, it would accelerate the process by allowing all of the information necessary to initiate to be submitted on the record at once, rather than requiring Commerce to issue supplemental questionnaires and ask for further information, both before and after initiation.

30

See Scope and Circumvention Final Rule,
86 FR 52300 (September 20, 2021) (
Scope and Circumvention Final Rule
).

31

Id.,
86 FR 52313-15.

32

Id.,
86 FR 52339-41.

In the
Proposed Rule,
Commerce noted that in the
Scope and Circumvention Final Rule,
Commerce had indicated that parties would have an opportunity to challenge the adequacy or veracity of a scope ruling application or circumvention inquiry request. However, such an opportunity was never codified in §§ 351.225 and 351.226.
33

Commerce's experience since the issuance of the scope and circumvention rules was that it would be beneficial to the agency to allow “interested parties, other than the applicant or a requestor, a clear opportunity to submit comments to Commerce on the adequacy of the application or request, within 10 days after the submission of the application or request.”
34

Thus, such a change to the regulation was proposed.

33

See Proposed Rule,
88 FR 29853, n. 9.

34

Id.,
88 FR 29853.

Furthermore, Commerce explained that the factors considered in a circumvention inquiry differ from a scope inquiry in that, for example, circumvention inquiries frequently require Commerce to consider if there were patterns of trade. Thus, Commerce explained in the
Proposed Rule
that Commerce was also proposing that in circumvention inquiries specifically, responsive new factual information could be provided in that 10-day time period and that the party alleging circumvention could respond five days afterwards with comments and new factual information to rebut, clarify, or correct the interested parties' new factual information. Commerce explained that it expected “that by allowing for both comments and new factual information in this manner,” the record would contain even greater amounts of information so that the agency could determine if the criteria to initiate were satisfied.
35

35

Id.

Commerce received several comments on these proposals. Some commenters opposed allowing interested parties to file comments on a scope application pre-initiation in scope inquiries and comments on a circumvention inquiry request and new factual information pre-initiation in circumvention inquiries. They complained that the procedure would be burdensome and slow the process down for initiation, when in fact, the new and revised regulations were intended to speed up the process for scope and circumvention inquiries. They commented that the proposed regulation changes would lead to a mini-investigation in each case and create an adversarial process before the case was ever even initiated, and that the very purpose of a scope or circumvention inquiry is to gather information and to make a determination on the basis of the record—not to conduct such an analysis pre-initiation. Some commenters even pointed to a proposed bill pending before Congress that would prohibit Commerce from accepting any unsolicited communications from any person other than an interested party requesting a circumvention inquiry pre-initiation and suggested that Commerce should act in accordance with that proposed legislation and codify the prohibition of all such submissions. Overwhelmingly, the main concern from those opposed to the consideration of additional information before initiation was that it would slow the process down.

In the alternative, some parties suggested that if Commerce continues to accept comments and new factual information before initiation, the date for such filings should not be due 10 days after filing of a scope ruling application or circumvention inquiry request, but instead after the administrative protective order (APO) is established. They explained that this would give responsive submitting parties more adequate time to review a scope ruling application or circumvention inquiry request.

Commerce's Response:

Commerce has made no changes to the proposed §§ 351.225(c)(3) and 351.226(c)(3) and will permit the submission of arguments and information as provided in those regulatory provisions. Since 2021, Commerce has conducted scope and circumvention inquiries in which interested parties have indicated to Commerce that information in a scope

ruling application or circumvention inquiry request was not accurate or was missing key information, and it became evident that the regulations did not adequately provide a means for such concerns to be raised and considered in a timely fashion. These changes remedy that problem. We believe allowing interested parties to file comments 10 days after the filing of a scope application to address the adequacy of the application, and file comments and new factual information 10 days after the filing of a circumvention inquiry request to address the adequacy of that inquiry request, is consistent with current practice, is fair to all interested parties, and better informs Commerce so that the agency does not initiate a scope inquiry or circumvention inquiry on inaccurate or incomplete data. To the extent that the bill before Congress proposed that Commerce should be prohibited from considering information which would better inform the agency in determining to initiate a segment, Commerce is in no way bound by that proposed legislation and must prepare regulations which we believe best serve the parties and the government.

To the extent that parties are concerned that this will slow down the initiation process, it is the agency's belief that for scope ruling applications, it should make no difference. If Commerce does not initiate a scope inquiry or reject a scope application within 31 days, it will be deemed initiated pursuant to § 351.225(d)(1). For circumvention inquiry requests, it is possible that the addition of new factual information may delay initiation by a few days, as we explained in the
Proposed Rule
and describe further below, but we believe that greater amounts of information filed in a timely fashion will assist the agency in making an informed and fair decision to initiate, or not initiate, a circumvention inquiry.

Finally, we will continue to require the date for filing responsive arguments, and in circumvention inquiries, new factual information, to be 10 days from the filing of the application or request. The date of issuance of the APO will differ from case to case, and one of the purposes of these regulations is to standardize procedures and bring predictability to scope and circumvention inquiries. We believe that 10 days from the date of submission on the record is adequate time for interested parties to consider if there are reasons to be concerned about the completeness or veracity of an application or circumvention inquiry request, and if so, to raise those concerns with Commerce on the record.

B. Commerce may request clarifications from a scope ruling applicant or circumvention inquiry requestor, reset the initiation deadline from the date of filing a complete response to the clarification request, and extend the deadline for initiating a circumvention inquiry by 30 days if an interested party has filed new factual information in response to the circumvention inquiry request, in the §§ 351.225(d)(1) introductory text and (d)(1)(ii) and (iii) and 351.226(d)(1) introductory text and (d)(1)(ii) and (iii).

Commerce explained in the
Proposed Rule
that one issue which has arisen several times since the 2021 scope and circumvention regulations were issued is that there have been proceedings in which Commerce wished to seek clarification on one or more aspects of a submission, but the regulation only permitted initiation or rejection of an application.
36

Frequently, Commerce may only seek answers, for example, to less than a page of questions, and it is an inefficient use of the agency's, scope applicants', and circumvention inquiry requesters' time to reject a submission, and then have the requesters resubmit everything with just the answers to those few questions added to the application or request. Commerce, therefore, proposed a modification to its scope and circumvention inquiry regulations to reset the 30-day deadline to start after a party files a timely response to a clarification request by Commerce.

36

See Proposed Rule,
88 FR 29854.

In addition, Commerce recognized that by allowing parties to submit new factual information in response to a circumvention inquiry request and allowing requesters to respond with new factual information on surrebuttal, the additional data may require Commerce to extend beyond the normal allowance of up to an additional 15 days if it is not practicable for Commerce to initiate within 30 days. Accordingly, Commerce proposed up to an additional 15-day extension in that scenario, to allow a combined extension of no more than 30 days beyond the original 30-day deadline if new factual information was submitted on the record pre-initiation.
37

37

Id.,
88 FR 29856.

Commerce received several comments on these provisions. Most of the commenters expressed a frustration that while the 2021 regulations had created procedures in scope and circumvention inquiries that would lead to 30-day initiations in scope inquiries, and no more than 45-day initiations in circumvention inquiries, the addition of allowing Commerce to seek clarification, and then resetting the 30-day clock after a timely response to the clarification request, seemed to undermine, or at least slow down, much of that expedient process. For that reason, a few commenters objected to Commerce being able to seek clarification, while others requested that Commerce limit its ability to request clarification pre-initiation to a single request.

Likewise, several commenters objected to Commerce allowing for an additional 15-day extension to initiate circumvention inquiries if new factual information had been submitted on the record in response to a scope application or circumvention inquiry request. They commented that this would extend the period even further than the scope and circumvention regulations anticipated when they were issued and would be unnecessary and impractical. One commenter expressed concerns that by extending the deadline from 30 days to 60 days, it was an open invitation to exporters to ship additional circumventing merchandise to the United States, to the detriment of domestic producers, because those entries would not be covered by a subsequent circumvention finding. They suggested that the best defense to prevent further circumventing merchandise from being exported to the United States would be to allow for no extensions and no additional information on the record pre-initiation.

One commenter expressed disagreement with those commenters opposed to allowing Commerce to seek clarification. That commenter stated that it is a waste of time for Commerce and applicants or requestors to refile because of a few small issues, which could have quickly been resolved and provided to the agency upon request if given an opportunity. That commenter explained that, in the past, foreign exporters and importers took advantage of rejected circumvention inquiry requests and shipped additional products to the United States before domestic producers could refile their submissions with necessary supplemental information (thereby allowing their merchandise shipped pre-initiation from being covered by an affirmative circumvention finding).

Another commenter suggested that if Commerce retains its ability to seek clarification from scope ruling applicants or circumvention inquiry requestors, Commerce should revise the regulation to allow interested parties to submit comments on the adequacy of the responses to Commerce's requests for clarification 10 days after they are

submitted or 10 days after an APO has been established, whichever is latest.

Commerce's Response:

Commerce explained in the
Proposed Rule
that it is both fair and more efficient to allow the agency to seek clarifications and reset the 10-day deadline rather than reject a scope ruling application or circumvention inquiry request outright, when the agency just needs a limited amount of clarifying information. It is evident that the greatest concern from many commenters is that Commerce will use the ability to seek comments as a
de facto
way to grant extensions and delay scope and circumvention inquiries. That is not the purpose or intention of that provision. If a scope ruling application is generally incomplete and inadequate, Commerce will reject it. However, if Commerce determines that it needs additional information to supplement one or two sections of an application, for example, or it needs to understand responses to a limited number of questions, Commerce should be able to seek those answers without rejecting the scope application or circumvention inquiry request. The purpose of these modifications to the regulation is not to let the “exception become the rule” in this regard—we agree that one of the purposes of the standardization and the addition of express requirements in the scope and circumvention regulations was to accelerate the process of initiating and conducting scope and circumvention inquiries. The ability to seek clarification should not be interpreted as a means for anyone to inhibit that purpose.

Furthermore, the commenters that opposed allowing for an additional 15 days to consider whether or not to initiate a circumvention inquiry expressed little understanding of the time and resources it takes for an agency to consider record information and determine whether initiation is warranted. We understand the desire of some commenters for a speedy process, but as we explained above, we do not believe that Commerce should ignore or prohibit facts and arguments in circumvention cases that might undermine the accuracy or completeness of a circumvention inquiry request. Commerce's determinations are based on record information, and it is important that when the agency initiates a scope or circumvention inquiry, it does so based on accurate and, when possible, complete information.

We therefore continue to find that it is advisable for Commerce to seek clarifications from applicants or requestors pre-initiation, when necessary. Further, we find that allowing for an extra 15 days for the agency to review and analyze new factual responsive information on the record pre-initiation is not unreasonable.

Commerce does not, however, agree that the agency should allow other parties to submit further, new factual information and arguments on the record after a party files a timely submission in response to Commerce's request for clarification, as suggested by some commenters. If the facts are simple, then Commerce may be able to initiate quickly after receiving the responses or reject the application or request quickly as well. In other words, Commerce may not need, or want, 30 full days after the timely clarification response has been filed to initiate a scope or circumvention inquiry. If Commerce was required to allow parties to provide additional submissions after a clarification has been requested and a response has been filed, we believe that there would be too much of a possibility of unnecessary delay—the concern expressed by most of the commenters on this issue. This would be true whether the deadline is after the submission of the response or, as some commenters suggested, after the APO has been established. Therefore, we have not codified an additional layer of comments and submission of new facts following the receipt of clarification responses on the record, pre-initiation.

Finally, we note that on September 29, 2023, Commerce revised the language of §§ 351.225(d) and 351.226(d) with some small changes.
38

The new language does not conflict with this revised addition to the regulation, and Commerce is merging the two sets of textual revisions together in the final regulation.

38

See APO and Service Final Rule,
88 FR 67077-78.

C. Commerce agrees that the proposed provisions under §§ 351.225(f), 351.226(f), and 351.227(d) should be revised to reflect that only the filing and timing restrictions set forth in § 351.301(c) do not apply to the filing deadlines set forth in the scope, circumvention, and covered merchandise regulations.

In §§ 351.225(a), 351.226(a), and 351.227(a), each provision states that “unless otherwise specified, the procedures as described in subpart C of this part (§§ 351.301 through 351.308 and 351.312 through 351.313) apply to this section.” There were outstanding questions as what procedures were “otherwise specified” in Commerce's 2021 regulations, and in the
Proposed Rule,
Commerce proposed that §§ 351.225(f), 351.226(f), and 351.227(d) be amended to incorporate language that stated that none of the procedures described in subpart C applied to the scope, circumvention and covered merchandise filing deadlines and procedures.
39

39

See Proposed Rule,
88 FR 29854.

Three commenters pointed out that the language proposed by Commerce inadvertently covered too many regulatory provisions, because there was no reason to believe that the timing and filing provisions of §§ 351.225, 351.226, and 351.227 intended to forgo, for example, the formatting requirements of § 351.303, or the rules pertaining to treatment of, access to, and use of business proprietary information under § 351.306. Those commenters suggested that, in fact, Commerce intended only to state that § 351.301(c) does not apply to those regulations, because that is the general regulatory provision that sets forth filing and timing restrictions for submissions of factual information in AD and CVD inquiries.

Commerce's Response:

We agree with the commenters who stated that Commerce intended only for the filing and timing restrictions of § 351.301(c) to be inapplicable to the scope, circumvention, and covered merchandise regulations. Accordingly, we have revised the proposed language in §§ 351.225(f) and 351.226(f) to state that “The filing and timing restrictions of § 351.301(c) do not apply to this paragraph (f), and factual information submitted inconsistent with the terms of this paragraph may be rejected as unsolicited and untimely,” and revised the proposed language in § 351.227(d) to state that “the filing and timing restrictions of § 351.301(c) do not apply to this paragraph (d), and factual information submitted inconsistent with the terms of this paragraph may be rejected as unsolicited and untimely.” With respect to § 351.301(b), Commerce expects that the types of factual information submitted under §§ 351.225(f), 351.226(f), and 351.227(d) will normally be covered by § 351.102(b)(21)(i) and (ii). Accordingly, the written explanation requirements of § 351.301(b) will continue to apply to those regulations.

D. Commerce will continue to allow for extensions to preliminary circumvention determinations up to 90 days in § 351.226(e)(1).

Section 351.226(e)(1) states that a preliminary circumvention determination will be issued no more than 150 days after the publication of the notice of initiation and does not

expressly provide for the opportunity of an extension. Furthermore, § 351.226(l)(2)(ii) provides that if Commerce preliminarily determines that merchandise was circumventing an AD or CVD order during a given period of time, and the merchandise was not being suspended pursuant to those orders, Commerce will normally direct CBP to suspend liquidation of all entries of the merchandise entered on or after initiation and collect cash deposits on those entries. The preamble to the
Scope and Circumvention Final Rule
explains the reason for this sequence. In summary, Commerce determined that in most cases, the publication of the initiation of a circumvention inquiry in the
Federal Register
would be sufficient notice for producers, exporters, and importers that their non-subject merchandise might subsequently be determined to be subject to an order through a circumvention determination.
40

Thus, rather than direct suspension starting at the date of an affirmative preliminary determination, the regulation provides that normally Commerce will direct suspension, and the collection of cash deposits, to be applied retroactively to entries on or after initiation—thereby preventing parties from quickly shipping merchandise after initiation to the United States in avoidance of potential future ADs or CVDs.

40

See Scope and Circumvention Final Rule,
86 FR 52344-50.

In the
Proposed Rule,
Commerce explained that given the complexity of certain circumvention inquiries, it was reasonable to expressly provide for an extension to the issuance of a preliminary circumvention determination.
41

Commerce determined that a 90-day extension, for a deadline of no more than 240 days from the date of publication of the notice of initiation, was a reasonable extension amount, and emphasized that this would not alter the maximum deadline for issuing a final circumvention determination of 365 days.
42

41

See Proposed Rule,
88 FR 29856.

42

Id.,
88 FR 29856-57.

Multiple commenters objected to Commerce's addition of an extension allowance to § 351.226(e)(1). They expressed concerns that because no suspension and collection of cash deposits would commence for entries not already suspended under the AD or CVD orders until a preliminary determination was issued, that any extension of a preliminary determination would provide circumventing parties with a longer time in which they could benefit from duty-free entry and possibly evade the payment of ADs or CVDs altogether. The commenters suggested that Commerce's ability to extend a preliminary circumvention determination was unnecessary and that allowing for an extension largely undermined the remedy provided in the
Scope and Circumvention Final Rule
in § 351.226(l)(2)(ii), perpetuating ongoing harm to domestic producers. In particular, some commenters expressed concerns that extending a preliminary circumvention determination by three months could, in fact, guarantee that many entries which entered earlier in the period of the inquiry, and were the foundation of a circumvention allegation, would be liquidated without regard to any ADs or CVDs, defeating the very purpose of a circumvention inquiry and determination.

In the alternative, some commenters suggested that if Commerce continues to allow for an extension of a preliminary circumvention determination, then it should limit such an extension to only 45 days, rather than 90 days. Others proposed that Commerce should limit an extension to 50 days, to allow for no more than 200 days before issuance of a preliminary determination after publication of the initiation
Federal Register
notice. Those commenters also suggested that Commerce should consider revising its regulations under § 351.226(l), and permit suspension of liquidation of entries in every circumvention inquiry starting immediately at initiation, rather than waiting for a preliminary affirmative circumvention determination, thereby mitigating the significant risk of merchandise being liquidated as entered before Commerce issues its preliminary determination.

Commerce's Response:

Since Commerce issued its
Scope and Circumvention Final Rule
in 2021, Commerce has found good cause to extend multiple preliminary circumvention determinations pursuant to § 351.302(b). This is because circumvention inquiries can be extremely complicated. For example, in analyzing if merchandise was assembled or completed in a third country in circumvention of AD or CVD orders, Commerce must consider the five factors which establish if there was circumvention, the factors which inform Commerce if a process of assembly or completion is minor or insignificant, an analysis of patterns of trade, a determination of affiliations, and consideration of increases in imports of particular merchandise into the foreign country.
43

If there are multiple parties involved, such analyses require that Commerce request a large amount of information from the interested parties, and then analyze all of that data on the administrative record. It has been the agency's experience that in many circumvention inquiries, 150 days is simply not enough time for Commerce to gather sufficient information, conduct such an analysis, and make a preliminary determination.

43

See
sections 781(b)(1), (2), and (3) of the Act.

We appreciate that parties are concerned that extending a preliminary determination could possibly allow more entries of merchandise to be liquidated without regard to ADs or CVDs than if Commerce issued its preliminary circumvention determination earlier. However, the presumption behind that complaint is that Commerce would be able to adequately gather all of the necessary information and conduct the necessary analysis of all of the statutory and regulatory criteria needed in a preliminary circumvention determination within 150 days in every circumvention inquiry. Given the complexity and number of circumvention determinations, not to mention other AD and CVD proceedings demanding resources and time from Enforcement and Compliance teams, we stress that such a presumption is mistaken.

Our experience has shown that there will be some circumvention inquiries which do not require more time, or at least not an additional 90 days, to complete a preliminary circumvention determination. For example, a circumvention inquiry with a single producer or exporter conducted pursuant to a minor alterations allegation under section 781(c) of the Act might not require Commerce gather as much information or conduct such a lengthy analysis as, for example, a further assembly or completed circumvention allegation under section 781(a) of the Act, in a case involving multiple producers or exporters. It is a case-by-case determination, but ultimately, Commerce needs the flexibility to extend its preliminary circumvention determination when the strains on the record and the agency's resources require such an extension.

Furthermore, we continue to believe that Commerce should not direct CBP to suspend liquidation and collect cash deposits on non-subject merchandise not already suspended until it has made an affirmative circumvention determination, as reflected in § 351.226(l)(2)(ii), for all of the reasons

provided in the
Scope and Circumvention Final Rule.
Therefore, we have made no changes to § 351.226(l).

In addition, although we appreciate why some commenters have suggested that Commerce reduce the 90-day extension allowance to 45 or 50 days, we continue to believe that a 90-day allowance remains appropriate. Just because the 90-day allowance exists in the regulation does not mean that Commerce will always extend up to the full 90 days. Furthermore, regardless of the length of the extension, § 351.226(e)(2) still requires Commerce to issue its final circumvention determination no later than 365 days from the date Commerce published the initiation notice in the
Federal Register
.

Finally, we must emphasize that even if some additional entries might be liquidated without regard to ADs or CVDs if Commerce extends a preliminary circumvention determination, that extension will not “undermine” the circumvention law or defeat the very purpose of a circumvention inquiry and determination, as some commenters alleged. Commerce will continue to direct CBP to continue to suspend entries which are already suspended at initiation under § 351.226(l)(1). Further, Commerce will continue to direct CBP to suspend entries of, and collect cash deposits on, merchandise covered by an affirmative circumvention determination retroactively to the date of initiation, in accordance with § 351.226(l)(2)(ii). That means that even if the period in which Commerce made its preliminary determination was extended, the effect of that decision will only reach further back to cover more entries that have not yet been liquidated. Accordingly, most of the remedy available without the extension provision in § 351.226(e)(1) will remain in place with the addition of the extension provision to § 351.226(e)(1), and the benefit will be that Commerce will be able to conduct its inquiry, complete its preliminary analysis, and enter a preliminary circumvention determination consistent with its statutory and regulatory obligations.

E. Commerce will continue to codify its practice that it will only conduct a scope ruling of merchandise not yet imported if it has been historically commercially produced and sold in § 351.225(c)(1) and (c)(2)(x).

Commerce explained in the
Proposed Rule
that although it will conduct scope inquiries of merchandise not yet imported into the United States, under its practice, it will only do so if that merchandise has been commercially produced and sold.
44

Commerce proposed to codify that practice in § 351.225(c)(1) and (c)(2)(x).

44

See Proposed Rule,
88 FR 29853.

Some commenters were critical of Commerce's practice and the codification of that practice in the regulations. They expressed concerns that the “heightened standard” would place an unreasonable burden on applicants. They suggested that Commerce should clarify that scope ruling applicants need only be required to provide evidence available to them, and not be required in every case to prove that a product has been commercially produced and sold because sometimes scope applicants may not have access to such information. They pointed out that the initial language of § 351.225(c)(2) actually provides that all of the information required in the application is based on language that states, “to the extent reasonably available to the applicant.”
45

Their concern was that that language proposed for § 351.225(c)(1) states that the applicant “must provide evidence that the product has been commercially produced and sold,” with no “reasonably available” language attached to it.
46

45

See
§ 351.225(c)(2).

46

See Proposed Rule,
88 FR 29871.

Commerce's Response:

It is Commerce's practice to require evidence that merchandise which has not yet been imported into the United States was commercially produced and sold in other foreign markets before Commerce will initiate a scope inquiry on that merchandise. We have therefore not changed the language in § 351.225(c)(1) as proposed in the
Proposed Rule.
As some of the commenters pointed out, there are many areas in our law in which Commerce will consider allegations and complaints based on information which is reasonably available to the party making the allegation or claim. In this case, however, Commerce is extending a service to review merchandise which has not yet even entered the United States stream of trade. In providing such a service, it is therefore critical that Commerce not expend its time and resources on sample sales, prototypes, or mere models of merchandise not yet commercially produced. It is also critical that Commerce not expend its time or resources on merchandise which has never been commercially sold and might never be commercially sold in the United States in the future. Accordingly, the requirement that applicants provide evidence of both of these factors is reasonable and Commerce will not revise its practice or the proposed evidentiary standard in this final rule.

With respect to the language set forth in proposed § 351.225(c)(2)(x), although it falls under the introductory language of paragraph (c)(2), like all of the other elements requesting information from scope ruling applicants, we wish to be clear that if an applicant is unable to provide (1) a statement that the product has been commercially produced, (2) a description of the countries in which the product is sold, or has been sold, and (3) relevant documentation which reflects the details surrounding the production and sale of that product in countries other than the United States, then Commerce will not conduct a scope inquiry of that merchandise. We have made one minor change, however, from the
Proposed Rule
to § 351.225(c)(2)(x)(B), that allows evidence of countries in which merchandise is either currently being sold, or evidence of countries in which the merchandise “has been sold” in the past. Although the contemporaneity of such sales would be important, there is no requirement under Commerce's practice that the sales must be currently made in other countries.

F. Commerce has modified its scope clarification regulation, § 351.225(q), in response to the comments received.

Section 351.225(q) was added to the regulations in the
Scope and Circumvention Final Rule
and Commerce explained in the
Proposed Rule
that it was intended to codify Commerce's historical usage of such clarifications to address scope-related issues not addressed by scope rulings.
47

The current regulation provides an example in which, after Commerce has previously issued repeated interpretations of particular language in a scope, Commerce issues a scope clarification that takes the form of an interpretive footnote to the scope when the scope is published or set forth in instructions to CBP. However, Commerce explained in the
Proposed Rule
that this was not the only situation in which Commerce issues a scope clarification post-order, and it determined that the regulation would benefit by setting forth other instances in the regulation in which a scope clarification would be appropriate. Further, Commerce provided examples in which a scope clarification could take different forms (
e.g.,

Federal Register
notices, memoranda in the context of an

ongoing segment, and the aforementioned interpretive footnote).
48

47

Id.
, 88 FR 29855-56.

48

Id.

Commerce received a few comments on the proposed changes to § 351.225(q), primarily concerned with the breadth and reach of the language of the provision. Commenters expressed concerns that Commerce was trying to avoid the disciplines of the scope ruling regulation requirements through the scope clarification provision. Commenters worried that the provision was trying to avoid notice and comment, due process protections, and essentially issue scope rulings without a fulsome analysis. Some commented that the current language was sufficient, while others questioned even the current (
i.e.,
unmodified) language of the provision, challenging the clause in § 351.225(q) which states that scope clarifications can be used to clarify “whether a product is covered or excluded by the scope of an order at issue based on previous scope determinations covering the same or similar products”
49

and asking how that analysis differs from the analysis conducted under § 351.225(k)(1)(i)(C).

49

See
§ 351.225(q).

Some commenters suggested that all scope clarifications should be published in the
Federal Register
, or that, at minimum, Commerce should include all scope clarifications in the quarterly notice of scope rulings published in the
Federal Register
in accordance with § 351.225(o). They also objected to the fact that it is Commerce's practice to issue scope clarifications in the context of ongoing segments, instead of conducting a separate segment, like a scope ruling, and allowing parties outside of the segment to comment on a clarification. They stated that scope clarifications, by their nature, are not company-specific and could affect the trading community broadly.

Other commenters requested that Commerce explain in greater detail its authority to interpret a scope through a scope clarification, and one commenter protested Commerce's reference to the four scenarios set forth in the proposed regulation as just examples, and its statement in the
Proposed Rule
preamble that “these examples are not exhaustive.”
50

That commenter expressed concerns that such broad language provided uncertainty to the parties and, again, suggested that Commerce was trying to evade the disciplines of a scope ruling analysis under § 351.225(k) through scope clarifications.

50

See Proposed Rule,
88 FR 29856.

Commerce's Response:

Commerce has considered the comments raised by the commenters and concluded that the language of § 351.225(q) should be narrowed and revised to better reflect the purpose and form of a scope clarification.

To begin, Commerce has the statutory and regulatory authority as the administrator of the trade remedy laws to clarify the scope of an order when the need arises. Commerce has a long history of issuing clarifications in its proceedings, and there is no question that such clarifications assist in the administration of the AD and CVD laws. However, a scope clarification is not equivalent to a scope ruling or scope determination, and Commerce never intended for the regulation to equivocate the two through the codification of the original § 351.225(q) or the proposed revision in the
Proposed Rule.
The commenters have pointed to concerns with both the original and modified language, and we understand those concerns. Thus, we have revised the provision in response to those concerns.

First, in the introductory language to § 351.225(q), Commerce explains that a scope clarification may be issued in any segment of a proceeding that provides an interpretation of specific language in the scope of an order and addresses other scope-related issues, but makes clear that a scope clarification may not analyze or determine whether a product is covered by the scope of an order in the first instance, outside of the situations explicitly listed in the regulation. The purpose of a scope ruling, unlike a scope clarification, is to determine if a specific physical product, in the first instance, is covered or not covered by an AD or CVD order.

Next, rather than provide “examples” that were non-exhaustive, as was set forth in the
Proposed Rule,
the new § 351.225(q)(1) provides four specific situations in which a scope clarification may be applied. First, it may be used to determine if a product is covered or excluded by the scope of an order if Commerce has previously issued at least two scope determinations or rulings covering the same products with the same physical characteristics. This is the example which is set forth in the existing regulation. Such a situation arises, for example, when one exporter exports a product with certain physical characteristics, and Commerce issues a scope ruling on that product. Then, another exporter exports a product with the same physical characteristics, and Commerce issues a scope ruling on that product as well. Then a third exporter exports a product, again, with the same physical characteristics, and Commerce determines that rather than repeat the same analysis through multiple scope rulings, a scope clarification is the appropriate means of communicating its determination in general going forward for that particular product with specific physical characteristics.

In response to those commenters who requested that Commerce explain the difference between this language and the analysis set forth in § 351.225(k)(1)(i)(C), in Commerce's analysis under § 351.225(k), Commerce is considering whether a product is covered, or not covered, by an AD or CVD order in the first instance, and is looking to Commerce's earlier scope rulings and determinations covering physically same or similar products under the order at issue, as well as orders with same or similar scope language, for guidance. In the example above, Commerce would likely consider the sources listed in § 351.225(k)(1)(i)(C) as part of its analysis of the products exported by the first and second scope ruling applicants to determine if both products are covered, or not covered, by the scope of an AD or CVD order. It is only once Commerce continues to receive repeated requests for scope rulings on the same physical product that Commerce might determine, instead, to issue a general scope clarification covering products with the same physical characteristics.

The second situation set forth in the regulation pertains to section 771(20)(B) of the Act, for merchandise imported by, or for the use of, the Department of Defense, in which coverage by the scope of an AD or CVD order is not at issue. Under that provision, the issue is not if the product is covered by an order, but if the merchandise is able to avoid the payment of duties pursuant to the limited governmental importation exception set forth in the statutory provision. The purpose of a scope ruling is to determine if a product is covered by the scope of an order, not if subject merchandise should be excluded from coverage pursuant to a statutory exception to the trade remedy laws. In that situation, a scope clarification is an appropriate means of addressing the issue.

The third situation relates to language or descriptors in the scope of an order that has been subsequently updated, revised, or replaced under certain circumstances. The regulation explains that those circumstances involve modifications to the language in the scope of an order pursuant to litigation or a changed circumstances review under section 751(b) of the Act, changes to HTSUS clarifications, as administered by the ITC, and changes to

industrial standards set forth in a scope, as determined by the industry source for those standards identified in the scope. Such changes have the potential to lead to confusion and, therefore, in those circumstances a scope clarification might be beneficial. For example, sometimes, products covered by a particular HTSUS classification set forth in an AD or CVD order following an investigation may not be subsequently covered by that same HTSUS classification when it is revised in the future. In that case, Commerce might issue a scope clarification in an ongoing segment of a proceeding, explaining that the HTSUS classifications are provided for illustrative reasons, but are not binding on the merchandise covered by a scope. Accordingly, if the product was covered at the time the AD or CVD order was issued, Commerce could explain through a scope clarification that the subsequent change in that classification would not change the coverage status of merchandise under the AD or CVD order.

Finally, the fourth situation pertains to the need for clarification of an analysis conducted by Commerce in a previous scope determination or scope ruling. The regulation provides an example where Commerce previously determined in a country-of-origin determination, pursuant to § 351.225(j)(2), that the country-of-origin was established at a certain stage of production where the agency determined that the essential component of the product was produced or where the essential characteristics of the product were imported. If Commerce observes that a company in a segment of the proceeding has divided that stage of production between two or more countries, Commerce may need to clarify its previous country-of-origin analysis to explain in which part of the stage of production was the essential component produced or the essential characteristics imparted. Such an analysis might not require a new scope ruling but could instead be addressed through a scope clarification.

In response to those commenters suggesting that scope clarifications should never be conducted in segments of proceedings, and should always be published in the
Federal Register
, or at least be published in the quarterly notice of scope rulings under § 351.225(o), we disagree that publication in the
Federal Register
is usually necessary. Historically, Commerce has addressed scope clarifications in individual segments because the nature of a scope clarification is such that it is targeted only to a limited issue before the agency, like many other calculation and methodological issues which Commerce normally faces in its investigations and administrative reviews on a case-by-case basis. However, we recognize that there may be situations in which a scope clarification may be less specific to the case at hand and may have outsized effects on those subject to an AD or CVD order in general. In that situation, Commerce believes the agency would benefit from the broader participation of the “trading community,” as noted by one of the commenters. Accordingly, removing the “examples” language from the proposed regulation, Commerce has modified § 351.225(q)(2) to provide that scope clarifications may take the form of an interpretive footnote to the scope when the scope is published or issued in its instructions to CBP, in a memorandum issued in an ongoing segment of a proceeding, or, at the discretion of the Secretary, in a
Federal Register
document. The regulation provides that when the scope clarification is conducted as a standalone segment, Commerce will publish a preliminary notice of scope clarification in the
Federal Register
, provide parties with at least 30 days to file comments with the Secretary, and then address comments received in a final notice of scope clarification published in the
Federal Register
. To be clear, Commerce does not believe that the publication of a scope clarification in the
Federal Register
will be necessary for most scope clarifications, but Commerce does agree that it should be an option available for Commerce in certain circumstances.

G. Commerce has made minor edits to §§ 351.225(m)(2), 351.226(m)(2), and 351.227(m)(2) to clarify certain terms in those provisions.

In reviewing the proposed revisions to the scope, circumvention, and covered merchandise regulations, Commerce became aware that language proposed for §§ 351.225(m)(2), 351.226(m)(2), and 351.227(m)(2) stated that the Secretary would include on the record of the CVD proceeding a copy of the “final determination” and a “preliminary determination.”
51

We have concluded that such language is not sufficiently clear. Therefore, in the final regulations, we are revising that sentence in § 351.225(m)(2) to state that once the Secretary issues a final scope ruling on the record of the AD proceeding, the Secretary will include a copy of the final scope ruling memoranda, a copy of the preliminary scope ruling memoranda if one had been issued, and “all relevant instructions to U.S. Customs and Border Protection.” The language for § 351.227(m)(2) will align with the circumvention language, but will instead apply to a covered merchandise proceeding. We determine that this change will provide added clarity on the information which will be placed on the record of the CVD proceeding following a scope, circumvention or covered merchandise determination issued on the record of the companion AD proceeding.

51

See Proposed
Rule, 88 FR 29872, 29873.

H. Commerce made no changes in responses to other scope and circumvention issues raised in the comments on the Proposed Rule.

One commenter criticized Commerce's existing regulations that require that scope, circumvention, and covered merchandise proceedings in companion orders should be conducted on the record of the AD proceeding. That commenter also suggested that Commerce should place preliminary scope, circumvention, and covered merchandise rulings/determinations on the record at the same time that those preliminary determinations are placed on the AD record. Furthermore, that commenter expressed frustration that although parties with an APO in previous AD segments could move information from one AD segment to another under the revised § 351.306(b)(3), those who were not covered by an APO in those segments could not.

Another commenter expressed concerns with the language of the current standard APO, stating that it does not reflect the cross-proceeding sharing provisions of § 351.306(b)(3) and (4). They offered suggestions for language to revise the standard APO once these regulations become final.

Commerce's Response:

Commerce will continue to conduct scope, circumvention, and covered merchandise segments covering companion orders on the record of the AD segment. We will not place information on the CVD record following the notification to interested parties that all subsequent filings should be filed on the AD segment of the proceeding, as explained in §§ 351.225(m)(2), 351.226(m)(2), and 351.227(m)(2), until final scope rulings and circumvention and covered merchandise determinations are issued. With respect to the APO, Commerce intends to modify its standard language to incorporate the changes to the regulation, but those changes will not be reflected in the regulation and the APO will not be revised until the effective date of the final rule.

4. Commerce has made certain revisions to the proposed amendments

to Notices of Subsequent Authority—§ 351.301(c)(6).

As Commerce explained in the
Proposed Rule,
sometimes while an administrative segment is ongoing, a Federal court may issue a holding, or Commerce may issue an administrative decision, in another case which an interested party believes is directly applicable to an issue currently before the agency.
52

When that occurs, the interested party may file on the record a Notice of Subsequent Authority. The uniqueness of a Notice of Subsequent Authority is that the subsequent authority may occur at any time, including after the time for new factual information under § 351.301(c) has passed, after briefs and rebuttal briefs have been filed consistent with § 351.309(c) and (d), and possibly right up until Commerce issues a final determination or final results in a segment of an AD or CVD proceeding.

52

Id.,
88 FR 29857.

Currently, Commerce has no regulation guiding the filing of, or receipt and use of, a Notice of Subsequent Authority, nor is there any regulation allowing other interested parties to comment on such a Notice. Further, there is no regulation which addresses the filing of a Notice of Subsequent Authority in light of the administrative procedures and deadlines which Commerce faces in the last few weeks of a segment (
e.g.,
meeting internally to get official clearances for the agency's decisions and positions, drafting and finalizing positions, completing calculations when necessary, and preparing documents for publication in the
Federal Register
and for release to the parties under the APO). Accordingly, under statutory deadlines, it might simply be untenable for Commerce to consider a Notice of Subsequent Authority in the days immediately preceding a final determination or final results. Commerce, therefore, determined in the
Proposed Rule
that it would be beneficial to issue a regulation which addressed the procedures and deadlines for the filing of a Notice of Subsequent Authority and a response to such a notice.
53

It therefore proposed a new regulatory provision, § 351.301(c)(6), which stated that Commerce would “only be required to consider and address” a Notice of Subsequent Authority if it was filed 30 days or more before a final determination or results deadline and a response to that Notice if it was filed 25 days or more before that final determination or results deadline.
54

Furthermore, the proposed regulation set forth the content requirements of such a Notice and responsive comments in § 351.301(c)(6)(iii).

53

Id.

54

Id.,
88 FR 29873.

Some commenters generally accepted Commerce's proposal, while four commenters expressed concerns. Two commented that Commerce already had sufficient discretion to consider and address Notice of Subsequent Authority whenever and however it wished, and voiced concerns that parties would abuse what they consider “subsequent authority” under this provision. Another expressed concerns that not only did Commerce have such discretion, but if Commerce was unable to consider arguments before its final determination or results, then the party would have the opportunity to appeal the decision and Commerce could address the alleged authority in a remand redetermination. That party also stated that Commerce's restriction of filing dates of 30 days and 25 days might be unlawful, because when a precedential court or agency decision is issued, Commerce is required by law to consider it and follow it, regardless of whether the decision is issued one day or one month before a final determination or decision. That commenter emphasized that constraining parties to file by 30 days and 25 days would not relieve Commerce of its legal obligation to follow binding precedent. The three commenters therefore suggested that Commerce should not implement the proposed Notice of Subsequent Authority provisions, or at least not implement the timing restrictions, in the proposal.

The fourth commenter expressed concerns that the 30-day and 25-day deadlines would lead to unnecessary litigation when subsequent authorities, of which Commerce was aware, arose and Commerce nonetheless issued final determinations or results inconsistent with binding authorities. That commenter suggested that the regulation should allow Commerce to consider extensions in certain circumstances, or at least move the deadlines closer to the final determination or results deadlines by 15 days.

Commerce's Response:

After consideration of the comments, we agree that the timing language as proposed in § 351.301(c)(6)(ii) was too restrictive given Commerce's legal obligation to consider subsequent authorities when possible. Accordingly, we have removed the language of § 351.301(c)(6)(ii) which stated that Commerce would “only be required to consider and address” Notices of Subsequent Authority and rebuttal comments submitted within the 30-day and 25-day deadlines. Instead, the revised language states only that Commerce “will consider and address” Notices of Subsequent Authority and rebuttal comments filed within those deadlines.

On the other hand, we also believe that interested parties should file Notices of Subsequent Authority only when the authorities are immediate and “subsequent” to agency actions. Commerce has timing requirements in each of its segments for parties to make the agency aware of relevant court and agency decisions as the segment progresses. If a party is aware of the existence of an alleged binding authority but does not alert Commerce of that alleged authority until 30 days before the deadline for issuing the final determination or results, we believe that such an action would be inconsistent with our normal deadlines and an abuse of this provision. Accordingly, we have added a second timing requirement to the regulation that Notice of Subsequent Authority may only be filed within 30 days after the alleged subsequent authority was issued.

In addition, a new sentence was added to the regulation which states that given statutory deadlines, “the Secretary may be unable to consider and address the arguments and applicability of alleged subsequent authorities adequately in a final determination or final results if a Notice of Subsequent Authority or rebuttal submission is submitted later in the segment of the proceeding.” Finally, we edited references to final results “of administrative review” to make it just final results in general because a Notice of Subsequent Authority may be filed in other administrative segments, such as circumvention inquiry proceedings under section 781 of the Act and § 351.226 or a scope ruling proceeding under § 351.225.

We appreciate the concerns expressed by the commenters that if a court holding, for example, is binding on Commerce and arises immediately before the issuance of a final determination or results, Commerce may be lawfully bound by that holding despite the fact that Commerce may also be administratively unable to consider and address that holding before the agency decision is issued by a statutory deadline. As one of the commenters stated, in that case, the only option may be for parties to litigate the issue and have Commerce address the subsequent authority in a remand redetermination.

Still, though, it is possible in some cases that Commerce may be able to consider and address subsequent authorities and arguments in less than 30 or 25 days before the deadline for a final determination or final results, but Commerce's ability or inability to consider and address subsequent authority in a truncated period of time would be highly case-specific and cannot be guaranteed by the regulation.

Section 351.301(c)(6)(ii) primarily is intended to inform the public that if Notices of Subsequent Authority are filed 30 days or more before the deadline of a final determination or results, and a response is filed 25 days or more before the deadline for a final determination or results, Commerce will be able to consider and address the alleged authority and arguments for and against its application to the segment of the proceeding. Accordingly, if the alleged authority was issued before those deadlines, interested parties must file their Notice of Subsequent Authority by the 30-day deadline. If interested parties wait to submit notice of the alleged authority after those deadlines, or if the alleged authority was issued after those deadlines, then Commerce's ability to consider and address the alleged authority will be entirely dependent on the agency's administrative resources and existing time constraints before the agency issues its final determination or results.

5.
Commerce has made certain revisions to the CVD AFA hierarchies in—§ 351.308(j).

In 2015, in the Trade Preferences Extension Act (TPEA), Congress added section 776(d) to the Act, which addresses Commerce's application of AFA under sections 776(a) and 776(b). The provision discusses Commerce's ability to select the highest CVD rate or highest dumping margin in certain circumstances, provides that there are no obligations to make certain estimates or address certain claims, and gives guidance for Commerce in otherwise selecting a CVD rate or dumping margin from the facts otherwise available.
55

With respect to CVD proceedings, in particular, section 776(d) of the Act states that Commerce may “(i) use a countervailable subsidy rate applied for the same or similar program in a countervailing duty proceeding involving the same country; or (ii) if there is no same or similar program, use a countervailable subsidy rate for a subsidy program from a proceeding that the administering authority considers reasonable to use.”
56

That language implements, in general, Commerce's longstanding use of CVD AFA hierarchies, and Commerce stated in the
Proposed Rule
that it was codifying those hierarchies, in full, by adding a new paragraph to § 351.308.
57

55

See
TPEA of 2015, Public Law 114-27, 129 Stat. 362, 384 (2015), sec. 502, codified at 19 U.S.C. 1677e(b)(1).

56

See
sections 776(d)(1)(A)(i) and (ii) of the Act.

57

See Proposed Rule,
88 FR 29858.

As a preliminary matter, although Commerce proposed that the CVD AFA hierarchies be codified as § 351.308(g) in the
Proposed Rule,
we have subsequently concluded that other provisions found in section 776(d) of the Act, and parts of Commerce's AFA practice in general, should be codified in § 351.308 and should logically precede the CVD AFA hierarchies in the regulation. Accordingly, we have moved the CVD AFA hierarchies to § 351.308(j) in this final rule, and have reserved § 351.308(g), (h), and (i) for future rulemaking.
58

58
To prevent confusion, to the extent parties made arguments about proposed § 351.308(g) in their comments, we have referred to those comments below as referencing § 351.308(j).

In the CVD hierarchy regulation, Commerce provides for one hierarchy for investigations in § 351.308(j)(1) and a second hierarchy for administrative reviews in § 351.308(j)(2). In addition, the regulation provides guidance on the application of the CVD hierarchy in both types of segments in § 351.308(j)(3), providing that Commerce will treat rates less than 0.5 percent as a
de minimis
rate, will normally determine a program to be a similar or comparable program based on Commerce's treatment of the program's benefit, and will normally select the highest program rate available in accordance with the hierarchical sequence, unless Commerce determines that the highest rate is otherwise inappropriate. In addition, in accordance with section 776(c)(1) of the Act, which requires certain facts available derived from secondary information to be corroborated, § 351.308(j)(3)(iv) states that when Commerce determines a CVD AFA rate from secondary information using the hierarchy, it will determine those facts available to be corroborated.

Commerce received several comments on the AFA CVD hierarchies. Generally, the comments were supportive, though most of those commenters expressing support for the provision opposed Commerce's proposed use of an “above-zero” threshold in the first step of the AFA hierarchy governing investigations, and instead suggested that the regulation should include an “above-
de minimis”
threshold. While these commenters recognized that the intention of the proposed rule was to codify existing Commerce practice, they also commented that the “above-
de minimis”
threshold in no way conflicted with the statutory language and, in fact, would better reflect the purpose and goals of the AFA CVD hierarchy. Those commenters focused primarily on concerns that parties could obtain a more favorable result by failing to cooperate than if they had cooperated fully by gaming the “above-zero” threshold, undermining Commerce's statutory directive to discourage non-compliance. Further, some commenters also expressed concerns that even though section 776(d)(3) of the Act was added by Congress in the TPEA and explicitly states that in selecting an AFA rate Commerce is not required to estimate what a CVD rate would have been if the respondent had cooperated, or demonstrate that an AFA rate reflects a respondent's “alleged commercial reality,” the “above-zero” threshold implicitly considers both.

In addition, multiple commenters suggested revisions to the proposed regulation as it relates to instances when Commerce may determine that a rate selected from a hierarchy is inappropriate. Section 351.308(j)(3)(iii) states that “{the} Secretary will normally select the highest program rate available in accordance with the hierarchical sequence, unless the Secretary determines that such a rate is otherwise inappropriate.” One commenter noted that deviation from the hierarchy may be necessary to ensure the statutory purpose of AFA is achieved and stated that the placement of § 351.308(j)(3)(iii) at the end of the regulatory provision made this purpose seem like an afterthought. This commenter suggested moving a portion of this paragraph to the introductory section of paragraph (j), and subsequently deleting § 351.308(j)(3)(iii).

Other commenters requested that Commerce elaborate on specific instances in which Commerce may deviate from an AFA hierarchy or otherwise deem a rate selected via a hierarchy to be inappropriate. These suggestions included,
inter alia,
requests that: Commerce clarify that the use of the word “normally” permits deviation from the hierarchy when it fails to effectuate the purpose of the AFA statute; an explicit statement that Commerce will not apply the hierarchy to generate a
de minimis
CVD rate for uncooperative respondents; and modifications to paragraph (j)(3)(iii) of § 351.308 to specifically note that Commerce may deviate from a hierarchy if the rate “fails to ensure that the party

does not obtain a more favorable result by failing to cooperate than if it had cooperated fully, or is not sufficiently adverse so as to deter future noncompliance.”

In addition, one commenter requested that Commerce clarify that it will not apply lower AFA rates in response to the same types of uncooperative responses regarding the same program from one segment of a proceeding to another, while another commenter suggested that Commerce must calculate “a reasonably accurate estimate of the respondent's actual rate” and, therefore, should edit paragraphs (j)(1)(iii) and (j)(2)(ii) and (iii) of § 351.308 to read that Commerce will “apply the highest calculated above-
de minimis
rate for the most similar or comparable program.”

Finally, another commenter expressed broad disagreement with the proposed regulation, claiming that the application of an adverse inference in CVD rate calculations is not permitted by the WTO and inconsistent with the “spirit” of the CIT's understanding of the use of AFA in general. This commenter referenced certain Panel and Appellate Body decisions in support of its statement that the 1994 WTO Agreement on Subsidies and Countervailing Measures (SCM Agreement) does not allow the imposition of “punitive” measures and that the purpose of Article 12.7 of the SCM Agreement is not to “punish non-cooperating parties.” Further, that same commenter stated that Commerce's use of AFA “contradicts the legal principles” expressed by the CIT, referencing challenges to AD proceedings and CVD proceedings which did not involve Commerce's application of the CVD AFA hierarchies.

Commerce's Response:

After consideration of the comments, we have determined to make one change to the proposed regulation covering the AFA hierarchies. We are replacing “above-zero” with “above-
de minimis”
in § 351.308(j)(1)(i). While Commerce seeks to balance the dual goals of relevancy and inducement in its application of AFA, it must do so while properly effectuating the statutory goal of compliance and ensuring that parties do not obtain a more favorable result by failing to cooperate than if they had cooperated fully. We believe replacing the “above-zero” requirement with an “above-
de minimis”
threshold in paragraph (g)(1)(i) of § 351.308 better accomplishes this objective, for the reasons stated by the commenters. For example, as the commenters pointed out, there could be situations in which parties obtain a more favorable result by failing to cooperate than if they had cooperated fully through an abuse of the “above-zero” threshold. Such an outcome would be unacceptable. We do not believe the same situation would arise with the use of an “above-
de m

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/fr%3A2024-05509. Public record. Not legal advice.