Final Rules for Investigations and Related Proceedings Concerning Unfair Practices in Import Trade

SUMMARY: The Commission has adopted final rules of practice and

procedure for investigations and related proceedings under section 337

of the Tariff Act of 1930 (19 U.S.C. 1337).1 These rules were

adopted in response to public comments requesting changes in the

interim rules, the need to revise certain interim rules to more

accurately reflect actual Commission practice, and the need for

Commission rules concerning matters that are not currently provided for

in the interim rules. In addition, some provisions of the final rules

were adopted in response to public comments on the proposed rules that

were published on November 5, 1992.

\1\The term ``related proceeding'' is defined in final rule

210.3, which appears elsewhere in this notice.

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The final rules will be codified in 19 CFR part 210 and will

replace the interim rules that currently appear in 19 CFR parts 210 and

211. Part 211 will be removed from title 19 of the Code of Federal

Regulations.

EFFECTIVE DATE: August 31, 1994. The final rules will be applicable to

all investigations and related proceedings under section 337 of the

Tariff Act that are instituted after August 31, 1994. These rules will

also be applicable to the following kinds of written submissions that

are filed after August 31, 1994: complaints requesting the institution

of a section 337 investigation; motions for temporary relief; and

motions, complaints, or petitions requesting the institution of related

proceedings.

FOR FURTHER INFORMATION CONTACT: P. N. Smithey, Esq., Office of the

General Counsel, U.S. International Trade Commission, telephone 202-

205-3061. Hearing-impaired individuals can obtain information on the

final rules by contacting the Commission's TDD terminal at 202-205-

1810.

SUPPLEMENTARY INFORMATION:

Rulemaking Analysis

Like the interim rules that they are replacing, the final rules are

not major rules for purposes of Executive Order 12291 of February 17,

1981. As required by the Regulatory Flexibility Act, the Commission

also certifies that the final rules will not have a significant adverse

impact on small business entities.

Background

The current rules in parts 210 and 211 were adopted on an interim

basis in 1988 to implement the amendments to section 337 of the Tariff

Act of 1930 (Tariff Act) (19 U.S.C. Sec. 1337) that were effected by

the Omnibus Trade and Competitiveness Act of 1988, Public Law No. 100-

418, 102 Stat. 1107 (1988) (Omnibus Trade Act).2 The interim rules

in part 210 contain procedures for adjudicative investigations under

section 337 of the Tariff Act. The interim rules in part 211 establish

procedures for advisory opinions and the enforcement, modification, or

revocation of remedial or consent orders issued under section 337.

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\2\See 53 FR 33043 (Aug. 29, 1988) and 53 FR 49118 (Dec. 6,

1988).

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The final rules were promulgated in accordance with the

Administrative Procedure Act (APA).3 A notice soliciting public

comment on proposed final rules was published in the Federal Register

on November 5, 1992.4 The Commission received only one set of

comments, from the International Trade Commission Trial Lawyers

Association (ITCTLA). The Commission took those comments into account

before promulgating the final rules. (The ITCTLA's comments on the

proposed rules are summarized and the Commission's responses are

provided in the section-by-section analysis of the final rules, which

appears elsewhere in this notice.5)

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\3\ 5 U.S.C. Sec. 553.

\4\ 57 FR 52830 (Nov. 5, 1992).

\5\ The ITCTLA's comments included (1) suggestions for revising

various proposed rules, (2) expressions of the ITCTLA's approval of

certain proposed rules, (3) identification of typing errors in

certain proposed rules, and (4) suggestions for nonsubstantive

editing. All ITCTLA comments were duly considered by the Commission

before it decided on the content of the final rules. For the most

part, however, the section-by-section analysis of the final rules in

this notice focuses on ITCTLA comments which advocated revision of

particular proposed rules.

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Interested persons will note that each final Commission rule based

on Rule 11, 26, or 37 of the Federal Rules of Civil Procedure (FRCP)

differs from the correspondingly numbered proposed Commission rule that

was published on November 5, 1992. The FRCP were amended on December 1,

1993.6 The amendments covered FRCP provisions that the Commission

is required by law to follow (such as FRCP 11 and 37), as well as some

that the Commission has chosen to follow (FRCP 26(e) and (g)). The

Commission accordingly revised the relevant proposed rules to

correspond to the FRCP amendments, before adopting the proposed rules

as final rules.

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\6\146 Federal Rules Decisions 401-728 (1993).

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The Commission noted that the APA does not require that the exact

text of a proposed rule be published for comment before the proposed

rule is adopted as a final rule. A description of the subject and

issues involved in the rule is sufficient.7 The Commission

concluded that the notice of proposed final rulemaking published on

November 5, 1992, contained a description of the subjects and issues

involved that was sufficient to cover the revised provisions.89

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\7\The APA states that a notice of proposed rulemaking shall

include ``either the terms or substance of the proposed rule or a

description of the subjects and issues involved.'' 5 U.S.C.

Sec. 553(b)(3) [emphasis added].

\8\In that notice, the preamble to each of the proposed rules at

issue--namely, proposed rule 210.4(b), 210.25, 210.27(c) and (d),

210.33(c), and 210.70(c)--provided a description of the subject

matter and the issues involved. See 57 FR at 52831-52832, 52840,

52843, and 52861.

For example, the preamble to proposed rule 210.25 indicated that

the text of that rule was based on the content of proposed final

rules 210.4(b), 210.27(d), 210.33(c), and 210.34(c). Id. at 52840.

The preamble to proposed rules 210.70(c) indicated that the text of

that rule was based in part on the content of proposed final rule

210.4(b). Id. at 52861.

The preamble to proposed rules 210.4(b), 210.27(d), and

210.33(c) alerted interested persons that those rules had been

specifically drafted to correspond to the FRCP 11, 26(g), and 37,

respectively. See 57 FR at 52831-52832, 52840, 52842-52843.

Similarly, the preamble to proposed final 210.70(c) advised the

public that the Commission intended for that rule to incorporate (by

reference) the standard of conduct imposed by FRCP 11. Id. at 52860-

52861.

The preamble to proposed rule 210.27(c) noted that rule was

based on FRCP 26(e). 57 FR at 52840. (Proposed rule 210.27(c) is the

same as interim rule 210.30(d) and its predecessor, 19 CFR 210.30(d)

(1988).) The text of proposed rule 210.27(c) (and its predecessors)

came directly from FRCP 26(e), as it read prior to December 1, 1993.

In the case of proposed rules 210.4(b) and 210.33(c), the

preamble also noted that 19 U.S.C. Sec. 1337(h) requires the

Commission to follow FRCP 11 and 37 in the promulgation of

Commission rules governing sanctions for abuse of process or ``abuse

of discovery'' (i.e., failure to make or cooperate in discovery, as

described in FRCP 37). 57 FR at 52831-52832 and 52842-52843.

\9\The discussion in the present notice focuses on the

differences between the proposed rules and the final rules. For the

most part, this notice does not discuss the substance of--or the

reasons for--the FRCP amendments. Persons who are interested in the

FRCP amendments and the reasons therefor should consult 146 Federal

Rules Decisions 401-728 (1993) and the 1993 Committee Notes to the

FRCP.

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Overview of the Final Rules

Interested persons will note first that the organization of the

final rules differs from that of the interim rules. To enable readers

to readily determine which final rule is replacing a particular interim

rule or which interim rule is the basis, in whole or part, for a

particular final rule, the Commission has provided distribution and

derivation tables elsewhere in this notice.

The final rules also differ substantively from the interim rules in

many respects. New and noteworthy aspects of the final rules are

summarized below, according to the subpart in which they appear.

Subpart A--Rules of General Applicability. Provisions based on

amended FRCP 11 permit the Commission to impose monetary sanctions for

abuse of process. Also included are new specifications for written

submissions and prescribed deadlines for filing nonconfidential copies

of certain confidential submissions.

Subpart B--Commencement of Preinstitution Proceedings and

Investigations. Parties may be allowed to assist the Commission in

obtaining personal jurisdiction over a nonparticipating respondent. If

the Commission Secretary is unable to obtain proof that copies of the

complaint and notice of investigation were served on a particular

respondent by certified mail, a party who wishes the Commission to have

personal jurisdiction over that respondent may attempt to make personal

service on that respondent, with leave from the presiding

administrative law judge (ALJ), and may file proof of such service with

the Commission Secretary (if the attempt is successful).

Subpart C--Pleadings. The complainant has a duty to supplement the

complaint if a change in a material pleaded fact or law occurs after

the complaint is filed and before the investigation is instituted.

Subpart D--Motions. Default will be limited to the statutory

grounds: (1) a respondent's failure to properly respond to the

complaint and notice of investigation or failure to otherwise appear to

answer the complaint and notice;10 or (2) a finding of default as

a sanction for abuse of process or failure to make or cooperate in

discovery.11 Failures to act other than the statutory forms of

default may result in adverse inferences and the issuance of findings

of fact, conclusions of law, determinations, and orders adverse to the

party who failed to act. This applies to complainants as well as

respondents, and can ultimately result in adverse determinations on

violation of section 337 and the issuance of remedial orders.

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\1\0See 19 U.S.C. Sec. 1337(g)(1).

\1\1See 19 U.S.C. Sec. 1337(h).

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The final rules in subpart D also provide that the permanent relief

phase of an investigation may be designated ``more complicated'' by

order of the presiding ALJ or the Commission. The ALJ's order is final,

but aggrieved party may appeal to the Commission. The timing of the

order determines the procedure for appeal.

Subpart E--Discovery and Compulsory Process. Most of the final

rules in subpart E do not provide deadlines for various discovery

activities. Such deadlines are to be set by the presiding ALJ. The

final rules in subpart E also correspond more closely to the relevant

FRCP than the interim rules did.

A signature and certification requirement based on FRCP 26(g) is

imposed for all discovery requests, responses, and objections. Monetary

sanctions may be imposed for violation of that requirement. Monetary

sanctions comparable to those available under certain provisions of

FRCP 37 may be imposed for failure to make or cooperate in discovery.

There also is a new reporting requirement concerning requests for

disclosure of confidential information covered by an administrative

protective order (APO) issued by the Commission or the presiding ALJ.

Persons who receive such information under an APO must notify the

Commission immediately upon learning that the information is the

subject of a subpoena, a judicial or administrative order (other than

an order of a court reviewing a Commission decision), a discovery

request, or an agreement requiring disclosure of the information to

persons who may not be entitled to see it under the Commission's APO or

the Commission's rules. A failure to report may result in a sanction or

other action by the Commission.

Subpart F--Prehearing Conferences and Hearings. The final rules in

subpart F are essentially the same as the interim rules. However, the

final rule defining the record codifies longstanding Commission

practice by including all briefs as part of the administrative record

of an investigation or a related proceeding.

Subpart G--Determinations and Actions Taken. The ALJ must issue a

recommended determination (RD) on remedy and bonding by the

respondents, within 14 days after issuing an initial determination (ID)

on violation of section 337. (This means that the parties will address

remedy and bonding while the investigation is before the ALJ, as well

as after the investigation returns to the Commission. The ALJ

accordingly may order discovery on those issues.) The Commission will

consider the RD (as well as submissions from the parties, other

agencies, and the public) in making final determinations on remedy and

bonding by the respondents.

The proposed rules published on November 5, 1992, contained a new

procedure for processing IDs on violation of section 337. That

procedure has not been incorporated into the final rules. IDs on

violation will be processed in the same manner that they were processed

under the interim rules, although the Commission may decide to

implement the new procedure at a future date. IDs on matters other than

violation of section 337 (or temporary relief) will also be processed

in the manner that they were processed under the interim rules.

Subpart H--Temporary Relief. There is a new method of calculating

the amount of a complainant's temporary relief bond. The interim rules

provided that the bond was likely to be an amount within 10 to 100

percent of the sales revenues and licensing royalties from the domestic

product at issue. The final rules use a tiered schedule of fixed bond

amounts based on complainant's sales revenues and licensing royalties

from the intellectual property right at issue.

The grounds for modifying, reversing, or setting aside a temporary

relief ID in whole or part are no longer limited to errors of law or

policy reasons. Such action also may be taken on the basis of errors of

material fact in the ID.

Temporary relief bond forfeiture proceedings will no longer be

initiated automatically whenever the Commission makes a negative final

determination in whole or part on the complaint of a complainant who

was granted temporary relief. Instead, forfeiture proceedings will be

initiated only upon the Commission's own initiative or upon the filing

of a motion by a respondent or a Commission investigative attorney (IA)

within 30 days after service of the Commission's negative determination

on violation. The standard of conduct the Commission will use in

determining whether the complainant's bond should be forfeited will be

the amended FRCP 11 standard which is codified in final rule 210.4(c).

If the complainant prevails upon appeal of the Commission's

determination on violation of section 337, the appropriate amount of

any temporary bond that was forfeited by the complainant will be

forthcoming as a matter of procedure. The complainant thus will not

have to file a motion or petition to obtain the refund.

Subpart I--Enforcement Procedures and Advisory Opinions. Reporting

requirements may be imposed for exclusion orders as well as cease and

desist orders. Moreover, formal proceedings for the enforcement of a

remedial or consent order may be instituted on the Commission's own

initiative or in response to the filing of a complaint by the

complainant in the original investigation, the complainant's successor

in interest (if any), or the Commission's Office of Unfair Import

Investigations (OUII). An ALJ's decision in a formal enforcement

proceeding must be an ID instead of an RD. The ID will become the

determination of the Commission in 90 days if the Commission does not

order a review or extend the period for determining whether to order a

review.

The final rules in subpart I also clarify that the Commission has

the authority to seek judicial enforcement of sanctions orders, and

that the Commission need not give notice to any person when it seeks

judicial enforcement of an exclusion order, a cease and desist order, a

consent order, or a sanctions order--except as required by the court in

which the civil action is initiated.

Finally, the final rules governing advisory opinions codify

Commission practice by: (1) affording all persons (instead of just

respondents) the right to seek such opinions; (2) limiting such

opinions to whether a course of action would violate a particular

remedial order (rather than whether it would violate section 337); (3)

requiring the party requesting an advisory opinion to fully state its

request in its first submission to the Commission, since the Commission

does not wish to issue seriatim advisory opinions to the same requester

on the same subject; and (4) stating positively that advisory opinion

proceedings are not subject to the APA.

Section-By-Section Analysis of the Final Rules

Many of the final rules set forth in this notice are identical--or

virtually identical12--to the correspondingly numbered proposed

rules published on November 5, 1992. Those final rules are listed

below.

\1\2 Nonsubstantive editorial changes account for minor

differences between some of the final rules and the correspondingly

numbered proposed rules.

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210.1-210.3

210.5-210.9

210.10(b) and (c)

210.11-210.15

210.16(a), (b), and (c)(2)

210.17-210.20

210.21(a)-(c)(3) and (d)

210.22(a) and (c)

210.23

210.24(a)(1), (a)(3), (b)(1), (b)(3), and (c)

210.26

210.27(a)

210.28 and 210.29

210.30(a) and (c)

210.31

210.32(a)-(d), (f), and (g)

210.34

210.35(a)-(c)

210.36(a)-(c) and (e)

210.37(a), (c), (d), (f) and (g)

210.38(b)-(d)

210.39-210.41

210.42(a)(2), (b), (c), (e)-(g), (h)(3)-(h)(5), and (i)

210.43(a), (c), and (d)

210.46(b)

210.47-210.49

210.50(b)(1) and (2)

210.51

210.52(b)-(d) and (f)

210.53 and 210.54

210.55(a)

210.56-210.57

210.59-210.69

210.70(a), (b) and (e)

210.71(b)-(d)

210.72 and 210.73

210.74(b)

210.75(a) and (b)

210.76-79

The ITCTLA did not make substantive comments on the proposed

version of each of the aforesaid rules, and the Commission found no

reason to change the proposed version on its own initiative before

adopting it as a final rule. The commentary that preceded the proposed

version of the aforesaid rules accordingly constitutes the preamble to

the final version of those rules.13

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\1\3 See the section-by-section analysis of the proposed rules,

which appeared in 57 FR at 52830-52864.

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Most of the final rules that are discussed below were the subject

of a comment by the ITCTLA. The substance of some of those rules also

differs substantively from the text of the relevant proposed rule. The

changes were made in response to an ITCTLA comment or on the

Commission's own initiative after reconsideration of the proposed rule.

The commentary in the notice published on November 5, 1992, which

preceded the proposed version of the rules discussed below, constitutes

part of the preamble to the final version of these rules (along with

the discussion below), to the extent that such commentary is not

inconsistent with the discussion below.14

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\1\4Id.

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Subpart A--Rules of General Applicability

Section 210.4

Final rule 210.4 governs written submissions filed by parties or

proposed parties in connection with a section 337 investigation or a

related proceeding under part 210.

Paragraph (a). Paragraph (a) of proposed rule 210.4 listed the

required information that must appear on the front of written

submissions filed in connection with a section 337 investigation. The

ITCTLA commented that the final rule should also provide that the front

page of a complaint must contain the name of the complainant. The

Commission noted that Commission rule 201.8(e) already imposes such a

requirement.15 The Commission has repeated that requirement,

however, in paragraph (a)(1) of final rule 210.4.

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\1\5See 19 CFR 201.8(e) (1993).

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Paragraph (b). Section 337(h) of the Tariff Act authorizes the

Commission to issue sanctions for abuse of process in section 337

proceedings to the extent provided in FRCP 11.16 Proposed rule

210.4(b) was the Commission analog to FRCP 11, and was based on FRCP

11(a) as it read prior to December 1, 1993.

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\1\619 U.S.C. Sec. 1337(h).

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On December 1, 1993, FRCP 11 was amended for the following

purposes:

to broaden the scope of the obligation that attorneys

and pro se litigants have to refrain from conduct that frustrates

the aims of FRCP 11 as amended (i.e., to secure the just, speedy,

and inexpensive determination of every action);

to place greater restraints on the imposition of

sanctions and thus reduce the number of motions for sanctions; and

to remove from the ambit of FRCP 11 all discovery

requests, responses, objections, and motions that are subject to the

provisions of FRCP 26-37.17

\1\7See 146 F.R.D. 583, 584, and 405.

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Paragraph (b) of final rule 210.4, is based on amended FRCP 11(a),

and imposes a signature requirement for every written submission filed

by a party or a proposed party to an investigation or a related

proceeding under part 210. This paragraph replaces the signature

requirement in paragraph (b)(1) of proposed rule 210.4, which was based

on FRCP 11(a) as it read prior to December 1, 1993. Unlike the proposed

rule, the final rule makes the signature requirement applicable to

``every pleading, written motion, and other paper of a party or

proposed party.'' [Emphasis added.]

The ITCTLA commented that paragraph (b) of the final rule should

also provide that the telephone number of the attorney or party who

signs each submission must be included on the document. The Commission

agreed. Such a requirement appears in amended FRCP 11(a), and thus

appears in paragraph (b) of final rule 210.4.

Paragraph (c). Paragraph (c) of final rule 210.4 is based on

amended FRCP 11(b). Paragraph (c) states that by presenting a pleading,

written motion, or other paper to the presiding ALJ or the Commission,

an attorney or unrepresented party or proposed party is certifying the

truth, veracity, and good faith of the submission. This paragraph

replaces the certification provision in paragraph (b)(1) of proposed

rule 210.4, which was based on FRCP 11 as it read prior to December 1,

1993. The final rule differs from the proposed rule in several

important respects.

First, the certification is not made solely by signing a pleading,

written motion, or other paper. In the final rule, the certification

occurs in the presentation of a pleading, written motion, or other

paper to the presiding ALJ or the Commission, whether that presentation

is by signing, filing, submitting, or later advocating the document to

the ALJ or the Commission.

Second, the certification provisions are more explicit in the final

rule. Separate standards are provided for legal arguments, for

``allegations and other factual contentions,'' and for ``denials of

factual contentions.''

Third, the certification provisions of the final rule do not apply

to discovery requests, responses, objections, or motions that are

subject to provisions of final rules 210.27 through 210.34 (i.e.,

Subpart E--Discovery and Compulsory Process).18

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\1\8The certification requirement in amended FRCP 11(c) also

does not apply to the ``disclosures'' mandated by amended FRCP 26.

Final rule 210.27--which is the Commission analog to amended FRCP

26--does not currently contain provisions on mandatory disclosures.

See the discussion in this notice concerning final rule 210.27.

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Paragraph (d). Paragraph (d) of final rule 210.4 provides sanctions

for violation of the certification requirement, and is based on amended

FRCP 11(c). This paragraph replaces paragraphs (b)(1) through (b)(4) of

proposed rule 210.4, which were based on FRCP 11(a) as it read prior to

December 1, 1993.

Paragraph (d) of final rule 210.4 is similar to paragraph (b)(2) of

proposed rule 210.4, since paragraph (d) provides that a representation

need not be frivolous in its entirety in order for an ALJ or the

Commission to determine that the certification provision has been

violated. If any portion of a representation is found to be false,

frivolous, misleading, or otherwise in violation of paragraph (b), a

sanction may be imposed. In determining whether paragraph (b), has been

violated, the ALJ or the Commission will consider whether the

representation or disputed portion thereof was objectively reasonable

under the circumstances.

Paragraph (d)(1)(i) of final rule 210.4 contains new prerequisites

to the filing of a motion for sanctions. The movant must first serve

the motion on the nonmoving parties. The party or person against whom

sanctions are being sought then has seven days (or such other period as

the ALJ or the Commission may prescribe) to withdraw or correct the

challenged paper, claim, defense, contention, allegation, or

denial.\19\ If withdrawal or correction does not occur within the

prescribed period, the movant is then free to file the motion for

sanctions. The motion must be filed separately, however, from the

party's other motions (if any).

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\19\Amended FRCP 11(c)(1)(A) allows 21 days for such withdrawals

or corrections. The Commission concluded, however, that 21 days is

too lengthy a period for investigations and related proceedings

under part 210, in light of the statutory and/or administrative time

constraints.

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Paragraph (d)(1)(ii) of final rule 210.4 provides that an ALJ or

the Commission may initiate a sanctions inquiry sua sponte, by issuing

an order describing the specific conduct that appears to violate the

certification provisions and directing an attorney, law firm, or party

to show cause why it has not violated the relevant provisions.

The final rule also contains new provisions governing the

imposition of sanctions. The stated purpose of the FRCP 11 sanctions

authority is to deter, rather than to compensate.\20\ That policy is

recited in paragraph (d)(2) of final Commission rule 210.4, since

section 337(h) of the Tariff Act states that the Commission may impose

sanctions for abuse of process to the extent authorized in FRCP 11.

Paragraph (d)(2) of final rule 210.4 thus provides that each sanction

must be limited to ``what is sufficient to deter repetition of such

conduct or comparable conduct by others similarly situated.'' Sanctions

may be imposed upon the attorneys, law firms, or parties that have

violated the certification provisions of paragraph (b) or are

responsible for the violation. (Paragraph (d)(1)(i) of final rule 210.4

provides that in the absence of exceptional circumstances, a law firm

is jointly responsible for violations committed by its partners,

associates, and employees.)

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\20\FRCP 11(c)(2), as amended; 146 F.R.D. at 422-423. See also

146 F.R.D. at 587-588.

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Paragraph (d)(2) of the final rule also imposes certain limitations

on the kinds of sanctions that may be imposed. Appropriate sanctions

may consist of or include ``directives of a nonmonetary nature.''\21\

The preferred monetary sanction is the payment of a penalty to the

Commission, rather than costs and attorney's fees. Cost and fee

sanctions may be ordered, however, ``if imposed on motion and warranted

for effective deterrence.'' Paragraph (d)(2) also indicates that a cost

and fee award may consist of ``some or all'' of the reasonable

attorney's fees and other expenses incurred as a direct result of a

violation of the certification provisions.\22\

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\21\The Committee Notes to FRCP 11 as amended cite the following

examples: ``striking the offending paper; issuing an admonition,

reprimand, or censure; requiring participation in seminars or other

educational programs; * * * referring the matter to disciplinary

authorities (or, in the case of government attorneys, to the

Attorney General, Inspector General, or agency head), etc.'' See 146

F.R.D. at 587.

\22\That provision is based on amended FRCP 11(c)(2), 146 F.R.D.

at 423. See also 146 F.R.D. at 587-589. The Commission notes that

the relevant provisions of FRCP 11(c)(2) specifically state that

costs and attorney's fees are to be awarded ``to the movant.'' FRCP

11(c)(1)(A) and the Committee Notes indicate, however, that such

awards can be made to the party who prevails on the motion for

sanctions--regardless of whether that party is the movant or the

target of the motion. 146 F.R.D. at 422 and 591.

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There are additional limitations on the Commission's ability to

impose monetary sanctions. Paragraph (d)(2)(ii) of final rule 210.4

states that monetary sanctions cannot be imposed on a party for

violation of the certification provisions concerning the truth,

veracity, and good faith of legal arguments presented to the ALJ or the

Commission. (The party's attorneys are to be monetarily responsible for

violations of that sort.) Paragraph (d)(2)(iii) provides that monetary

sanctions also cannot be ordered on the Commission's own initiative,

unless--

1. a show cause order was issued before the investigation or

related proceeding is terminated, in whole or relevant part, as to

the party or proposed party which is, or whose attorneys are, to be

sanctioned; and

2. such termination is the result of (a) a motion to withdraw

the complaint, motion, or petition that was the basis for the

investigation or related proceeding, (b) a settlement agreement, or

(c) a consent order agreement.\23\

\23\This provision is based on amended FRCP 11(c)(2)(B), which

provides that monetary sanctions may not be awarded on the court's

initiative unless the court issues its order to show cause before a

voluntary dismissal or settlement of the claim made by or against

the party which is, or whose attorneys are, to be sanctioned. The

Committee Notes explain that--Parties settling a case should not be

subsequently faced with an unexpected order from the court leading

to monetary sanctions that might have affected their willingness to

settle or voluntarily dismiss a case. Since show cause orders will

ordinarily be issued only in situations that are akin to a contempt

of court, this rule does not provide a `safe harbor' to a litigant

for withdrawing a claim, defense, etc., after a show cause order has

been issued on the court's own initiative. Such corrective action,

however, should be taken into account in deciding what if any

sanction to impose if, after consideration of the litigant's

response, the court concludes that a violation has occurred. 146

F.R.D. at 592.

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Furthermore, the sanctions in such a case must be limited to a

penalty payable to the Commission.\24\

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\24\Although this provision authorizes the Commission or the ALJ

to issue an order requiring payment of a monetary penalty, the

Commission may collect the money but cannot keep it. In the absence

of a statute providing otherwise, an official or agent of the United

States Government having custody or possession of ``public money''

that is not for current expenditure must promptly deposit it into

the Treasury or a depository designated by the Secretary of the

Treasury without deduction for any charge or claim. 31 U.S.C.

Sec. 3302. The term ``public money'' is not defined in that statute.

The regulations implementing that provision specifically refer,

however, to a federal agency's processes for the collection of

``monies owed to or received by'' the agency and for the expeditious

crediting and availability of such monies to the Treasury. See 31

CFR 206.4(a) (1993). These regulations would appear to cover a

monetary penalty payable to the Commission pursuant to a sanction

order issued under paragraph (d)(1)(A) of final rule 210.4.

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Paragraph (d)(2)(i) of final rule 210.4 states that the United

States, the Commission, and IAs are exempt from monetary sanctions for

signing and filing a written submission in violation of the

certification provision of paragraph (b).

Paragraph (d)(2)(iv) provides that monetary sanctions imposed to

compensate the Commission for expenses incurred by an IA or OUII will

include reimbursement for some or all costs reasonably incurred as a

direct result of the violation, but will not include attorneys' fees.

Paragraph (d)(2)(iv) thus covers cases in which OUII is awarded

monetary sanctions on the basis of a motion by OUII, as well as cases

in which OUII is found to be entitled to monetary sanctions because it

successfully defended against another party's motion for nonmonetary

sanctions.

The ITCTLA noted that an IA is a party to a section 337

investigation, that he or she is subject to the same professional and

ethical standards as members of the private bar, and that there is no

basis to assume, as proposed rule 210.4(b)(3) does, that IAs are less

likely to engage in unethical conduct than are members of the private

bar. The ITCTLA argued further that since the Commission has the

authority to self-initiate section 337 investigations, exempting IAs

from monetary sanctions for abuse of process would deny respondents in

such investigations the rights that would be available to respondents

in investigations initiated in response to the complaint of a private

party.

The ITCTLA added that it is fundamentally unfair to exempt IAs from

cost and fee sanctions for violations of rule 210.4(b)1(1), but allow

them to recover costs for violations by other parties. The ITCTLA urged

the Commission either to subject IAs to liability for monetary

sanctions or to draft the final rules to prohibit IAs from receiving

monetary compensation for violations by other parties.

The Commission disagrees with the ITCTLA's arguments. The

Commission notes first that any monetary sanction constituting

reimbursement for costs incurred by an IA as a result of another

party's abuse of process would be paid to the Commission--not to the IA

or OUII. (Similarly, if the Commission were to abandon the rule

exempting IAs from liability for monetary sanctions, any such sanction

imposed against an IA for an action taken within the scope of his or

her employment would probably be paid by the Commission.)

Furthermore, the amount that the Commission would collect on an

IA's behalf as a sanction for abuse of process by another party is not

likely to be substantial. Paragraph (d) of final rule 210.4 indicates

that a sanction imposed for violation of this section shall be limited

to what is sufficient to deter repetition of such conduct or comparable

conduct by others similarly situated, and that a penalty rather than

costs and attorney's fees is the preferred monetary sanction. Moreover,

paragraph (d)(2)(iv) provides that monetary sanctions awarded on motion

by an IA or OUII will include reimbursement for some or all costs

reasonably incurred by the movant as a direct result of the violation,

but will not include attorneys' fees (i.e., OUII's personnel costs).

The Commission is thus not likely to recover substantial sums (on an

IA's or OUII's behalf) in the application of final rule 210.4.

The Commission also believes that a rule permitting monetary

sanctions to be levied against IAs is unnecessary. As amended FRCP 11

and the Committee Notes indicate, the sanction authority is to deter

abuses of process, rather than to compensate persons aggrieved by such

abuses.\25\ IAs are subject to adverse personnel action for malfeasance

or misconduct involving abuse of process in the performance of their

duties. The Commission believes that the threat of such action is an

effective and sufficient deterrent.

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\25\Amended FRCP 11(c)(2); 146 F.R.D. at 422-423. See also 146

F.R.D. at 587-588. See also the Committee Notes to the 1983

Amendment, which indicate that the imposition of sanctions under

FRCP 11 is to ``discourage dilatory or abusive tactics and help to

streamline the litigation process by lessening frivolous claims and

defenses.'' The Commission notes further that one of the reasons

that FRCP 11 was amended on December 1, 1993, was to place greater

restraints on the imposition of sanctions and thus reduce number of

motions for sanctions. See 146 F.R.D. 583, 584, and 405.

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The Commission also notes that subjecting IAs to monetary sanctions

could have serious programmatic implications. The threat of monetary

sanctions for actions taken in the course of an IA's ordinary duties

would affect his or her ability to serve as a neutral and impartial

advocate of the public interest. IAs take positions on the substantive

issues in an investigation. An IA's position in a given investigation

may be adverse to one or more of the private parties (i.e., the

complainant(s), the respondent(s), and/or any non-government

intervenor(s)). The actual or potential threat of a motion for monetary

sanctions during the course of an investigation or related proceeding

could be used as a means to intimidate IAs and to pressure them into

taking a position favorable to a particular party.

The Commission notes further that the resources that IAs can devote

to a particular investigation or related proceeding are limited. If IAs

are forced to deal with motions for monetary sanctions against them,

their ability to deal with the substantive issues in the case would be

impaired.

The Commission notes finally that adopting a final rule which does

not exempt IAs (and other Commission employees) to liability for

monetary sanctions would create certain ethical and practical problems

for the Commission. For example, Commission determinations on whether

to assess monetary penalties against a Commission employee would raise

a number of conflict of interest issues. If an ALJ were to issue an

order or an RD granting a motion for monetary sanctions, that decision

would be subject to review by the Commission, even though the

Commission itself might ultimately be responsible for paying the amount

awarded.\26\ Thereafter, if the Commission did not indemnify the IA or

otherwise pay the amount awarded, the Commission might have to bring an

enforcement action in U.S. district court against one of its own

employees in order to collect the award.\27\

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\26\See final rule 210.25 regarding the processing of motions

for monetary sanctions for abuse of process.

\27\It is also possible that the IA might be entitled to

independent legal representation at the Commission's expense.

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In view of the aforesaid legal and policy arguments against

subjecting the Commission and its attorneys from liability for monetary

sanctions for abuse of process, the Commission has drafted paragraph

(d)(2)(i) of final rule 210.4 to exempt the Commission, its employees,

and the United States from liability for such sanctions.

Paragraph (d)(3) of final rule 210.4 is based on amended FRCP

11(c)(3). Paragraph (d) thus provides that when sanctions are imposed,

the Commission or the ALJ must describe the conduct determined to

constitute a violation of 210.4(b) certification provision and must

explain the basis for the sanction imposed.

Paragraph (e). Paragraph (e) of final rule 210.4 is based on

amended FRCP 11(d). Paragraph (e) provides that paragraphs (b) through

(d) of final rule 210.4 do not apply to discovery requests, responses,

objections, or motions that are subject to provisions of sections

210.27 through 210.34.\28\ (Certification standards and sanctions that

apply to discovery requests, responses, objections, or motions are

found in final rule 210.27(d).)

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\28\Amended FRCP 11(d) also states that amended FRCP 11 does not

apply to ``disclosures'' covered by amended FRCP 26 and 37. Final

rules 210.27 and 210.33--which are the Commission analogs to amended

FRCP 26 and 37--do not currently contain provisions on mandatory

disclosures. See the discussion in this notice concerning final

rules 210.27 and 210.33.

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Paragraph (f). Paragraph (f) of final rule 210.4 is based on

paragraph (c) of proposed rule 210.4, which imposed specifications and

other requirements for written submissions in section 337

investigations.

Paragraph (f)(1)(i) of proposed rule 210.4 is based on paragraph

(c)(1)(i) of proposed rule 210.4, which contained spacing and print-

size requirements for written submissions that are addressed to the

Commission in a section 337 investigation or a related proceeding. As

the preamble to the proposed rule explained,29 the Commission is

of the view that spacing and print-size requirements are necessary and

appropriate to prevent evasion of the intended effect of the page

limitations in proposed rules 210.66 (c) and (e)(2) by utilizing

unusually small spacing in submissions.30 The specific

requirements imposed in paragraph (c)(1)(i) of proposed rule 210.4 were

identical to those applied to briefs filed in the U.S. Court of Appeals

for the Federal Circuit (Federal Circuit) in appeals from Commission

determinations under section 337.31,32

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\2\957 FR at 52832.

\3\0See, e.g., Inv. No. 337-TA-304, Certain Pressure

Transmitters (Commission denied motion to strike respondent's

abnormally-spaced written comments on the ID concerning temporary

relief, as the interim rules did not impose spacing requirements).

\3\1See Fed. Cir. R. 32(a) (1990).

\3\2The specifications in paragraph (c)(1)(i) of proposed rule

210.4 did not apply to written submissions that are addressed to an

ALJ. Paragraph (c)(1)(ii) of proposed rule 210.4 allowed the ALJ to

impose any specifications he deems appropriate for written

submissions addressed to the ALJ.

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Paragraph (f)(1)(i) of the final rule contains an additional

provision. The Federal Circuit rule in question now provides that

``[t]ext and footnotes shall be in the same size type.''33 The

Commission accordingly has inserted that requirement in paragraph

(f)(1) of final rule 210.4. Requiring text and footnotes to be in the

same size type will aid in preventing evasion of the intended effect of

the page limitations in proposed rules 210.66 (c) and (e)(2) by

utilizing unusually small spacing in footnotes.

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\3\3See Fed. Cir. R. 32(a) (effective June 1, 1993).

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Paragraph (f)(3) of final rule 210.4 is based on paragraph (c)(3)

of proposed rule 210.4. The proposed rule provided that if certain

specified types of submissions contain confidential business

information, the submitter must file and serve nonconfidential copies

of the submission within 10 business days after filing the confidential

version of the submission.

The ITCTLA commented that the prescribed filing period for

nonconfidential copies should be shortened to five days. The ITCTLA

explained that in order to obtain information and assistance in

preparing responses to pleadings, motions, and other papers in a

section 337 investigation, an attorney often needs to show the document

in question to persons who are employed by the party the attorney

represents but are not signatories to the Commission's APO. In the

ITCTLA's opinion, a Commission rule imposing a 10-business day filing

deadline for sanitized copies of confidential submissions would prevent

the attorney from doing this, since the public version of the document

in question would not be available until after a response is

due.34 The ITCTLA thus believed that having a 10-day deadline for

the submission of nonconfidential copies of confidential pleadings,

motions, and other papers would seriously impair the party's ability to

prepare an adequate response.

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\3\4Responses to motions, for example, are generally due within

10 calendar days after service of the motion. See proposed rule

210.15(c) and final rule 210.15(c).

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The Commission believes that several factors militate against

reducing the prescribed filing period to five days. It may be

particularly difficult, for example, for parties with limited resources

to comply with a five-day deadline. Moreover, in a case where

consultation with opposing parties or third parties is necessary in

order to prepare the nonconfidential copies of particular confidential

submissions, it may be difficult for any party to meet such a deadline,

even if the party has substantial resources.

While the ITCTLA's concerns about consultation with clients who can

only see public versions has merit, the Commission also notes that

there are many important submissions (such as petitions for review or

responses to petitions for review) that must be filed within five days

after service or issuance of a particular document. Thus, in many

instances, the filing of a public version on the fifth day will not

allow for consultation in advance of the preparation of the submission

due on that date. Additionally, the Commission is concerned that the

shorter the time afforded to create public versions, the more likely it

will be that such public versions will be characterized by wholesale

redactions that will not facilitate consultation with those who are not

signatories to the APO, and that requests for extensions of time will

be numerous.

The Commission accordingly has not adopted a five-day filing period

for mandatory nonconfidential copies of certain confidential

submissions. Paragraph (f) of final rule 210.4 does provide, however,

that the prescribed period for filing such copies is 10 calendar days

(instead of 10 business days).

The last aspect of proposed rule 210.4 that elicited comments from

the ITCTLA was paragraph (c)(3), which listed the kinds of confidential

submissions that are subject to the mandatory nonconfidential copy

requirement. Item (iv) on that list was ``the evidentiary record,''

i.e., ``the exhibits offered by a party or a proposed party that are

accepted as evidence of record.''

The ITCTLA objected to item (iv). The ITCTLA noted that the

evidentiary record in section 337 investigations is often quite

voluminous. In such a case, the process of reviewing, redacting, and

copying of the redacted parts of the record would be extremely

expensive and burdensome, and may result in the production of documents

that are virtually incomprehensible as a result of the redactions.

The ITCTLA noted further that even though the proposed rule imposed

the burden of preparing the public versions on the party submitting the

evidence, exhibits frequently consist of confidential documents

produced in discovery by opposing parties. Hence, the task of preparing

public versions would most likely fall on the opposing party, i.e., the

party which produced the document, instead of the party designating the

document for use in evidence. In the ITCTLA's opinion, this would be

quite burdensome and could lead to abuses intended to gain a tactical

advantage over the opposing parties at the time of the evidentiary

hearing, when time is of paramount importance.

The ITCTLA accordingly argued that it would be preferable for the

final rule to follow the current practice, which is to designate each

separate exhibit confidential or nonconfidential in its entirety.

The Commission agrees and has omitted item (iv) from the list in

paragraph (f)(3) of final rule 210.4.

Paragraph (g). Paragraph (g) of final rule 210.4 is the same as

paragraph (d) of proposed rule 210.4, which discusses service of

written submissions in investigations and related proceedings under

part 210.

Subpart B--Commencement of Preinstitution Proceedings and

Investigations

Section 210.10

Paragraph (a). Paragraph (a)(5) of proposed rule 210.10 stated that

a complainant has the right to withdraw its section 337 complaint at

any time before the Commission votes on whether to institute an

investigation in response to the complaint.

In final rule 210.10, paragraph (a)(5) has been divided into

paragraphs (a)(5)(i) and (a)(5)(ii).

The new paragraph (a)(5)(i) states that the complainant may

withdraw the complaint as a matter of right at any time before the

Commission votes on whether to institute an investigation. It also

provides, however, that if the complaint is being withdrawn pursuant to

a settlement agreement, confidential and nonconfidential copies of the

agreement must be filed with the Commission along with the notice of

withdrawal.

The new paragraph (a)(5)(ii) contains a provision from the proposed

rule, which states that if a motion for temporary relief was filed in

addition to the complaint, the motion must be withdrawn along with the

complaint, and the complainant must serve copies of the notice of

withdrawal on all proposed respondents and the embassies that were

served with copies of the complaint and motion pursuant to final rule

210.54.

Subpart D--Motions

Section 210.16

Final rule 210.16 governs default in section 337 investigations,

specifically, the forms of default provided for in sections 337 (g) and

(h) of the Tariff Act--i.e., (1) failure to respond or to otherwise

appear to answer the complaint and notice of investigation, and (2) a

finding of default as a sanction for abuse of process under final rule

210.4 (the Commission analog to FRCP 11) or failure to make or

cooperate in discovery under final rule 210.33 (the Commission analog

to FRCP 37).

Paragraph (c)(1). Paragraph (c)(1) of proposed rule 210.16

indicated that the Commission could issue a limited remedial order

directed to a respondent, on the basis of that respondent's failure to

respond to the complaint and notice of investigation in the manner

required under the Commission rules or to otherwise fail to appear to

answer the complaint and notice of investigation. The point at which

such relief would be issued was not specified.

The November 5, 1992, preamble to this rule explained that the

Commission believed it necessary and appropriate to retain the

flexibility to issue limited remedial orders immediately after the

respondent is found to be in default, or after the Commission has

adjudicated the violation issues, and that the choice would depend on

the facts and circumstances involved. It was noted that in most cases,

the Commission would be likely to defer decisions on issuing default

relief pending the adjudication of any defenses by participating

respondents that may have a bearing on the public interest factors. The

preamble went on to say, however, that the Commission was particularly

interested in receiving comment from interested persons on whether the

final rule should specify the point at which a default remedy should be

issued.35

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\3\5See 57 FR at 52837.

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The ITCTLA commented that the final rule should not specify a time

at which a default remedy may be issued and that a decision on the

point of issuance should be made on the basis of the facts.

The preamble to proposed rule 210.16(c)(1) had noted that there may

be cases in which time is of the essence and the complainant should not

be forced to wait until the end of the investigation to obtain relief

against defaulting respondents. The preamble also had noted that there

may be cases in which the rapid issuance of limited relief is not

critical and it would be more appropriate to wait until the end of the

investigation.36 The ITCTLA concurred.

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\3\6Id.

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The ITCTLA suggested that immediate relief should be provided if

the complainant is suffering substantial injury from increased

importations of the merchandise of a defaulting respondent. The ITCTLA

went on to say, however, that immediate relief should not be granted

against a defaulting respondent that is a distributor or manufacturer

of the foreign merchandise imported or sold by a participating

respondent, since the distributor's violation of section 337 would

depend on the finding with regard to the manufacturer.

The Commission believes that the ITCTLA's second hypothetical is

incorrect. No finding of violation, on the merits, would be required in

order for the Commission to issue a limited remedial order against the

defaulting distributor. If the distributing respondent defaulted in the

manner described in the statute, the Commission would be required to

``presume the facts alleged in the complaint to be true.''37 (It

therefore would not matter whether a violation had--or had not been--

proven with respect to the participating respondent that manufactured

the defaulting respondent's imported merchandise.) In such a case, the

only justification the Commission could have, as a matter of law, for

properly denying relief would be the likely adverse impact on one or

more of the statutory public interest factors.38

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\3\7See 19 U.S.C.1337(g)(1).

\3\8Section 337(g)(1) provides that ``[T]he Commission shall

presume the facts alleged in the complaint to be true and shall,

upon request, issue an exclusion from entry or a cease and desist

order, or both, limited to that [respondent] unless, after

considering the effect of such exclusion or order upon the public

health and welfare, competitive conditions in the United States

economy, the production of like or directly competitive articles in

the United States, and United States consumers, the Commission finds

that such exclusion or order should not be issued.'' [Emphasis

added]. 19 U.S.C. 1337(g)(1).

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The Commission did not alter paragraph (c)(1) of proposed rule

210.16 before adopting it as a final rule. The final rule thus does not

specify the point at which the Commission may issue a limited remedial

order directed to a respondent, on the basis of that respondent's

failure to respond to the complaint and notice of investigation in the

manner required under the Commission rules or to otherwise fail to

appear to answer the complaint and notice of investigation.

Section 210.21

Proposed rule 210.21 provided for termination of investigations on

the basis of settlement agreements or consent orders.

Paragraph (c)(3). Paragraph (c)(3) of proposed rule 210.21 recited

the required content of a consent order stipulation. Before adopting

paragraph (c)(3) as a provision of final rule 210.21, the Commission

revised paragraph (c)(3)(i)(B) by adding a requirement that the consent

order stipulation in an intellectual property-based investigation must

state that each signatory to the stipulation who was respondent in the

investigation will not seek to challenge the validity of the

intellectual property right(s), in any administrative or judicial

proceeding to enforce the consent order. The Commission made this

change to be consistent with its ruling in Investigation No. 337-TA-

357, Certain Sport Sandals and Components Thereof.\39\

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\39\In that investigation, the presiding ALJ issued an ID

granting a joint motion by the complainant and one respondent for

termination of the investigation as to that respondent on the basis

of a settlement agreement, consent order agreement, and proposed

consent order. Although the motion was granted, the ID expressed

concern that the proposed consent order might not prevent the

respondent from challenging the validity of the patent in

controversy in any future proceeding to enforce the consent order.

The Commission reviewed the ID and remanded it to the ALJ for

clarification of the parties' intent concerning their stipulation of

patent validity. Specifically, the Commission noted that it would

not approve the issuance of a consent order which permitted the

possibility of a challenge to patent validity, by a respondent who

had signed the order, in an agency or judicial proceeding concerning

enforcement of the order. The Commission thus instructed the ALJ to

``advise the parties that, if they wish to terminate the

investigation on the basis of a consent order, the stipulated

findings in the proposed consent order should make clear that the

stipulation concerning the patent's validity will become void only

if the patent is found to be invalid by a court or agency in a final

decision that is no longer subject to appeal and is unrelated to

enforcement of the consent order.'' [Emphasis in the original.]

[Commission] Order at 1 (June 13, 1994).

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Sections 210.22 and 210.24

Proposed rule 210.22 established procedures for designating the

permanent relief and/or the temporary relief phase of an investigation

``more complicated.'' Paragraph (b) of proposed rule 210.22 provided

that the permanent relief phase of an investigation could be designated

``more complicated'' by order of the presiding ALJ or the Commission.

Proposed rule 210.24 established the procedure for obtaining

Commission review of various interlocutory orders issued by an ALJ

(including orders declaring the permanent relief phase of an

investigation ``more complicated''). Paragraph (a)(2) of proposed rule

210.24(a)(2) stated that parties aggrieved by an ALJ's order

designating the permanent relief phase of a ``more complicated'' could

file an application for interlocutory review by the Commission, without

first having to obtain leave from the ALJ.

The ITCTLA commented that the aforesaid proposed rules are

beneficial in light of ``the importance of timely adjudication in

section 337 investigations and due to the purely injunctive nature of

relief.''

The Commission agrees. Paragraph (b) of proposed rule 210.22 and

paragraph (a)(2) of proposed rule 210.24(a)(2) have been adopted as

final rules without any substantive changes.

Another aspect of proposed rule 210.24 concerning interlocutory

appeals also drew comment from the ITCTLA. Paragraph (b)(2) of that

rule provided that parties aggrieved by an ALJ's order granting or

denying confidential treatment could file an application for

interlocutory review with the Commission only if leave is granted by

the ALJ.

The ITCTLA commented that interlocutory appeals of confidentiality

orders could be beneficial in certain circumstances in light of the

importance of maintaining the confidentiality of information, and that

paragraph (b)(2) of proposed rule 210.24 strikes the proper balance

between the possible importance of determinations relating to

confidential treatment and the unwieldiness of interlocutory appeals,

by requiring the ALJ to grant leave to appeal the order. The ITCTLA

also expressed the hope, however, that such leave would not be given as

a matter of course.

The Commission agrees with the ITCTLA that the authority to grant

leave to seek interlocutory appeals of orders granting or denying

confidential treatment under paragraph (b)(2) of the final rule should

be used judiciously. Paragraph (b)(2) of final rule 210.24 is

substantively the same as the proposed rule.

Section 210.25

Proposed rule 210.25 addressed the filing and adjudication of

motions for sanctions for abuse of process, abuse of discovery, failure

to make or cooperate in discovery, or violation of an APO. Proposed

rule 210.25 established several procedures for the adjudication of such

motions, depending on when the motion was filed and whether it was

addressed to the Commission or the ALJ.

The Commission drafted final rule 210.4(b)-(f) to conform to the

December 1, 1993, amendments to FRCP 11. The text of final rule 210.25

has been drafted to be consistent with those provisions of final rule

210.4. In paragraph (a) of final rule 210.25, a separate sentence has

been inserted concerning the appropriate time to file a motion for

sanctions, in view of the prerequisites that will apply to certain

types of motions (e.g., prior service of the motion on the parties, or

a good faith attempt to resolve the dispute before seeking action by

the ALJ or the Commission).

The Commission also made two other changes throughout final rule

210.25. First, the wording reflects the fact that the Commission rules

for part 210 apply to investigations and related proceedings and that

sanctions may be requested in related proceedings as well as in

investigations. Second, the rule discusses referring a sanctions motion

to an ALJ (instead of the ALJ) because the identity of the presiding

ALJ usually is not known when the Commission order making the

assignment is issued.

The wording of final rule 210.25 also incorporates suggestions made

by the ITCTLA. For example, paragraph (f) of proposed rule 210.25

pertained to motions that were filed with the ALJ, and permitted him to

defer issuing a ruling on the motion until 90 days after the issuance

of an ID on violation of section 337. The second sentence of that

paragraph reads as follows:

His [i.e., the ALJ's] ruling on the motion for sanctions must be

in the form of a recommended determination and shall be issued no

later than 90 days after issuance of the aforesaid initial

determination on violation of section 337 or termination of the

investigation.

The ITCTLA commented that the foregoing sentence should be revised

to read as follows:

If the administrative law judge defers his adjudication in such

a manner, his ruling on the motion for sanctions must be in the form

of a recommended determination and shall be issued no later than 90

days after his ID on violation of section 337 or termination of the

investigation. [Emphasis added.]

The Commission has made that change in paragraph (f) of the final

rule 210.25. The changed language accurately states what the Commission

actually intended for the proposed rule to provide.

The ITCTLA also commented that allowing the ALJ 90 days from

issuance of the ID on violation of section 337 to issue an RD on

sanctions ``could be problematic in that it could lead to decisions on

sanctions issuing simultaneously with the Commission's decision.''

The Commission notes first that 90 days is the maximum time that

the ALJ can take to issue the RD. If the circumstances allow it, the

ALJ is free to issue the RD in fewer than 90 days. (The Commission

encourages its ALJs to do so whenever possible).

The Commission also does not foresee any problem with the 90 day

deadline as long as the proposed sanction discussed in the motion and

the RD is not one that, if granted, would have a bearing on the merits

of the Commission determination on violation of section 337. The

likelihood of that occurring is not high, since ALJs usually include

affirmative sanction rulings of that sort in the ID on violation, or

issue them prior to the ID but make reference to them in the ID. Even

if there were a case in which the grounds for an evidentiary sanction

do not become apparent until the ALJ adjudicates the sanction motion in

an RD issued 90 days after the ID on violation, the final rules contain

procedures that would address the difficulties. If the sanction is one

that would have a bearing on the issues of violation, remedy, the

public interest, and/or bonding by respondents, the Commission could

designate the investigation ``more complicated,'' if that designation

had not previously been applied, to give the Commission time to

consider the RD in connection with its final determinations on those

issues. If that were not an option, the Commission could make its final

determinations on violation, remedy, the public interest, and bonding

without taking the sanction RD into account. The Commission could then

process the RD and reconsider the aforesaid determinations if

necessary, sua sponte or in response to motions under final rules

210.47 and 210.48 (``Petitions for Reconsideration'' and ``Disposition

of Petitions for Reconsideration'') or final rule 210.76

(``Modification or Rescission of Exclusion Orders, Cease and Desist

Orders, and Consent Orders'').

If the sanction RD concerns a sanction that would not have a

bearing on the issue of violation, remedy, the public interest, or

bonding (e.g., a monetary sanction for failure to make or cooperate in

discovery), the Commission sees no problem with the issuance of the

sanction RD coinciding with the Commission determinations on those

issues.

The ITCTLA's final comment concerning proposed rule 210.25

pertained to the third sentence in paragraph (f), which read as

follows:

To aid the Commission in determining whether to adopt a

recommended determination granting or denying cost or attorney's fee

sanctions, any party may file written comments with the Commission

14 days after service of the recommended determination.

The ITCTLA commented that the foregoing sentence should be revised

to read:

To aid the Commission in determining whether to adopt a

recommended determination, any party may file written comments with

the Commission fourteen (14) days after service of the recommended

determination.

The ITCTLA explained that this change was necessary because the

wording of the proposed rule improperly restricted a party's ability to

appeal orders pertaining to sanctions other than costs or attorneys

fees. The Commission agrees and has made the requested change in the

final rule.

Subpart E--Discovery and Compulsory Process

Section 210.27

Proposed rule 210.27 covered the permissible methods and subject

matter of discovery, time constraints on discovery, and supplementation

of responses to discovery requests.

Paragraph (b). Paragraph (b) of proposed rule 210.27 addressed the

permissible subject matter of discovery. It was based on portions of

subdivision (b)(1) of FRCP 26 as it read prior to December 1, 1993.

On December 1, 1993, subdivision (b) of FRCP 26 was amended to

provide U.S. district courts with broader discretion to have greater

control of and to impose additional restrictions on the scope and

extent of discovery.\40\ A new paragraph (5) was also added to require

a party to notify other parties if it is withholding materials

otherwise subject to disclosure under FRCP 26 or pursuant to a

discovery request because the party is asserting a claim of ``privilege

or work product protection.''\41\

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\40\See 146 F.R.D. at 436-440 and 638-639.

\41\See 146 F.R.D. at 639-640.

---------------------------------------------------------------------------

The Commission decided against having paragraph (b) of final rule

210.27 match amended subdivision (b) of FRCP 26. The Commission noted

first that it is not required by law to follow FRCP 26 concerning the

permissible scope and limits of discovery (as it is in the case of the

Commission rules providing sanctions for abuse of process or discovery

in accordance with FRCP 11 or 37). The Commission also was of the

opinion that incorporating the amended FRCP provisions into the

Commission rule was not necessary at this time, since proposed rule

210.27 is--and the current practice of the ALJs are--largely consistent

with the provisions of those amendments. The Commission also recognized

that some aspects of the FRCP amendments could be problematic if

applied in section 337 proceedings.\42\ The Commission thus concluded

that wholesale adoption of the amended subdivision (b) of FRCP 26 would

be ill-advised, while partial adoption of its provisions would be

likely to delay the Commission's adoption of final rules.

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\42\For example, subdivision (b)(4)(C) of amended FRCP 26 would

require the Commission to reimburse the private parties' experts for

deposition testimony and other discovery requested by OUII. The

Commission also noted that subdivision (b)(3) of amended FRCP 26

provides that non-parties may obtain transcripts of their testimony,

but does not indicate who would bear the costs of those additional

transcripts (which usually cost about $800 per day of testimony).

---------------------------------------------------------------------------

The Commission notes, however, that a presiding ALJ can issue his

own ground rules to supplement the part 210 discovery rules, and that

such ground rules may incorporate provisions of FRCP 26 or other

Federal Rules, as the ALJ deems appropriate.

In addition to considering whether to revise paragraph (b) of

proposed rule 210.27 to be consistent with amended subdivision (b) of

FRCP 26, the Commission also considered whether to revise paragraph (b)

in response to a comment by the ITCTLA.

Paragraph (b) of the proposed rule stated that the scope of

discovery for the temporary relief phase of an investigation would be

governed by proposed rule 210.61. Paragraph (b) also expressly allowed

discovery on the issues of remedy and bonding by the respondents in

connection with the permanent relief phase of an investigation.

The ITCTLA commented that because the public interest is an issue,

the final rule should specifically provide for discovery on the public

interest in certain circumstances. The ITCTLA went on to say that to

avoid overbreadth, the ALJ should be given discretion not only to

determine whether such discovery should be taken, but also to limit the

discovery in whatever manner is appropriate.

The Commission does not think it necessary to make the changes the

ITCTLA advocated. As the preamble to proposed rule 210.27 explained,

serious questions as to whether the granting of permanent relief would

have an adverse impact on the public interest arise relatively

infrequently. Moreover, the scope of evidence and information that

conceivably could be categorized as relevant to the public interest is

potentially so vast as to make discovery and findings by the ALJ

concerning the public interest impracticable. For those reasons,

paragraph (b) of proposed rule 210.27 did not require ALJs to allow

discovery, to take evidence, or to make findings or recommendations to

the Commission concerning the public interest in connection with the

grant or denial of permanent relief. The Commission notes, however,

that it has the option to order an ALJ to take evidence and make

findings on the public interest in appropriate cases. 40

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\4\0See 19 CFR 201.4(b) (1993) regarding waiver of Commission

rules and final rule 210.50(b) concerning the ALJ's ability to take

evidence, hear argument, and make findings concerning the public

interest.

---------------------------------------------------------------------------

Paragraph (b) of final rule 210.27 does not differ substantively

from the corresponding paragraph of the proposed rule. The final rules

maintain the practice employed under the interim rules--i.e., of

generally prohibiting the ALJ from addressing the public interest, in

the absence of an express order from the Commission directing the ALJ

to order discovery on the public interest in a particular

investigation. See final rule 210.50(b)(1).

Paragraph (c). Paragraph (c) of proposed rule 210.27 pertained to

the supplementation of a response to a discovery request, and

corresponded to subdivision (e) of FRCP 26 as it read prior to December

1, 1993.

On December 1, 1993, subdivision (e) of FRCP 26 was amended to

provide that the duty to supplement applies to disclosures required by

the amended subdivision (a) of FRCP 26. The amended subdivision (e)

also clarifies that the obligation to supplement formal discovery

requests applies to interrogatories, requests for production, and

requests for admissions, but not generally to deposition

testimony.41

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\4\1See 146 F.R.D. at 442-443 and 641.

---------------------------------------------------------------------------

Because the Commission did not draft paragraph (a) of final rule

210.27 to incorporate the amended subdivision (a) of FRCP 26 concerning

mandatory disclosures, the Commission also did not draft paragraph (c)

of final rule 210.27 to cover such disclosures.

The ITCTLA commented that paragraph (c) of final rule 210.27 should

be drafted to broaden the duty to supplement discovery responses. The

ITCTLA explained that--

On a fast track, as parties develop their cases and muster their

evidence, it is likely that relevant material is later discovered

which was within an earlier discovery request but not found

previously despite a diligent search. Thus, the duty to supplement

should be imposed on the party in possession of the information. At

a minimum, the rule should require parties to supplement their

responses prior to hearing, without exception.

The Commission decided that paragraph (c) of final rule 210.27

should match subdivision (e) of FRCP 26 by clarifying that the

obligation to supplement formal discovery requests applies to

interrogatories, requests for production, and requests for admissions,

but not generally to deposition testimony. Paragraph (c)(1) of final

rule 210.27 specifically provides that a party who has responded to a

request for discovery with a response is under a duty to supplement or

correct the response to include information thereafter acquired if

ordered by the ALJ or in the circumstances outlined in the rule. The

presiding ALJ can therefore issue ground rules to either supplement or

replace the requirements set forth in the rule.

Paragraph (d). Paragraph (d) of proposed rule 210.27 was based on

subdivision (g) of FRCP 26 as it read prior to December 1, 1993.

Paragraph (d) thus imposed signature and certification requirements for

discovery requests, responses, and objections. Those requirements were

similar to the signature and certification requirements imposed by FRCP

11 as it read prior to December 1, 1993, and in paragraph (b) of

proposed Commission rule 210.4. Paragraph (d) of proposed rule 210.27

also provided for cost and fee sanctions like those authorized in FRCP

37 prior to December 1, 1993, and in paragraph (c) of proposed

Commission rule 210.33.

As the 1992 preamble to proposed rule 210.27 explained, FRCP 26 was

not cited in section 337(h) as one of the Federal Rules that the

Commission is to use as a standard for imposing cost and fee sanctions

in section 337 investigations. Section 337(h) does state, however, that

the Commission may by rule prescribe sanctions for abuse of discovery

to the extent authorized by FRCP 37,42 and FRCP 26 is derived from

FRCP 37. The Commission decided that it was appropriate for the

proposed rules to include a provision based on paragraph (g) of FRCP

26, as the Commission has the authority to adopt any rules it deems

necessary to carry out its functions and duties,43 and the ALJs

had advised the Commission that there was a need for a Commission rule

based on paragraph (g) of FRCP 26.

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\4\219 U.S.C. Sec. 1337(h).

\4\3See 19 U.S.C. Sec. 1335.

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On December 1, 1993, subdivision (g) of FRCP 26 was amended to make

the signature, certification, and sanction provisions applicable to

disclosures required by subdivision (a) as amended. The sanction

provisions were also amended to be consistent with provisions of FRCP

37.44

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\4\4See 146 F.R.D. at 444-447 and at 644. The Committee Notes

also point out that FRCP 11, as amended, does not apply to such

violations. Id. at 644.

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Since the Commission did not draft paragraph (a) of final rule

210.27 to cover disclosures, the Commission also did not draft

paragraph (d) of that rule to make the signature, certification, and

sanction provisions applicable to disclosures. The changes that the

Commission did make in paragraph (d) of the proposed rule before

adopting it as a final rule are described below.

First, the Commission revised the wording of the certification

requirement in paragraph (d) to correspond more closely to the wording

and substance of subdivision (g) of FRCP 26, as amended. For example,

the certification provision was revised so that it no longer states

that the signature of the attorney or party constitutes a certification

that the signer has read the request, response, or objection.

The Commission also changed the cross-references in paragraph (d).

The revised paragraph (d) provides that a discovery response, request,

or objection must be consistent with rule 210.5 and other relevant

rules. The revised paragraph does not refer to Commission rule

201.8.45 The Commission also revised paragraph (d) to omit a

reference to ``Sec. 210.4.''46 The Commission added a new

paragraph (d)(1), however, containing provisions like those in

paragraph (a) of proposed rule 210.4.47

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\4\5Rule 201.8 (19 CFR 201.8) imposes requirements for the

filing of documents. Responses to discovery requests are not

normally filed with the ALJ or the Commission.

\4\6The signature, certification, and sanction provisions of

rule 210.4 are based on FRCP 11, and FRCP 11 as amended no longer

applies to disclosures and discovery requests, responses,

objections, or motions covered by FRCP 26.

\4\7Paragraph (a) of proposed rule 210.4 was not based on FRCP

11, and simply stated that the front page of every written

submission must contain a caption setting forth the name of the

Commission, the title of the investigation or related proceeding,

and the docket number or investigation number, if any, assigned to

the investigation or related proceeding.

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The sanction provisions of paragraph (d) were modified as well.

Among other things, paragraph (d) was revised to indicate that a

violation occurs and a sanction may be imposed when a request,

response, or objection is certified without substantial justification,

which is the standard used in subdivision (g) of FRCP 26 as amended.

The sanction provisions also do not include a reference to ``proposed

parties.''48 Finally, the revised paragraph (d) also omits a

reference to the possible imposition of a fine as a sanction for

violation of the certification requirement.49

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\4\8Proposed parties do not usually participate in discovery.

The inclusion of that reference in the proposed rule was an error.

\4\9Unlike the amended FRCP 11, the amended paragraph (g) of

FRCP 26 does not provide for the imposition of monetary penalties

other than costs or attorney's fees.

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Section 210.30

Proposed rule 210.30 concerned requests for the production of

documents and things and entry upon land.

Paragraph (b). Paragraph (b) of proposed rule 210.30 outlined the

procedure for making, serving, and responding to requests for the

production of documents and things and entry upon land. Paragraph (b)

also provided that the presiding ALJ would determine the deadline for

responding.

The ITCTLA commented that instead of leaving the response time to

the discretion of the ALJ, there should be a minimum response period

provided in the rule, which the ALJ has the authority to extend, but

not diminish.

The Commission notes that the proposed discovery rules contained no

prescribed deadlines because the Commission had deferred to Chief ALJ

Saxon's view that discovery deadlines in each investigation should be

established by the presiding ALJ and not by Commission rule. The ITCTLA

did not offer any justification for the Commission to insert a deadline

in paragraph (b) of the final rule. The Commission thus has not made

the change that the ITCTLA requested; paragraph (b) of final rule

210.30 does not differ substantively from the corresponding paragraph

of the proposed rule.

Section 210.32

Proposed rule 210.32 governed the issuance of subpoenas.

Paragraph (e). Paragraph (e) of proposed rule 210.32 was the same

as the corresponding paragraph of interim rule 210.35 and discussed ex

parte rulings on applications for subpoenas. Paragraph (e) provided

that applications for the issuance of the subpoenas can be made ex

parte, and, if so made, such applications and rulings thereon must

remain ex parte unless otherwise ordered by the ALJ.

The ITCTLA commented that it is not clear whether the ex parte

applications are discoverable by any party or person who wishes to try

to quash the subpoena. The ITCTLA believes that final rule 210.32

should expressly provide that such applications are discoverable by any

party or person seeking to quash the subpoena if it is actually issued.

The Commission did not modify paragraph (e) in the manner the

ITCTLA advocated. The Commission intends for paragraph (e) of final

rule 210.32 to correspond to the FRCP 34 on the issuance of subpoenas.

FRCP 34 does not contain a provision of the sort that the ITCTLA has

requested. The issues of whether and when applications for subpoenas

are discoverable by parties and subpoenaed persons accordingly will be

left to the discretion of the presiding ALJ.

Section 210.33

Proposed rule 210.33 was based on FRCP 37 as it read prior to

December 1, 1993, which provided sanctions for failure to make or

cooperate in discovery.

Paragraph (a). Paragraph (a) of proposed rule 210.33 pertained to

the filing of motions for orders compelling discovery. Paragraph (a)

was based on the first sentence in subdivision (a) of FRCP 37, as it

read prior to December 1, 1993.

On December 1, 1993, subdivision (a) of FRCP 37 was amended to be

consistent with amended subdivision (a) of FRCP 26 (which requires

disclosures of certain matters without a discovery request). It was

also amended to provide that--

a party dissatisfied with the disclosures made by an

opposing party may move for an order to compel disclosure;

litigants must seek to resolve discovery disputes by

informal means before filing a motion with the court;

evasive or incomplete disclosures and responses to

interrogatories and production requests will be treated as failures

to disclose or respond; and

monetary sanctions can be imposed if the disclosure or

requested discovery is provided after the motion to compel is filed

with the court but before a hearing is held on the motion (except

that a party may not be awarded its expenses for filing a motion

that could have been avoided by conferring with opposing

counsel).50

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\5\0See 146 F.R.D. at 467-470 and 689-691.

The Commission decided against incorporating provisions of

subdivision (b) of amended FRCP 37 into paragraph (a) of final rule

210.33 at this time. Paragraph (a) of final rule 210.33 is therefore

the same as paragraph (a) of the proposed rule.

The Commission notes, however, that a presiding ALJ can issue his

or her own ground rules to supplement the part 210 discovery rules (and

hence those ground rules may require that a movant must certify that

there have been good faith efforts to resolve a discovery dispute by

informal means prior to the filing of a motion to compel discovery). A

presiding ALJ's ground rules also can provide that an evasive or

incomplete disclosure, answer, or response will be treated as a failure

to respond as provided in amended FRCP 37(a)(3).

Paragraph (b). Section 337(h) gives the Commission express

authorization to impose sanctions for ``abuse of discovery'' to the

extent provided in FRCP 37.51 Paragraph (b) of proposed rule

210.33 addressed non-monetary sanctions for failure to make or

cooperate in discovery. Paragraph (b) was based on the non-monetary

sanction provisions of FRCP 37(b) (as well as paragraph (b) of interim

rule 210.36, which listed various kinds of sanctions that may be

imposed if a party fails to comply with a discovery order).

---------------------------------------------------------------------------

\5\119 U.S.C. Sec. 1337(h).

---------------------------------------------------------------------------

The Federal Rule upon which paragraph (b) of proposed rule 210.33

was based--subdivision (b) of FRCP 37--was not amended on December 1,

1993. The Commission therefore did not consider making changes in

paragraph (b) before adopting it as part of final rule 210.33.

Paragraph (c). Paragraph (c) of proposed rule 210.33 discussed

monetary sanctions for failure to make or cooperate in discovery. It

was based in part on subdivision (b)(2) of FRCP 37, which was not

amended on December 1, 1993.

Subdivisions (c), (d), and (g) of amended FRCP 37 are also relevant

to the question of monetary sanctions for failure to make or cooperate

in discovery in section 337 investigations. Subdivision (c) authorizes

cost and fee sanctions for failure to make the disclosures required by

subdivision (a) of FRCP 26, as amended. Subdivision (c) also provides

sanctions for false or misleading disclosures and refusals to

admit.52 Subdivision (d) authorizes cost and fee sanctions for a

party's failure to attend its own deposition or to serve answers to

interrogatories or responses to requests for inspection. (Subdivision

(d) also provides that when a party fails to file any response to

interrogatories or a FRCP 34 request, the discovering party is required

to try informally to obtain such responses before filing a motion for

sanctions.)53 Subdivision (g) authorizes cost and fee sanctions if

a party or a party's attorney fails to participate in good faith in the

development and submission of a proposed discovery plan as required by

amended subdivision (f) of FRCP 26.54

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\5\2See 146 F.R.D. at 470-472 and 691-692.

\5\3See 146 F.R.D. at 472-473 and 691-692.

\5\4See 146 F.R.D. at 473 and 692.

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The Commission has decided not to incorporate the provisions of

subdivisions (a), (c), (d), and (g) of amended FRCP 37 into its final

rules at this time. The only monetary sanctions available under

paragraph (c) of final rule 210.33 will be those based on subdivision

(b)(2) of amended FRCP 37 for failure to comply with an order to

provide or permit discovery.

The Commission made several substantive revisions to paragraph (c),

however. First, paragraph (c)(1) was revised by changing the citation

to ``Rule 37 of the Federal Rules of Civil Procedure'' to ``Rule

37(b)(2) of the Federal Rules of Civil Procedure.'' In addition, the

language of paragraph (c)(1) was altered to conform more closely to

that of subdivision (b)(2) of amended FRCP 37. The Commission added

language indicating that monetary sanctions may not be awarded if the

ALJ or the Commission finds that the uncooperative party's failure to

comply with the order to provide or permit discovery was substantially

justified or that other circumstances make an award of expenses unjust.

The Commission also deleted the references in paragraph (c)(1) to

the imposition of an ``appropriate monetary sanction'' and the

possibility of a fine being imposed in lieu of or in addition to cost

and attorneys' fee sanctions. Unlike the sanction provisions of amended

FRCP 11, the sanction provisions of amended FRCP 37 do not provide for

monetary sanctions of any kind other than the payment of another

party's costs and attorneys' fees.

The Commission also made some minor editorial changes in paragraph

(c)(2) before adopting it as part of final rule 210.33.

Subpart F--Prehearing Conferences and Hearings

Section 210.35

Paragraph (d). Paragraph (d) of proposed rule 210.35 discussed

prehearing orders, and stated that the ALJ's order shall control the

subsequent course of the hearing, unless the ALJ modifies the order.

The ITCTLA commented that this provision gives the presiding ALJ

wide latitude to modify his prehearing order. The ITCTLA believes,

however, that while ALJs should have broad powers to modify pretrial

orders, some sort of limit should be imposed. The ITCTLA accordingly

requested that the last sentence of final rule 210.35 be drafted to

state that the ALJ can modify his pretrial order for ``good cause.''

The ITCTLA noted that ``good cause'' is the standard that Federal

judges must apply in modifying scheduling orders under FRCP 16(b).

The Commission does not see a need for the change the ITCTLA has

advocated. The Commission assumes that the ALJs will not abuse their

power to modify a pretrial order and will only make modifications when

good cause exists for the change. That being the case, revising the

last sentence to add the ``good cause'' proviso would seem to be

unnecessary.

Section 210.36

Paragraph (d). Paragraph (d) of proposed rule 210.36 described the

rights of the parties at evidentiary hearings. It stated, among other

things, that every party will have the right of adequate notice, cross-

examination, presentation of evidence, objection, motion, argument, and

all other rights essential to a fair hearing.

The ITCTLA commented that the reference to ``all other rights

essential to a fair hearing'' is vague and unnecessary, and should be

omitted from the final rule. The Commission does not agree and has

retained that phrase in paragraph (d) of final rule 210.36.

Section 210.37

Paragraph (b). Paragraph (b) of proposed rule 210.37 discussed the

admissibility of evidence. It stated, in pertinent part, that

immaterial or irrelevant parts of an admissible document will be

segregated and excluded as far as practicable. The ITCTLA commented

that in the final rule, this sentence should be written in the

disjunctive, not in the conjunctive--i.e., the word ``or'' should be

used in place of the word ``and.'' The Commission believes that change

is appropriate and has made it in the final rule.

Paragraph (e). Paragraph (e) of proposed rule 210.37 discussed

objections to evidence, and stated that objections to evidence shall be

made in timely fashion and shall briefly state the grounds relied upon.

The ITCTLA commented that the word ``timely'' is too vague and, for

that reason, the final rule should state that objections must be made

when the evidence is offered.

The Commission intends for the presiding ALJ in each case to decide

at what point objections to evidence should be made. The Commission

therefore has not drafted paragraph (e) of final rule 210.37 to include

the provision that the ITCTLA requested.

Section 210.38

Proposed rule 210.38 governed the reporting and transcription,

correction, and certification of the administrative record of a section

337 investigation or related proceeding.

Paragraph (a). Paragraph (a) of the proposed rule identified the

kinds of documents and materials that constitute such a record. Unlike

paragraph (a) of the proposed rule, paragraph (a) of the final rule

codifies longstanding Commission practice by indicating that all briefs

and written statements are part of the record.

Subpart G--Determinations and Actions Taken

Section 210.42

Proposed rule 210.42 was the general rule concerning IDs.

Paragraph (a). Paragraph (a) of proposed rule 210.42 governed the

issuance of an ID on ``permanent relief,'' i.e., violation of section

337. The headings of the final rule differ from those in the proposed

rule in the following manner:

1. The heading of paragraph (a)(1)(i) has been changed from ``On

issues concerning permanent relief'' to ``On issues concerning

violation of section 337.'' This change was made because IDs issued

pursuant to this paragraph pertain solely to violation of section 337

of the Tariff Act and do not address the issue of permanent relief.

2. Paragraph (a)(1)(ii) has been given the heading ``Recommended

determination on issues concerning permanent relief and bonding,'' as

this paragraph requires the ALJ to issue, within 14 days after issuance

of the violation ID, an RD on the issues of remedy and bonding by

respondents.

The ITCTLA commented that apart from not detracting from the time

allotted to the ALJ to adjudicate the question of a section 337

violation, there does not seem to be any justification for treating an

ALJ's remedy and bonding decision differently from his decision on

violation. The ITCTLA also believes that the only advantage to having

the ALJ issue his remedy and bonding decision separately from the

decision on violation is that the public gets an opportunity to comment

on the remedy and bonding issues. The ITCTLA maintains, however, that

such comment would be possible without utilizing the RD mechanism.

The ITCTLA accordingly suggested that--

1. final rule 210.42(a)(1)(ii) should require the ALJ to issue

an ID on permanent relief and bonding, instead of an RD, on the 14th

day after issuance of the ID on violation of section 337;

2. processing of the ID should entail provision for petitions

for review by parties and a 30-day deadline for comments on the ID

by interested members of the public; and

3. the ID should have a 45-day effective date.

The Commission has not drafted paragraph (a)(1)(ii) of final rule

210.42 in the manner the ITCTLA has advocated. The Commission believes

that having the ALJ issue an RD on remedy and bonding by respondents

will give the Commission the greatest flexibility in reaching final

determinations on those issues.\55\

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\55\A Commission decision on whether to accept or reject the

recommendations in an RD is not governed by the same subject matter

limitations and deadlines as a decision on whether to review an ID.

---------------------------------------------------------------------------

The Commission did make one substantive change in paragraph

(a)(1)(ii) of proposed rule 210.42 before adopting it as a final rule.

That paragraph was revised to require an ALJ to issue an RD on remedy

and bonding in every case (and not just those in which the ALJ has

found a violation of section 337).

Paragraph (d). Paragraph (d) of proposed rule 210.42 described the

required content of an ID. It stated, among other things, that an ID

would become the determination of the Commission unless a party filed a

petition for review of the ID ``pursuant to Sec. 210.43(a) or

Sec. 210.46(a) or the Commission, pursuant to Sec. 210.44 of

Sec. 210.46(a)(6), orders on its own motion a review of the initial

determination or certain issues therein.'' Since the Commission has

determined not to adopt the procedure set forth in proposed rule

210.46(a), the cross-references to that rule have been omitted from

paragraph (d) of final rule 210.42.

Paragraph (h). Paragraph (h) of proposed rule 210.42 listed the

effective dates of various kinds of IDs.

Paragraph (h)(1) provided that an ID under proposed rule

210.42(a)(2) granting a motion to declassify confidential information

would become the determination of the Commission within 45 days after

service of the ID unless the Commission ordered a review. The ITCTLA

commented that the final version of this rule should provide a 30-day

effective date for the ID, because IDs on declassification of

confidential information ``[seem] more like the type of decision which

becomes effective within thirty (30) days (like amendment of the

complaint, etc.). The ITCTLA also suggested that the 30-day period be

measured from the date of issuance of the ID, and not the date of

service, to be consistent with proposed rules 210.43 (``Petitions for

Review of [IDs] on Matters Other Than Temporary or Permanent Relief'')

and 210.46 (``Petitions for and Sua Sponte Review of [IDs] on Permanent

or Temporary Relief'').

The Commission notes that consistency in rules dealing with similar

or related subject matter generally is desirable. In this case,

however, the Commission does not think it necessary or desirable to

revise the manner of measuring the effective date of an ID on

declassification of confidential information. Calculating a prescribed

period from the date of issuance of an ID (instead of the date of

service) usually shortens the actual period. Expedited procedures are

necessary, however, for IDs that must be processed before a statutory

or regulatory deadline. Such urgency does not exist with respect to

processing an ID concerning declassification of confidential

information.

Paragraph (h)(2) of proposed rule 210.42 concerning IDs on

permanent relief (i.e., violation of section 337) did not give an

effective date for such IDs because they were to be processed in

accordance with paragraph (a) of proposed rule 210.46, instead of being

processed by the customary bifurcated process. Instead, paragraph

(h)(2) simply stated that IDs on violation of section 337 would be

processed in accordance with proposed rule 210.46.

Since the Commission has not adopted the procedure set forth in

that proposed rule, paragraph (h)(2) of final rule 210.42 has been

drafted to state that IDs on violation of section 337 have a 45-day

effective date, unless the Commission orders otherwise or changes the

deadline for determining whether to order a review. Paragraph (h)(2)

also retains the provision from the corresponding paragraph of the

proposed rule indicating that the findings and recommendations made by

the ALJ in the RD on remedy and bonding by the respondents will be

considered by the Commission in reaching determinations on those

issues.

Section 210.43

Paragraph (b). Paragraph (b) of proposed rule 210.43 articulated

(1) the standard for review and the grounds that must be asserted in a

petition for review as justification for seeking review of specific

issues, and (2) the consequence of a party's failure to petition for

review of an issue decided adversely to the party. Like interim rule

210.54(b), upon which it was based, proposed rule 210.43(b) also stated

that any issue not raised in the petition for review will be deemed to

have been abandoned by the party and may be disregarded by the

Commission in reviewing the ID.

In the preamble to paragraph (b) of proposed rule 210.43, the

Commission noted that the Federal Circuit has construed paragraph

(a)(2) of interim rule 210.54 to mean that parties who petition the

Commission for review waive their right to raise additional or

different issues in a subsequent appeal to the Federal Circuit, while

parties who do not file petitions for review may raise all issues on

appeal.\56\ The Commission went on to say that while interim rule

210.54(a)(2) and proposed rule 210.43(b) permit the parties to elect to

bypass Commission review, and may thereby reduce the effectiveness of

the Commission's review procedures, some persons may feel that the

interim rule and proposed rule 210.43(b) effectively discourage the

filing of petitions for review.\57\

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\56\See Warner Brothers, Inc. v. U.S. International Trade

Commission, 787 F.2d 562, 564 (Fed. Cir. 1986). (The Federal Circuit

rejected the Commission's argument that parties waive the right to

challenge Commission determinations by failing to petition for

review of adversely decided IDs.) See also Allied Corporation v.

U.S. International Trade Commission, 850 F.2d 1573, 1580 (Fed. Cir.

1988), cert. denied, 109 S.Ct. 791 (1989) (``Allied abandoned review

of the claim construction in the ALJ's 1984 ID by failing to raise

the issue in its petition for review of that ID'').

\57\57 FR at 52846.

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For those reasons, the Commission specifically requested public

comment on whether it should adopt an Alternative provision to that in

proposed rule 210.43(b) stating that: (1) A party is required to file a

petition for review of an ID in which issues had been decided adversely

to that party, in order to preserve the party's right to judicial

review of any final Commission determination based on some or all of

the same grounds as the ID; and (2) a party's failure to file a

petition for review would be deemed to be abandonment of all issues

decided adversely to that party in the ID.\58\

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\58\Id.

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The ITCTLA commented that it does not favor the proposed rule as

written--or the alternative provision discussed in the preamble. The

ITCTLA explained that--

The ITCTLA feels that the problem with the present arrangement

is that it encourages overly comprehensive petitions, not that it

discourages a party from filing at all. The ITCTLA doubts whether

the decision to file a petition for review is influenced

significantly by the fact that, to avoid any waiver, a party must

petition for review of every issue lost before the ALJ. Parties that

do not seek review most likely have other motivations (e.g., lack of

interest in review of the issues lost, insufficient funds, etc.)

Thus the only effect of the Commission's suggested alternative

to the Proposed Rules would be to force parties which did not want

to file a petition for review to do so or else waive their right to

appeal to the Federal Circuit. It would not discourage overly

comprehensive petitions, but instead would ensure that all petitions

were indeed overly comprehensive.

The ITCTLA suggested a second alternative--namely, elimination of

the provision that issues not raised in a petition for review are

waived. The ITCTLA believes that if the final rule were written in that

manner, only legitimate issues would be raised in petitions for review.

The ITCTLA also is of the opinion that such a rule would not deprive

parties of fair notice of what might be raised on appeal, since the

present arrangement in which parties routinely file ``kitchen sink''

petitions does not provide such notice anyway.

The Commission has not drafted paragraph (b) of final rule 210.43

in the manner that the ITCTLA advocated.

Section 337 investigations are conducted--and determinations from

such investigations are appealable--in accordance with the APA.\59\ The

Supreme Court has held that Federal courts do not have the authority to

require a plaintiff to exhaust administrative remedies before seeking

judicial review under the APA when neither the relevant statute nor

agency rules specifically mandate exhaustion as a prerequisite to

judicial review. Darby v. Cisneros, 113 S.Ct. 2539 (1993).

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\59\See 19 U.S.C. Sec. 1337(c).

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The relevant provisions of section 337 do not mandate exhaustion as

a prerequisite to judicial review.\60\ The interim Commission rules

also do not require a complainant to exhaust the available

administrative remedies before seeking judicial review.\61\ As the

preamble to the proposed rules pointed out, the Federal Circuit

previously decided that the Commission's interim rule 210.54(a)(2)--

which is the same as proposed rule 210.43(b) on the issue of waiver--

does not require an aggrieved party to file a petition for Commission

review of an ID before seeking judicial review. See Warner Brothers,

Inc. v. U.S. International Trade Commission, 787 F.2d 562, 564 (Fed.

Cir. 1986).\62\

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\60\Id.

\61\See 19 CFR 210.54(a), 210.53(h), 210.56(c), and 210.71

(1993).

\62\In reaching that decision, the Federal Circuit noted that

interim rule 210.54(a)(2) does not address situations where the

petitioner appeals an ID of an ALJ directly to the court, without

first petitioning for review. ``As we read the current

regulations'', the Federal Circuit stated, ``if a party does file a

petition for review of the ID, any issue not raised therein `will be

deemed to have been abandoned.''' ``There is no requirement'', the

Federal Circuit continued, ``that a party file a petition for review

or risk waiver of all adversely decided issues.'' 787 F.2d at 564.

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To ensure that the doctrine of exhaustion of administrative

remedies can properly be applied to section 337 proceedings (in light

of Warner Brothers and Darby), the Commission has drafted paragraph (b)

of final rule 210.43 to provide that:

(1) any issue not raised in a petition for review will be deemed

to have been abandoned by the petitioning party and may be

disregarded by the Commission in reviewing the initial determination

(unless the Commission chooses to review the issue on its own

initiative under final rule 210.44); and

(2) a party's failure to file a petition for review of an ID

shall constitute abandonment of all issues decided adversely to that

party in the ID.

The Commission notes that its goal under section 337 is to issue

the best decision possible in the time available. That goal is

furthered by encouraging all parties (prevailing as well as non-

prevailing) to petition for review of any and all errors they perceive

in the ID on violation of section 337. The Commission believes that a

Commission rule providing for a waiver will achieve the desired effects

of (1) discouraging deliberate flouting of administrative processes,

(2) protecting agency autonomy by affording the agency the first

opportunity to apply its expertise, exercise its discretion, and

correct its errors, (3) aiding judicial review by promoting the

development of facts during the agency proceedings, and (4) promoting

judicial economy by reducing duplication.

Contingent Petitions

The ITCTLA suggested that the Commission consider whether to adopt

a rule expressly providing for contingent petitions for review--i.e.,

petitions in which the petitioning party is satisfied with the ID, but

would like to have the Commission review certain issues if the

Commission decides to review issues raised by an opposing party. The

ITCTLA claimed that permitting the filing of contingent petitions for

review ``might spare the Commission significant work, and appears to

have no down side.''

The Commission notes that it occasionally receives contingent

petitions for review of IDs. Owing to the administrative deadlines

governing the ID/discretionary Commission review process, contingent

petitions must be processed in the same time and manner as non-

contingent petitions. Paragraph (b) of final rule 210.43 accordingly

clarifies this practice, by stating that any petition designated by the

petitioner as a ``contingent'' petition for review shall be regarded as

an ordinary (i.e., non-contingent) petition and shall be processed

accordingly. The Commission thought that such clarification was

necessary in light of the fact that a ``contingent petition'' is

inconsistent with the requirement that all administrative remedies be

exhausted before judicial review.

Section 210.44

Proposed rule 210.44 covered sua sponte Commission review of IDs on

matters other than permanent or temporary relief. It bore the heading

``Commission review on its own motion of IDs on matters other than

permanent or temporary relief.''

In view of the Commission's decision to retain the current manner

of processing IDs on violation of section 337 and not to adopt the

procedure set forth in proposed rule 210.46 (as discussed below), the

heading of final rule 210.44 has been changed to ``Commission review on

its own motion of initial determinations on matters other than

temporary relief.''

Sections 210.45 and 210.46

Proposed rule 210.45 governed review of IDs on matters other than

temporary or permanent relief. Paragraph (c) of proposed rule 210.45

described Commission decisions on review of an ID concerning a matter

other than temporary or permanent relief. Paragraph (a)(7) of proposed

rule 210.46 similarly described Commission decisions on review of an ID

concerning permanent relief (i.e., violation of section 337). Paragraph

(c) of proposed rule 210.45 and paragraph (a)(7) of proposed rule

210.46 were essentially the same as interim rule 210.56(c)

(``Determination on Review'').\63\

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\63\Interim rule 210.56(c) provides as follows:

(c) Determination on review. On review, the Commission may

affirm, reverse, modify, set aside or remand for further

proceedings, in whole or in part, the initial determination of the

administrative law judge and may make any findings or conclusions

that in its judgment are proper based on the record in the

proceeding.

19 CFR 210.56(c) (1993).

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The ITCTLA commented that paragraph (c) of proposed rule 210.45 and

paragraph (a)(7) of proposed rule 210.46 should be amended to provide

that the Commission's determination on review is made according to the

same standard found in proposed rule 210.43(b), i.e., the standard by

which the Commission determines whether to review an ID.\64\ The ITCTLA

believes that the proposed change is warranted because the ALJs are

highly experienced triers of fact and thus are entitled to have their

opinions accorded the same deference called for under the standard set

forth in proposed rule 210.43(b).

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\64\The standard set forth in proposed rule 210.43(b) was:

1. that a finding or conclusion of material fact is clearly

erroneous;

2. that a legal conclusion is erroneous, without governing

precedent, rule or law, or constitutes an abuse of discretion; or

3. that the determination is one affecting Commission policy.

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The Commission views the ITCTLA's comment as an attempt to obtain

reversal of the Commission opinion in Inv. No. 337-TA-324, Certain

Acid-Washed Denim Garments and Accessories, which held that the

standard which the Commission applies in reviewing an ID (as opposed to

determining whether to review the ID) is a de novo standard.\65\ The

Commission therefore declines to revise paragraph (c) of proposed rule

210.45 and paragraph (a)(7) of proposed rule 210.46 in the manner that

the ITCTLA suggested. (But see the discussion below concerning the

Commission's decision not to adopt any part of proposed rule 210.46.)

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\65\The opinion stated in pertinent part as follows:

In our view, the standard for review provided in interim rule

210.56 is clear--the Commission may `make any findings or

conclusions that in its judgment are proper based on the record in

the proceedings.' Thus, once a sufficient basis for review has been

shown and review has been ordered, the Commission examines for

itself the record on the issues under review. It makes findings on

those issues it believes are appropriate, unconstrained by the

`clearly erroneous' standard of interim rule 210.54. Contrary to

respondents' claim, there is in our view no basis for grafting the

`clearly erroneous' standard from interim rule 210.54--which governs

whether there is a basis for review--onto interim rule 210.56--which

controls the Commission's decision upon review.

Certain Acid-Washed Denim Garments and Accessories, Inv. No.

337-TA-324, USITC Publication 2576, Opinion of the Commission at 4-5

(Nov. 1992).

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In view of the Commission's decision to retain the current manner

of processing IDs on violation of section 337 and not to adopt the

procedure set forth in proposed rule 210.46 (as discussed below), the

heading of final rule 210.45 has been worded to cover IDs on violation

of section 337. The heading of proposed rule 210.45 was ``Commission

review on its own motion of initial determinations on matters other

than temporary or permanent relief.'' The heading of final rule 210.45

is ``Commission review on its own motion of initial determinations on

matters other than temporary relief.'' The Commission also made a

similar change in paragraph (a) of the final rule.

Section 210.46

Paragraph (a). Paragraph (a) of proposed rule 210.46 set forth a

new procedure for the processing of an ID on permanent relief (i.e.,

violation of section 337) and the accompanying RD on remedy and bonding

by the respondents. The ITCTLA suggested changing various aspects of

the new process. The ITCTLA's comments will not be discussed here, as

the Commission has determined not to adopt, at least at this time, the

procedure set forth in paragraph (a) of proposed rule 210.46 for

processing IDs on violation of section 337.\66\

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\66\The Commission has so far utilized the procedure set forth

in paragraph (a) proposed rule 210.46 in one investigation, and will

consider the experience gained in that case, when the Commission

determines at a later date whether paragraph (a) of final rule

210.46 should be modified to incorporate some or all of the

procedures set forth in the proposed rule.

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Paragraph (a) of final rule 210.46 provides that IDs on violation

of section 337 will be processed in the manner set forth in final rules

210.43 through 210.45.

The only provision that has been retained from paragraph (a) of

proposed rule 210.46 is the one stating that the Commission will issue

a notice setting deadlines for written submissions from the parties,

other Federal agencies, and interested members of the public on the

issues of remedy, the public interest, and bonding by the respondents.

In those submissions, the parties may assert their arguments concerning

the RD issued by the ALJ pursuant to final rule 210.42(a)(ii) on remedy

and bonding by respondents.

An additional issue raised by the ITCTLA concerned paragraph (a)(7)

of proposed rule 210.46. That paragraph indicated that the Commission

would issue a notice, on or before the statutory deadline in each

investigation, setting forth its determinations on all issues,

including whether the Commission had affirmed, modified, reversed, or

set aside the ID in whole or in part.

The ITCTLA commented that paragraph (a)(7) should be revised to

include a provision dealing with review of motions for summary

determination and motions to terminate an investigation. The ITCTLA

noted that as the interim and proposed rules are currently written, an

ALJ can issue an ID granting a motion for summary determination or a

motion to terminate, but the only time limit that the Commission has is

the deadline for concluding the investigation. The ITCTLA noted further

that as a consequence of that omission and a deadlocked vote, the

Commission did not rule on whether to reverse the ALJ's ID granting

summary determination in Inv. No. 337-TA-334, Certain Condensers, Parts

Thereof and Products Containing Same, Including Air Conditioners for

Automobiles, until seven months after the ID was issued. The ITCTLA

added that the Commission reversed the ALJ, and that the parties were

left with very little time to prepare for a hearing even though the

case was declared ``more complicated.''

To ensure that this does not happen again, the ITCTLA suggested

that the following text be added to the end of proposed rule

210.46(a)(7):

In cases in which the initial determination results from the

granting of a motion for summary determination under Rule 210.18 or

a motion to terminate under Rule 210.21, the Commission will issue a

notice stating whether the Commission has affirmed, modified,

reversed, or set aside the initial determination in whole or part on

or before the sixtieth day after the issuance of the ID.

The final rules do not contain a provision like that recommended by

the ITCTLA. There has been no recurrence of delays of the sort that

occurred in the Condensers investigation. The Commission thus does not

believe it necessary for the final rules to impose a 60-day deadline

for completing Commission review of IDs granting motions for summary

determination or termination of an investigation in whole or part.

Rules Concerning Judicial Review

Interim rule 210.71 states that any person adversely affected by a

final determination under section 337 can appeal to the Federal

Circuit. The Commission omitted a comparable provision from the final

rules on the grounds that it merely repeated what was set forth in the

statute.

The ITCTLA commented that the final rules should contain provisions

explaining when a determination is considered ``final'' and thus is

ripe for appeal. The ITCTLA also wants the Commission to adopt rules

stating that the period for filing an appeal begins to run for all

issues at the same time. In the ITCTLA's opinion, such rules are needed

in order to facilitate the Federal Circuit's consolidation of multiple

appeals arising out of the same investigation, to prevent the parties

from filing multiple notices of appeals because they are not certain

how to calculate the deadline for filing, and to eliminate the need for

the Federal Circuit ``to sort out the mess.''

The Commission believes that its promulgation of such rules would

be ultra vires, would encroach upon the jurisdiction of the Federal

Circuit, and would not have the desired effect since the Federal

Circuit would not be bound by them. The final rules for part 210 thus

do not contain provisions of the sort the ITCTLA advocated.

Section 210.50

Paragraph (a). Paragraph (a) of proposed rule 210.50 stated that

when the Commission is considering whether to grant some form of

permanent relief, the submissions from parties, other Federal agencies,

and interested members of the public concerning the issues of remedy,

the public interest, and bonding shall be filed by the deadlines

specified in ``the Commission notice issued pursuant to

Sec. 210.46(a)(5) of this part.'' Since the Commission has determined

not to adopt paragraph (a)(5) of proposed rule 210.46, the appropriate

cross-references is to paragraph (a) of that rule. A cross-reference to

``Sec. 210.46(a)'' accordingly appears in paragraph (a) of final rule

210.50.

Paragraph (a) of proposed rule 210.50 also provided that any

written submissions that the Commission receives from other Federal

agencies or interested members of the public concerning remedy, the

public interest, or bonding by respondents would be available for

public inspection in the Commission Secretary's Office. Unlike the

interim rule upon which it was based, paragraph (a) of proposed rule

210.50 did not require that such submissions be served on the parties

to the investigation.67 The preamble also noted that the parties

could contact the Commission staff to learn whether any non-party

submissions were expected or had been filed and that they could readily

obtain copies of the submission from the Secretary's Office.68

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\6\7As the preamble to proposed rule 210.50(a) explained, the

Commission thought it inappropriate to require another Federal

agency to serve copies of its submission on the parties unless the

agency also is a party to the proceeding (as, e.g., through

intervention). The Commission also thought that the burden of

serving parties should not be imposed on members of the public. See

57 FR at 52885.

\6\8See 57 FR at 52885.

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The ITCTLA commented that it is understandable that the Commission

wishes to minimize the burden on nonparty submitters. The ITCTLA also

speculated that eliminating the service requirement for such

submissions might encourage more nonparties to file them. The ITCTLA

also is of the opinion, however, that the Commission should be required

to notify each party when a nonparty submission arrives, so that the

parties will not be forced to unnecessarily monitor the Commission

docket.

The Commission notes that the ITCTLA's argument presupposes that

the parties (and/or their attorneys) would be entitled to see every

nonparty submission that is filed. That may not be the case, however.

The Commission occasionally receives written submissions from other

agencies (such as the U.S. Customs Service) which contain information

that is not to be disclosed to anyone other than the Commission and

Commission staff who are assigned to the investigation.69 The

Commission also sometimes receives submissions from interested persons

outside of the Federal government, who request that their submissions

not be shown to the parties.

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\6\9The Commission has received, for example, submissions from

the U.S. Customs Service, which Customs has explicitly requested not

to be made available to anyone other than the Commission and the

Commission staff (and personnel at other agencies who are involved

in Presidential review of Commission remedial orders).

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In addition, it would unduly burden the Docket Section staff of the

Secretary's Office if those persons were required to monitor all remedy

submissions and telephone each party when a nonparty submission is

received. 70

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\7\0Some section 337 investigations have large numbers of

respondents. There were 112 respondents, for example, in Inv. No.

337-TA-112, Certain Cube Puzzles (1983).

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Paragraph (a) of final rule 210.50 thus does not contain the

notification requirement that the ITCTLA requested.

Subpart H--Temporary Relief

Section 210.52

Proposed rule 210.52 concerned the filing and content of motions

for temporary relief.

Paragraph (a). Paragraph (a) of proposed rule 210.52 stated that a

complaint requesting temporary relief must be accompanied by a motion

for such relief containing information relevant to the four factors the

Commission considers in determining whether to grant temporary relief.

Paragraph (a) of proposed rule 210.52 also explained that in

determining whether to grant temporary relief, the Commission would

apply the standards the U.S. Court of Appeals for the Federal Circuit

uses in determining whether to affirm lower court decisions granting

preliminary injunctions and that the motion for temporary relief must

contain a detailed statement of specific facts bearing on the factors

the Federal Circuit would consider.

The ITCTLA commented that the proposed rule did not accurately

reflect what the test is, and that the final rule should indicate that

the motion for temporary relief must contain a detailed statement of

specific facts ``bearing on the factors that the Federal Circuit [has]

stated that a district court must consider in granting a preliminary

injunction.'' The Commission has made that change in paragraph (a) of

final rule 210.52.

The ITCTLA also commented that the Commission should rewrite the

discussion in the preamble of the proposed rules which deals with

articulation of the district court standards, because ambiguity is

introduced concerning the burden of proof.

The Commission sees no reason to rewrite the commentary in

question. Instead, the Commission recommends that, for purposes of

drafting or ascertaining the validity of arguments for motions for

temporary relief or responses thereto, parties and other interested

persons should examine the most recent Commission and Federal Circuit

decisions rather than the commentary to the proposed rules.

Paragraph (e). Paragraph (e) of proposed rule 210.52 described how

the Commission would be likely to compute the amount of the

complainant's bond (if one is required as a prerequisite to the

issuance of a temporary exclusion order or a temporary cease and desist

order. It provided a tiered bond schedule based on sales of the product

at issue and licensing royalties from the intellectual property right

at issue.

The ITCTLA commented that it was unclear whether the $10,000 bond

amount prescribed in the first tier of the schedule--i.e., for sales

and licensing royalties of less than $1 million--would apply if the

complainant has had no sales. The ITCTLA noted that this question could

arise if the domestic industry is in the process of being established

or if the complainant has been unable to build up sales because of the

respondents' presence in the market. The ITCTLA thus suggested that

``the scale should be modified to reflect the recognition that such

circumstances may exist.''

The Commission does not see the need to make the change the ITCTLA

has suggested. Proposed rule 210.52(e) explicitly stated that the table

was likely to be applied ``[i]n cases where a domestic industry exists

and domestic sales of the product in question have commenced and have

not been de minimis.'' This proviso precluded application of the

schedule in situations of the sort that the ITCTLA has described.

The Commission also sees no need to revise any other provision of

paragraph (e) of proposed rule 210.52 ``to reflect recognition that

[the circumstances the ITCTLA cited] may exist.'' That paragraph

expressly provided that ``[i]n cases in which the aforesaid schedule

would not be appropriate, the amount of the bond will be determined on

a case-by-case basis.'' Paragraph (e) also indicated that in such

cases, the motion for temporary relief should explain (1) why the

prescribed schedule is not appropriate, and (2) the theory the

complainant believes is appropriate for computing the amount of the

bond.

The Commission thus has adopted paragraph (e) of proposed rule

210.52 as a final rule without making the changes the ITCTLA requested.

Section 210.55

Proposed rule 210.55 discussed redaction of confidential business

information from the copies of the complaint and motion for temporary

relief which the complainant is required to serve on each proposed

respondent and the appropriate embassies.

Paragraph (b). Paragraph (b) of proposed rule 210.55 described the

action that the Commission would take upon determining that the

confidential designation had been abused in the preparation of

sanitized service copies of the complaint and motion for temporary

relief.

The ITCTLA commented that it was not clear whether paragraph (b) of

proposed rule 210.55 provides the complainant with the right of appeal

afforded under Commission rules 201.6(e) and (f).71 The ITCTLA

also expressed the opinion that the final rule should provide the

standard that the Commission intends to apply to determine whether

there have been over-designations.

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\7\1Commission rule 201.6(e) provides the procedure for

discretionary appeals to the Commission from the Secretary's denial

of confidential treatment for a submission or portion thereof, while

Commission rule 201.6(f) governs appeals from the Secretary's

granting of such treatment for a submission or portion thereof. See

19 CFR 201.6(e) and (f) (1993).

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The Commission did not intend for paragraph (b) of proposed rule

210.55 (or the corresponding paragraph of the final rule) to provide

the complainant with the right of appeal afforded under Commission

rules 201.6(e) and (f). The Commission does not think it necessary for

the final rule to provide a standard for determining whether the

confidential designation has been abused. Such determinations are more

appropriately made on a case-by-case basis.

Potential complainants should be aware that abuse of the

confidential designation and the consequent over-redaction of

confidential information from the service copies of a complaint and

motion for temporary relief may be sanctionable under final rule 210.4

depending on the facts.

Section 210.58

Proposed rule 210.58 indicates that the Commission will determine

whether to provisionally accept a motion for temporary relief and

institute an investigation in response to the complaint by a prescribed

deadline, unless exceptional circumstances preclude adherence to that

deadline.

The ITCTLA commented that it was not clear, under proposed rule

210.58 or proposed rule 210.10, what ``exceptional circumstances'' are.

The ITCTLA questioned whether a definition of that term is desirable.

The Commission sees no need to add a definition of that term to the

final rules. The fact that circumstances are ``exceptional'' strongly

suggests that they are not susceptible to definition. Final rule 210.58

thus does not differ substantively from the proposed rule.

Section 210.70

Proposed rule 210.70 addressed the possible forfeiture of a

complainant's temporary relief bond when the Commission determines,

after issuing a temporary remedial order conditioned on a bond, that

one or more respondents have not violated section 337.\72\

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\72\The forfeiture authority appears in the legislative history

of the statute, but does not appear in the statute itself. See H.R.

Rep. No. 576 at 635; 134 Cong. Rec. H2044 (Apr. 20, 1988); 133 Cong.

Rec. S10365 (July 21, 1987).

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Paragraph (c). Paragraph (c) of proposed rule 210.70 enumerated the

criteria that the presiding ALJ and the Commission will consider in

determining whether to grant a motion for forfeiture of a complainant's

temporary relief bond in whole or part. Paragraph (c)(2) indicated that

in determining whether to grant the motion, the ALJ and the Commission

will consider whether the complainant's filing of the motion for

temporary relief was justified under the standard set forth in proposed

rule 210.4(b).

In final rule 210.70, paragraph (c)(2) incorporates--

1. the standards of conduct articulated in paragraph (c) of

final rule 210.4, and

2. the guidelines in paragraph (d) of final rule 210.4 for

determining whether those standards were violated.

Hence, the approach that the ALJ and the Commission will take in

bond forfeiture proceedings will be the following:

1. The ALJ and the Commission will determine whether the

complainant or its attorneys, by presenting the motion for temporary

relief (or a disputed portion thereof) to the presiding ALJ and the

Commission (by signing, filing, submitting, or later advocating it),

wrongfully certified that to the best of their knowledge,

information, and belief, formed after an inquiry reasonable under

the circumstances--

(a) the motion for temporary relief was not being presented for

any improper purpose, such as to harass or to cause unnecessary

delay or needless increase in the cost of the investigation;

(b) the claims, defenses, and other legal contentions in the

motion were warranted by existing law or by a nonfrivolous argument

for the extension, modification, or reversal of existing law or the

establishment of new law;

(c) the allegations and other factual contentions had

evidentiary support or, if specifically so identified, were likely

to have evidentiary support after reasonable opportunity for further

investigation or discovery; and

(d) the denials of factual contentions were warranted on the

evidence or, if specifically so identified, were reasonably based on

a lack of information or belief.

2. The ALJ and the Commission will keep in mind that the

presentation of the motion for temporary relief (or the relevant

portion thereof) by the complainant and its attorneys need not have

been frivolous in its entirety in order for the ALJ or the

Commission to determine that the standard of conduct articulated

above was violated. If the ALJ or the Commission determines that any

aspect of the presentation was false, frivolous, misleading, or

otherwise in violation of the standards of conduct articulated

above, the complainant may be ordered to forfeit its temporary

relief bond, in whole or part.

3. In determining whether any of the prescribed standards of

conduct has been violated, the ALJ and the Commission will consider

whether the presentation of the motion for temporary relief (or the

disputed portion thereof) was objectively reasonable under the

circumstances.\73\

\73\Consideration 1 above incorporates the standards of conduct

set forth in paragraph (c) of final rule 210.4. Considerations 2 and

3 are based on the guidelines that appear in paragraph (d) of rule

210.4 for determining whether the 210.4(c) standards have been

violated.

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The Commission decided against drafting paragraph (c) of final rule

210.70 to incorporate the final rule 210.4(d) prohibition against

imposing monetary sanctions on a party by reason of misconduct by the

party's attorney in the presentation of legal arguments. In reaching a

decision not to incorporate that prohibition, the Commission notes that

adherence to the entire FRCP 11/final rule 210.4 standard is not

required.\74\

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\74\As interested persons may recall, the legislative history

providing authorization for the forfeiture of complainants'

temporary relief bonds did not direct the Commission to use a

particular FRCP as a model. The legislative history simply stated

that the forfeiture authority should operate in the same way that

respondents' temporary relief bonds ``revert'' to the U.S. Treasury

when the Commission determines that imported articles that were

permitted to enter the United States under a bond violate section

337. See H.R. Rep. No. 576 at 635; 134 Cong. Rec. H2044 (Apr. 20,

1988); 133 Cong. Rec. S10365 (July 21, 1987).

The Commission decided, on its own initiative, to use the FRCP

11 standard of conduct required by proposed rule 210.4(b) in

determining whether a complainant should be ordered to forfeit its

temporary relief bond in whole or part. The Commission agreed with

commenters on the interim rules who suggested that the adoption of a

single standard of conduct would eliminate the need to rationalize

the differences between the rule governing forfeiture of a

complainant's temporary relief bond as a sanction for abusing the

temporary relief process and the general rule concerning sanctions

for abuse of process. See 57 FR at 52860-52861 (the preamble to

proposed rule 210.70).

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The Commission notes further that forfeiture of a temporary relief

bond, in whole or in part, is a monetary sanction imposed on the

complainant--not its attorneys. If the amended FRCP 11/final rule 210.4

provisions had been made applicable in their entirety to temporary

relief bond forfeiture proceedings, the ALJ and the Commission would

have to take into account the conduct of the complainant's lawyers, as

well as that of the complainant, in determining whether the

presentation of the motion for temporary relief (or the relevant

portion thereof) violated any of the prescribed standards,\75\ and the

complainant would be exempt from forfeitures based on misconduct by its

attorneys in connection with the presentation of legal arguments.\76\

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\75\See amended FRCP 11(b) and final rule 210.4(c).

\76\See amended FRCP 11(c)(2)(B) and final rule 210.4(d). Both

provide that monetary sanctions may not be imposed against a

represented party for a violation of the requirement that ``to the

best of the person's knowledge, information, and belief, formed

after an inquiry reasonable under the circumstances, * * * the

claims, defenses, and other legal contentions therein are warranted

by existing law or by a nonfrivolous argument for the extension,

modification, or reversal of existing law or the establishment of

new law.''

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The Commission believes that a decision as to whether a complainant

must forfeit its temporary relief bond in whole or part should be made

on a case-by-case basis.\77\ In a case in which the ALJ or the

Commission finds misconduct by complainant's retained counsel, but

decides that the misconduct should not be held against the complainant

for purposes of bond forfeiture, separate proceedings can be initiated

against such counsel.\78\

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\77\There may be cases in which the complainant's in-house

counsel was equally--or primarily--responsible for the retained

counsel's misconduct in the presentation of legal arguments

concerning the motion for temporary relief. In such a case, it may

be appropriate for the complainant to be penalized for its in-house

counsel's actions, by having to forfeit all or a percentage of the

temporary relief bond (depending on the degree of the in-house

counsel's culpability and other relevant facts). On the other hand,

if a forfeiture inquiry uncovers misconduct by complainant's

retained counsel that did not involve the in-house counsel or any

other officer or employee of the complainant, the complainant's lack

of involvement may be a relevant equitable consideration under

paragraph (c)(5) of final rule 210.70, and thus may be grounds for

the Commission to either (a) decline to order forfeiture of the

bond, or (b) order forfeiture of a smaller percentage than the

Commission would have ordered if the complainant's in-house counsel

(or other officers or employees) had been involved.

\78\Specifically, the ALJ or the Commission can issue an order

directing the retained counsel to show cause why his conduct was not

an abuse of process warranting the payment of a penalty and/or a

nonmonetary sanction under final rule 210.4. See paragraphs

(d)(1)(B) and (d)(2) of final rule 210.4.

---------------------------------------------------------------------------

Paragraph (d). Paragraph (d) of proposed rule 210.70 stated that

motions to stay temporary relief bond forfeiture proceedings would not

be granted.

The ITCTLA commented that the final rule should provide for

automatic stay of all bond forfeitures. The ITCTLA explained that--

There are adequate safeguards throughout the rules to deter

meritless section 337 temporary relief requests, making an absolute

bar on staying forfeiture proceedings while an appeal is pending

irrelevant to this concern. There is little inconvenience to

respondents since they do not receive the bond amount, and the bond

amount is of little significance to the U.S. Treasury. Complainants

would prefer to keep the bond outstanding rather than paying the

bond amount, especially since the bond may ultimately be returned.

The current rule forces the complainant to incur additional legal

expenses to recover the forfeited bond after winning on appeal. This

is unnecessary and not an efficient allocation of the complainant's

and the government's resources. Providing for an automatic stay of

bond forfeiture would appear to better serve all parties.

The ITCTLA went on to say that if the Commission does not favor

automatic stays of bond forfeitures, final rule 210.70(d) should

provide for stays of forfeiture proceedings or the effective date of a

forfeiture order on a case-by-case basis. The ITCTLA believes that in a

case, for example, in which the complainant has based its appeal on a

legal issue over which the Federal Circuit has not ruled, it would be

appropriate for the Commission to stay forfeiture of the bond until the

Federal Circuit has ruled.

The Commission notes that the legislative history of the bond

forfeiture authority indicates that (1) the Commission's temporary

relief bond forfeitures are to be effected in the same manner that the

U.S. Customs Service collects liquidated damages on respondents'

section 337 bonds, and (2) the implementing Customs regulations (19 CFR

Part 172) do not provide for stays on the assessment of liquidated

damages pending the outcome of judicial review of the relevant

Commission determination. The Customs procedures have not changed in

that regard. The Commission accordingly has not drafted paragraph (d)

of final rule 210.70 to provide for stays of bond forfeitures.

Paragraph (d) of proposed rule 210.70 also provided that if the

complainant wins on appeal, the complainant can file a petition

requesting a refund of the amount of the bond forfeited or that the

Commission may determine to provide a refund sua sponte. The ITCTLA

commented there is no reason for the Government to retain the forfeited

bond amount and that a refund should be forthcoming as a matter of

procedure, and should not be dependent upon the complainant filing for

a refund or the Commission considering the issue sua sponte. The

Commission agrees and has drafted paragraph (d) of the final rule to

provide that if the complainant prevails on appeal, a refund will be

forthcoming as a matter of procedure (so that the complainant will not

have to file for a refund and the Commission will not have to consider

the issue sua sponte).

Subpart I--Enforcement Procedures and Advisory Opinions

Section 210.71

Proposed rule 210.71 discussed the gathering of information

relevant to the enforcement of Commission orders.

Paragraph (a). Paragraph (a) of proposed rule 210.71 authorized the

Commission to require persons to report facts that will aid the

Commission in determining whether a remedial or consent order is being

complied with and whether conditions that led to the order have

changed.

The ITCTLA objected to this rule in part, apparently because it

provided that the Commission can require information to aid the

Commission in policing compliance with exclusion orders, even though it

is the Customs Service and not the Commission that enforces such

orders. The Commission has drafted paragraph (a) of the final rule in a

manner which should not create the impression that exclusion orders are

enforced by the Commission and not by the Customs Service.

The ITCTLA also objected to paragraph (a) of the proposed rule on

the grounds that it provides, in effect, that the Commission may

require signatories to consent order agreements to make reports that

were not part of their agreement. The ITCTLA explained that under

proposed rule 210.21(c)(3), signatories to consent order agreements

must agree not to impede or challenge in court any Commission effort to

gather information pursuant to subpart I of part 210 (the proposed

rules governing enforcement procedures and advisory opinions). Thus, a

respondent who consents and stipulates to the entry of a consent order

is also stipulating to permitting the Commission to request any

information it deems pertinent to assisting it in determining whether

and to what extent the respondent is complying with the consent order.

The ITCTLA pointed out that a respondent could consent to a certain

form of consent order, but the Commission could subsequently add

reporting requirements to that form and issue the order in a form that

the respondent does not consent to, and the respondent will essentially

be without recourse, because it has waived the right to challenge the

order in court.

The ITCTLA did not specifically ask the Commission to revise the

relevant aspects of proposed rule 210.71, and the Commission does not

think that any change is warranted. The Commission expects parties who

execute consent order settlements to have read and thought through the

consequences and implications of final rules 210.21(c)(3) and 210.71(a)

before signing the agreement and asking the Commission to terminate the

investigation in whole or part on the basis of the agreed upon consent

order. A settling respondent who consents and stipulates to the entry

of a consent order thus should be aware that it is also stipulating to

permitting the Commission to require any additional compliance reports

the Commission deems necessary or appropriate to ascertain whether the

respondent is complying with the consent order.

The Commission notes also that because consent orders must be

enforced, if necessary, by the Commission, it is not unreasonable for

the Commission to impose its own reporting requirements so that it can

know if the consent order is being complied with by the party to whom

it is directed.

Section 210.74

Proposed rule 210.74 concerned the modification of reporting

requirements.

Paragraph (a). Paragraph (a) of proposed rule 210.74 governed

modification of reporting requirements for section 337 remedial orders.

The ITCTLA commented that paragraph (a) contained the same kind of

ambiguity that is present in proposed rule 210.71(a)--namely, it

indicates that the Commission can modify reporting requirements of

exclusion orders to aid the Commission in policing compliance with such

orders, even though it is the U.S. Customs Service and not the

Commission that enforces exclusion orders.

The Commission has drafted paragraph (a) of the final rule in a

manner which should not create the impression that exclusion orders are

enforced by the Commission and not by the Customs Service.

Section 210.75

Proposed rule 210.75 set out the procedure to be used in

proceedings to enforce exclusion orders, cease and desist orders, and

consent orders.

Paragraph (c). Paragraph (c) of proposed rule 210.75 stated that

the Commission need not give prior notice to any person before

initiating civil action to enforce a remedial or consent order.

The ITCTLA commented that the court in which the civil action is

initiated determines the type, timing, and sufficiency of the notice.

For that reason, the ITCTLA suggested that final rule be drafted to

state that the Commission need not give notice of its seeking judicial

enforcement of an order, except as required by the court in which the

civil action is initiated. The Commission has drafted paragraph (c) of

final rule 210.75 in that manner.

Distribution Table

As stated above, the organization of the final rules differs

significantly from that of the interim rules. To determine which final

rule is replacing a particular interim rule, consult the following

table.

------------------------------------------------------------------------

Interim rule Final rule

------------------------------------------------------------------------

210.1......................................... 210.1

210.2......................................... 210.2

210.4......................................... 210.3

210.5(a)...................................... 210.4(a)

210.5(b)...................................... 210.4(b)-(e)

(see also 210.25)

210.5(c)...................................... 210.4(f)

210.5(d)...................................... 210.4(g)

210.6......................................... 210.5(a) and (b)

210.5(c)

210.5(d)

210.7......................................... 210.6

210.8......................................... 210.7

210.10........................................ 210.8

210.11........................................ 210.9

210.12........................................ 210.10

210.13........................................ 210.11

210.20........................................ 210.12(a)-(g)

210.12(h)

210.21........................................ 210.13

210.22........................................ 210.14(a)-(c)

210.23........................................ 210.14(d)

210.24(a)-(d)................................. 210.15

210.24(e)(1).................................. 210.52

210.24(e)(2).................................. 210.53(a)

210.24(e)(3).................................. 210.53(b)

210.24(e)(4).................................. 210.54

210.24(e)(5).................................. 210.55

210.24(e)(6).................................. 210.56

210.24(e)(7).................................. 210.57

210.24(e)(8).................................. 210.58

210.24(e)(9).................................. 210.59

210.24(e)(10)................................. (see 210.58)

210.24(e)(11)................................. 210.60

210.24(e)(12)................................. 210.61

210.24(e)(13)................................. 210.62

210.24(e)(14)................................. 210.63

210.24(e)(15)................................. 210.64

210.24(e)(16)................................. 210.65

210.24(e)(17)................................. 210.66

210.24(e)(18)................................. 210.67

210.25........................................ 210.16 and 210.17

210.26........................................ 210.19

210.30 (a), (b), and (d)...................... 210.27 (a), (b), and (c)

210.30(c)..................................... (see 210.61)

210.27(d)

(see also 210.25)

210.31........................................ 210.28(a)-(h)

210.28(i)

210.32........................................ 210.29

210.33........................................ 210.30

210.34........................................ 210.31

210.35........................................ 210.32(a)-(e)

210.32(f)

210.32(g)

210.36........................................ 210.33 (a) and (b)

210.33(c)

(see also 210.25)

210.37........................................ 210.34(a)-(c)

(see also 210.25)

210.34(d)

210.40........................................ 210.35

210.41........................................ 210.36

210.42........................................ 210.37

210.43........................................ 210.38

210.44(a)-(d)................................. 210.39

210.44(e)..................................... 210.20

(see also 210.42(a)(2))

210.50........................................ 210.18

210.51 (a) and (b)............................ 210.21 (a) and (b)

210.51(c)\79\................................. 210.21(c)

210.51(d)..................................... 210.21(d) and 210.41

210.52........................................ 210.40

210.53(a)..................................... 210.42(a)(i)

210.53(b)..................................... 210.42(b)

210.53(c)-(i)................................. 210.42(c)-(i)

210.53(j)..................................... 210.42 (b) and

(c) and 210.70(c)

2210.54....................................... 210.43 and 210.46(a)

210.55........................................ 210.44

210.56........................................ 210.45

210.57........................................ 210.49

210.58(a)..................................... 210.50(a)

210.58(b) (1) and (2)......................... 210.50(b) (1) and (2)

210.58(b)(3).................................. 210.68(a)

210.58(b)(4).................................. 210.68(b)

210.58(b)(5).................................. 210.68(c)

210.58(b)(6).................................. 210.68(d)

210.58(b)(7).................................. 210.69(a)-(c)

210.58(b)(8).................................. 210.69(d)

210.58(c)(1).................................. 210.70 (a) and (c)

210.58(c)(2).................................. 210.70(b)

210.58(c)(3).................................. 210.70(e)

210.58(c)(4).................................. 210.70(c)

210.58(c)(5).................................. 210.70(d)

210.59(a)..................................... 210.22 (a) and

(b), 210.23, and

210.51 (a) and (c)

210.59(b)..................................... 210.22(c),

210.23, and

210.51(b) and (c)

210.60........................................ 210.47

210.61........................................ 210.48

210.70........................................ 210.24

210.71........................................ ........................

211.01........................................ (\80\)

211.10........................................ ........................

211.20........................................ 210.21(c)(1)

211.21........................................ 210.21(c)(2)

211.22........................................ 210.21(c)(3)

211.50 (a) and (b)............................ (\81\)

211.50(c)..................................... ........................

211.51........................................ 210.71

211.52........................................ 210.72

211.53........................................ 210.73

211.54........................................ 210.79

211.55........................................ 211.74

211.56........................................ 210.75

211.57........................................ 210.76

211.58........................................ 210.77

211.59........................................ 210.78

------------------------------------------------------------------------

\79\See also the entries for interim rules 211.20 through 211.22.

\80\But see final rule 210.1 and the definition in final rule 210.3 of

the term ``related proceeding.''

\81\Id.

Derivation Table

To determine which interim rule is the basis, in whole or part, for

a particular final rule, consult the following table:

------------------------------------------------------------------------

Final rule Interim rule

------------------------------------------------------------------------

210.1......................................... 210.1

210.2......................................... 210.2

210.3......................................... 210.4

210.4(a)...................................... 210.5(a)

210.4(b)-(e).................................. 210.5(b)

210.4(f)...................................... 210.5(c)

210.4(g)...................................... 210.5(d)

210.5 (a) and (b)............................. 210.6

210.5(c)...................................... ........................

210.5(d)...................................... ........................

210.6......................................... 210.7

210.7......................................... 210.8

210.8......................................... 210.10

210.9......................................... 210.11

210.10........................................ 210.12

210.11........................................ 210.13

210.12(a)-(g)................................. 210.20

210.12(h)..................................... ........................

210.13........................................ 210.21

210.14(a)-(c)................................. 210.22

210.14(d)..................................... 210.23

210.15........................................ 210.24 (a)-(d)

210.16........................................ 210.25

210.17........................................ 210.25

210.18........................................ 210.50

210.19........................................ 210.26

210.2

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