On August 17th, U.S. Customs and Border Protection (CBP) made public several documents related to investigations undertaken under the Enforce and Protect Act of 2015, Section 421 (EAPA). The public release of documents was accompanied by a press release heralding the agency’s exercise of authority to launch multiple investigations of illegal Chinese imports.
The substance of the documents released supports CBP’s claim that the agency has prioritized antidumping and countervailing duty enforcement. Three different products – wire hangers, wooden bedroom furniture, and diamond sawblades – were involved in the EAPA proceedings. The investigations led CBP officials to visit purported manufacturing sites in Thailand (diamond sawblades and wire hangers) and Malaysia (wire hangers) as well as importer facilities in the United States (wooden bedroom furniture). CBP also documented successful efforts to coordinate with other federal agencies to obtain information vital to its investigations.
In addition, CBP’s releases provide a small window into how the agency will exercise discretion in EAPA proceedings. Currently, CBP operates EAPA proceedings under an Interim Final Rule (19 C.F.R. § 165). There is no specific timeline for the adoption of a Final Rule. While final regulations continue to be under consideration, an understanding of how CBP will utilize discretion may help to identify where additional guidance or clarification may be necessary in any Final Rule.
At least four aspects of CBP’s releases are noteworthy in terms of the agency’s exercise of discretion.
First, CBP will release information regarding EAPA investigations at its convenience. Amongst the documents released on August 17th were two letters regarding the initiation of an investigation of evasion of the antidumping duty order on diamond sawblades from the People’s Republic of China and the adoption of interim measures following initiation. This investigation, EAPA Case Number 7184, was not mentioned in the August 17th CBP press release and the letters were each dated June 27, 2017, meaning that the public issuance of the letters came nearly two months after they were sent. The delay in release occurred despite the fact that the domestic industry group that filed the original allegation, the Diamond Sawblades Manufacturers Coalition, had already issued a press release on June 28, 2017 regarding the interim measures adopted. The Interim Final Rule imposes no deadlines – or, indeed, no publication requirement – on CBP regarding EAPA actions and determinations. Further, the agency has responded to criticism regarding the narrow definition given to “parties to the investigation” in the Interim Final Rule (i.e., limiting the universe of “parties” to the alleging entity and the alleged evader) by observing that other parties that have an interest in any proceeding may submit relevant information to CBP during the investigation. However, the possibility of participating in this manner only exists if the agency publicizes the initiation of an investigation and adoption of interim measures on its website in a timely fashion. In the absence of publication or where publication has been significantly delayed, there is no meaningful ability for other parties outside of the “parties to the investigation” to offer relevant information. In the diamond sawblades case, CBP did not publish notice of the adoption of interim measures until 148 days after the initiation date of the investigation (March 22, 2017), roughly halfway through the 300 days allotted for an EAPA investigation.
Second, CBP will, at its discretion, diverge from the deadlines established in the Trade Facilitation and Trade Enforcement Act of 2015 (P.L. 114-125) for EAPA proceedings. As explained in the public releases regarding the diamond sawblades investigation, EAPA Case Number 7184, CBP initiated its investigation on March 22, 2017. The statute provides that a determination as to whether to adopt interim measures is to be made within ninety (90) days after the date of initiation. In the diamond sawblades investigation, this meant that the deadline for interim measures was June 20, 2017. However, CBP asserted that in the absence of a site visit to the purported manufacturer’s facility in Thailand, the agency “was unable to verify discrepancies on the record” and, as such, could not “make a determination as to whether there was a reasonable suspicion that the importer entered covered merchandise into the customs territory of the United States through evasion, within the time constraints specified in 19 U.S.C. § 1517(e).” CBP was able to conduct a site visit on June 21st and made its determination regarding interim measures on June 27th. However, having now exercised discretion to take action outside the deadlines established under the statute, it is unclear what limitations – if any – the agency will impose on its ability to do so in the future under different fact patterns. The Interim Final Rule does not contemplate or explicitly authorize extensions of the deadline for determinations on interim measures in any circumstances.
Third, CBP will expand the scope of an EAPA investigation beyond just those entries made within one year before receipt of an allegation. The Interim Final Rule adopted a provision limiting the import entries subject to an EAPA investigation to “those entries of allegedly covered merchandise made within one year before the receipt of an allegation under § 165.11 or of a request for an investigation under § 165.14.” But the Interim Final Rule also provides that CBP could, “at its discretion . . . investigate other entries of covered merchandise.” In the EAPA investigation involving wooden bedroom furniture, EAPA Case Number 7189, CBP observed that the allegation was received on April 18, 2017. However, because CBP was already – of its own volition – reviewing the entries of the importer alleged to have engaged in evasion, the agency exercised discretion to extend the scope of the investigation to cover all of the importer’s import entries in calendar year 2016. CBP provided no further explanation as to why the expansion of the scope was appropriate in this circumstance and has not explained why, with regard to its other EAPA proceedings, the scope of the investigation has not been extended even where the agency discovers that imports made more than one year before the receipt of an allegation were entered under circumstances similar or identical to entries made within one year of receipt. Nevertheless, the wooden bedroom furniture case demonstrates that the agency will exercise discretion to expand the scope of entries subject to an EAPA investigation.
Fourth, and perhaps most importantly, in the absence of an administrative protective order system that would provide “parties to the investigation” with access to confidential information placed on the record of an EAPA proceeding, CBP will obtain and utilize confidential information accumulated in other agency proceedings. In the agency’s August 14, 2017 letter providing notification of a final affirmative determination as to evasion regarding Chinese wire hangers transshipped through Thailand to the United States, EAPA Case Number 15135/7175, CBP reported that it had “collaborated” with the U.S. Department of Commerce (Commerce) to obtain the administrative record of Commerce’s new shipper review, under the antidumping duty order of steel wire garment hangers from the People’s Republic of China, of Hangzhou Yingqing Material Co., Ltd. and Hangzhou Qingqing Mechanical Co., Ltd. CBP does not explicitly state that the administrative record obtained included business proprietary information submitted in that new shipper review under administrative protective order, but the agency explains that “[a]s a result” of obtaining that administrative record it was able to make a determination regarding the shareholders of the purported Thai exporter and does not disclose what this determination was. This implies that CBP was able to review proprietary information from a Commerce administrative proceeding to which the alleged evader (the importer) was not a party and utilize that information in its investigation. Further, in the notice of initiation of investigations and the adoption of interim measures regarding a series of allegations involving Chinese wire hangers alleged to have been transshipped through Malaysia, EAPA Cons. Case Number 7191, CBP reported that it had taken “payment information and other documentation” submitted by the importer in EAPA Case Number 15135/7175 and “placed this information on the record of this investigation because at least one importer in the instant investigation is also connected with R&X Industries.” The ability to incorporate proprietary information from the record of Commerce proceedings as well as other EAPA proceedings into the administrative record of a separate EAPA investigation may exist because CBP is under no obligation to disclose such information to private parties under an administrative protective order. If an administrative protective order system were to be adopted, CBP would likely be required to establish a justification for the release of confidential information belonging to other parties that are not subject to that investigation.