U.S. Customs and Border Protection (CBP) has long had the authority to investigate and take enforcement actions against evasion of antidumping (AD) and countervailing duty (CVD) orders, including acting on tips received from interested parties.

CBP’s evasion investigations, however, were a “black box” in that parties making allegations or providing CBP with information were not permitted to participate in investigations and were not notified of the existence or outcome of such investigations.

Further, there were no deadlines or formal procedures for CBP to adhere to in investigating AD/CVD evasion, and CBP’s investigations, or lack thereof, were not subject to judicial review.

This has changed with the enactment of the Trade Facilitation and Trade Enforcement Act of 2015 (see Crowell’s Client Alert here) and the resulting promulgation of regulations establishing a formal process for investigations into possible AD/CVD evasion.

On August 22, the Treasury Department and CBP published in the Federal Register interim regulations with a request for comments on new AD/CVD evasion investigation regulations. The interim regulations were effective as of August 22, 2016, but both Treasury and CBP will consider comments received before the October 21, 2016 deadline before issuing the final regulations.

Under the new law and its ensuing regulations, private parties are permitted to make AD/CVD evasion allegations and participate in CBP’s evasion investigations. Further, CBP is required to provide certain notice and comply with new statutory deadlines for AD/CVD evasion investigations:

  • Within 15 days of receiving an AD/CVD evasion allegation from other federal agencies or “interested parties”—U.S. importers, producers, or wholesalers; foreign producers or exporters; or unions and trade associations—CBP must initiate an investigation if the allegation reasonably suggests that evasion is occurring. Interested parties will be informed within five days if an investigation is not initiated.
  • Within 90 days of initiation, CBP must determine if there is a reasonable suspicion of evasion. If so, the agency must suspend liquidation of the subject entries subsequent to the initiation, extend liquidation periods for entries imported prior to the initiation, and possibly require cash deposits or single entry bonds.
  • Within 200 days of initiation, parties to an investigation may voluntarily provide factual information in order to support, negate, or clarify the evasion allegation. Other parties may submit rebuttal factual information within 10 days of the submission of factual information by another party.
  • Within 230 days of initiation, parties may submit written arguments regarding the evasion determination based on facts on the administrative record. The party submitting arguments must serve a public version to the other parties, who can then respond within 15 days.
  • Within 300 days of the initiation (with up to 60 additional days for complicated cases), CBP must make a final evasion determination.
  • If CBP finds AD/CVD evasion occurred, interested parties will be notified within five days.
  • The remedy will be focused on collecting duties that importers failed to pay by:
    • Identifying the applicable duty assessment rate or cash deposit rate.
    • Requiring cash deposits or single entry bonds.
    • Requesting the U.S. Immigration and Customs Enforcement (ICE) section of the U.S. Department of Homeland Security (DHS) pursue a criminal or civil investigation.
    • Other enforcement measures as CBP determines appropriate.
  • If an interested party disagrees with CBP’s evasion determination, that party may request an internal de novo review by the CBP Commissioner. After the de novo review, the party may appeal to the U.S. Court of International Trade (CIT) which will determine whether CBP followed the proper procedures of the evasion investigation and review whether CBP’s investigation complied with statutory and regulatory procedures and whether its determination was arbitrary, capricious, or an abuse of discretion.

Though the new AD/CVD evasion law and regulations create a formal system for CBP’s evasion investigations, adding a degree of much needed transparency and accountability, they only shed some light on how CBP investigates evasion allegations. For example, many have raised the following criticisms regarding the statutory system itself and interim regulations for falling short on transparency, meaningful opportunities for participation, and accountability:

  • It is not clear what CBP will share with the public and parties involved regarding the information that forms the basis for CBP’s determination. Neither the statute nor the interim regulations provide a system similar to the AD/CVD proceedings at the U.S. Department of Commerce (DOC) and U.S. International Trade Commission (ITC). In both agencies, confidential business information submitted is protected from public release, but counsel for the parties are provided access to such information to review, allowing for rebuttal.
  • CBP claims that there is no judicial review of any decision to not initiate an investigation.
  • Under both the statute and the regulations, judicial review is limited to whether CBP followed the enumerated deadlines and procedures, i.e., not whether CBP’s evasion decision is supported by “substantial evidence.”

Further, there is still a significant loophole remaining on the new statutory deadline for CBP, namely that CBP may refer an evasion allegation to DOC for a scope ruling. During that time, CBP’s statutory deadlines for evasion investigations are tolled, and DOC does not have statutory deadlines for scope rulings (and typically can take well over a year to issue a final scope ruling).

Thus, though the new law and regulations governing AD/CVD evasion investigations have made improvements in bringing the “black box” of the past into the light, more work is required for a truly transparent and accountable process.