[Federal Register Volume 85, Number 157 (Thursday, August 13, 2020)]
[Proposed Rules]
[Pages 49472-49504]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15283]



[[Page 49471]]

Vol. 85

Thursday,

No. 157

August 13, 2020

Part III





Department of Commerce





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





International Trade Administration





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





19 CFR Part 351





Regulations To Improve Administration and Enforcement of Antidumping 
and Countervailing Duty Laws; Proposed Rule

  Federal Register / Vol. 85, No. 157 / Thursday, August 13, 2020 / 
Proposed Rules  

[[Page 49472]]


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

DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 200626-0170]
RIN 0625-AB10


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

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

ACTION: Proposed rule; request for comments.

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

SUMMARY: Pursuant to its authority under Title VII of the Tariff Act of 
1930, as amended (the Act), the Department of Commerce (Commerce) 
proposes to modify its regulations under Part 351 of Title 19 to 
improve administration and enforcement of the antidumping duty (AD) and 
countervailing duty (CVD) laws. Specifically, Commerce proposes to 
modify its regulation concerning the time for submission of comments 
pertaining to industry support in AD and CVD proceedings; to modify its 
regulation regarding new shipper reviews; to modify its regulation 
concerning scope matters in AD and CVD proceedings; to promulgate a new 
regulation concerning circumvention of AD and CVD orders; to promulgate 
a new regulation concerning covered merchandise referrals received from 
U.S. Customs and Border Protection (CBP); to promulgate a new 
regulation pertaining to Commerce requests for certifications from 
interested parties to establish whether merchandise is subject to an AD 
or CVD order; and to modify its regulation regarding importer 
reimbursement certifications filed with CBP. Finally, Commerce proposes 
to modify its regulations regarding letters of appearance in AD and CVD 
proceedings and importer filing requirements for access to business 
proprietary information. Commerce is seeking public comments on this 
proposed rule.

DATES: To be assured of consideration, written comments must be 
received no later than September 14, 2020.

ADDRESSES: Submit comments through the Federal eRulemaking Portal at 
http://www.Regulations.gov, Docket No. ITA-2020-0001. Comments may also 
be submitted by mail or hand delivery/courier, addressed to Jeffrey I. 
Kessler, Assistant Secretary for Enforcement and Compliance, Room 1870, 
Department of Commerce, 1401 Constitution Ave. NW, Washington, DC 
20230.
    Commerce will consider all comments received before the close of 
the comment period. All comments responding to this document will be a 
matter of public record and will generally be available on the Federal 
eRulemaking Portal at http://www.Regulations.gov. Commerce will not 
accept comments accompanied by a request that part or all of the 
material be treated confidentially because of its business proprietary 
nature or for any other reason. Therefore, do not submit confidential 
business information or otherwise sensitive or protected information.
    Any questions concerning the process for submitting comments should 
be submitted to Enforcement & Compliance (E&C) Communications office at 
(202) 482-0063 or [email protected].

FOR FURTHER INFORMATION CONTACT: Scott McBride at (202) 482-6292; David 
Mason at (202) 482-5051; or Jessica Link at (202) 482-1411.

SUPPLEMENTARY INFORMATION: 

General Background

    Title VII of the Act vests Commerce with authority to administer 
the AD/CVD laws, known as trade remedies. In particular, section 731 of 
the Act directs Commerce to impose an AD order on merchandise entering 
the United States when it determines that a producer or exporter is 
selling a class or kind of foreign merchandise into the United States 
at less than fair value (i.e., dumping), and material injury or threat 
of material injury to that industry in the United States is found by 
the International Trade Commission (ITC). Section 701 of the Act 
directs Commerce to impose a CVD order when it determines that a 
government of a country or any public entity within the territory of a 
country is providing, directly or indirectly, a countervailable subsidy 
with respect to the manufacture, production, or export of a class or 
kind of merchandise that is imported into the United States, and 
material injury or threat of material injury to that industry in the 
United States is found by the ITC.\1\
---------------------------------------------------------------------------

    \1\ A countervailable subsidy is further defined under section 
771(5)(B) of the Act as existing when: A government or any public 
entity within the territory of a country provides a financial 
contribution; provides any form of income or price support; or makes 
a payment to a funding mechanism to provide a financial 
contribution, or entrusts or directs a private entity to make a 
financial contribution, if providing the contribution would normally 
be vested in the government and the practice does not differ in 
substance from practices normally followed by governments; and a 
benefit is thereby conferred. To be countervailable, a subsidy must 
be specific within the meaning of section 771(5A) of the Act.
---------------------------------------------------------------------------

    The purpose of the regulatory changes proposed in this rulemaking 
is to strengthen the administration and enforcement of AD/CVD laws, 
make such administration and enforcement more efficient, and create new 
enforcement tools for Commerce to address circumvention and evasion of 
trade remedies. If adopted, these changes would equip Commerce to 
better fulfill the Congressional intent behind the AD/CVD laws--namely, 
to protect U.S. companies, workers, farmers, and ranchers from the 
injurious effects of unfairly traded imports. In addition, if adopted, 
these changes would promote the Administration's objective to enforce 
the AD/CVD laws rigorously, and to aggressively pursue parties that 
seek to skirt them. Moreover, the proposed regulations facilitate a 
stronger and more efficient administration of the AD and CVD laws in 
the context of Commerce's proceedings. The proposed changes are 
summarized briefly here, and discussed further below:
     Modify section 351.203 to provide for the establishment of 
a deadline by which parties may file comments on industry support. At 
present, comments on industry support may be filed up to and including 
the scheduled date of an initiation determination, leaving Commerce 
little or no time to consider fully such comments for purposes of 
determining whether the petition has sufficient industry support. 
Therefore, such modifications are necessary to enhance Commerce's 
ability to consider and act upon such comments in a timely manner.
     Revise numerous provisions to section 351.214 concerning 
new shipper reviews to address abuse of those procedures and ensure 
that the sales to be reviewed are, in fact, bona fide sales. These 
changes are necessary to conform the regulation to recent statutory 
changes \2\ and to ensure Commerce expends its limited resources on new 
shipper reviews only where warranted.
---------------------------------------------------------------------------

    \2\ Trade Facilitation and Trade Enforcement Act of 2015, Public 
Law 114-125, 130 Stat. 122, 155 (2016).
---------------------------------------------------------------------------

     Revise numerous provisions to section 351.225 concerning 
scope inquiries by adopting new procedures to preserve resources, 
expedite deadlines, and remove unnecessary and burdensome notice and 
service requirements. These revisions also clarify and codify the 
substantive basis for Commerce's scope rulings pertaining to country of 
origin, scope language interpretation, and ``mixed-media''

[[Page 49473]]

products, which incorporate subject merchandise in some form, in light 
of past practice and various court decisions. These revisions also 
ensure that AD/CVD duties are appropriately applied to products 
determined to be subject to the scope of the order.
     Adopt new section 351.226 concerning circumvention 
inquiries, which largely mirrors the proposed scope procedures. These 
provisions also clarify Commerce's authority to self-initiate 
circumvention inquiries and apply circumvention determinations on a 
``country-wide'' basis.
     Adopt new section 351.227 concerning ``covered merchandise 
referrals'' from CBP under section 517 of the Act, which largely mirror 
the proposed scope and circumvention procedures and allow Commerce 
maximum flexibility to further develop its procedures and practice as 
it gains more experience in this new area of the law.
     Adopt new section 351.228, which is specifically targeted 
at improving enforcement of AD and CVD orders and ensuring the 
effectiveness of those orders. Under new section 351.228, Commerce may 
determine to impose a certification requirement on an importer or 
another interested party to further ensure that entries of merchandise 
subject to an AD/CVD order are appropriately classified as subject 
merchandise.
     Modify section 351.402 regarding importer certifications 
for the payment or reimbursement of AD/CVD duties on entries subject to 
AD orders to account for updated procedures.
     Adopt necessary changes, consistent with certain 
substantive proposed rules discussed above, to two procedural 
provisions: Section 351.103(d)(1) pertaining to letters of appearance 
and public service lists, and section 351.305(d) pertaining to importer 
filing requirements for access to business proprietary information in 
Commerce's proceedings.

Explanation of the Proposed Rules

Comment Period on Industry Support Prior to Initiation Determination--
Section 351.203

    Once an AD petition under section 732(b) of the Act or a CVD 
petition under section 702(b) is filed, the statute provides Commerce 
with 20 days in which to determine whether the elements necessary for 
initiation of an investigation have been satisfied, including the 
requirement to demonstrate industry support. In exceptional 
circumstances, Commerce may extend the 20-day period to a maximum of 40 
days solely for purposes of determining industry support. At present, 
comments on industry support may be filed up to and including the 
scheduled date of an initiation determination, leaving Commerce little 
or no time to consider fully such comments for purposes of determining 
whether the petition has sufficient industry support. To address this, 
Commerce proposes to modify section 351.203 to provide for the 
establishment of a deadline for comments no later than five business 
days before the scheduled date of initiation; and rebuttal comments no 
later than two days thereafter.

New Shipper Reviews--Section 351.214

    Commerce proposes to modify its regulation pertaining to new 
shipper reviews under section 751(a)(2)(B) of the Act and section 
351.214. Section 751(a)(2)(B) of the Act provides a procedure by which 
exporters or producers who did not export the product during the 
original AD or CVD investigation can obtain their own individual 
dumping margin or countervailing duty rate on an accelerated basis 
(referred to as a ``new shipper review''). This provision was enacted 
in the Uruguay Round Agreements Act (URAA) in 1994,\3\ and Commerce 
promulgated its accompanying new shipper review regulation, section 
351.214, in 1997.\4\ This regulation provides the rules regarding 
requests for new shipper reviews and procedures for conducting such 
reviews, and is largely unchanged since 1997. Under this provision, 
Commerce conducts a new shipper review to establish an individual 
weighted-average dumping margin or countervailable subsidy rate if it 
receives a properly documented request for review.
---------------------------------------------------------------------------

    \3\ See Uruguay Round Agreements Act, Statement of 
Administrative Action, H.R. Doc. No. 103-316, vol. 1, at 816 (1994) 
(SAA) (``Article 9.5 {of the Anti-Dumping Agreement{time}  
establishes special procedures for imposing antidumping duties on 
exporters or producers who did not export the product to the 
importing country during the original period of investigation (so-
called `new shippers').'').
    \4\ See Antidumping Duties; Countervailing Duties, Proposed 
Rule, 61 FR 7308, 7317-18 (Feb. 27, 1996) (1996 Proposed Rule) 
(discussing the proposed new shipper review regulation); Antidumping 
Duties; Countervailing Duties, Final Rule, 62 FR 27296, 27318-19 
(May 19, 1997) (1997 Final Rule) (discussing the finalized new 
shipper review regulation).
---------------------------------------------------------------------------

    In 2016, the Trade Facilitation and Trade Enforcement Act of 2015 
was signed into law, which contains Title IV--Prevention of Evasion of 
Antidumping and Countervailing Duty Orders (short title ``Enforce and 
Protect Act of 2015'' or ``EAPA'').\5\ Section 433 of EAPA (entitled 
``Addressing Circumvention by New Shippers'') made two important 
revisions to the new shipper review procedures under section 
751(a)(2)(B) of the Act.
---------------------------------------------------------------------------

    \5\ Public Law 114-125, 130 Stat. 122, 155 (2016).
---------------------------------------------------------------------------

    First, in legislative history explaining these amendments, Congress 
expressed concern regarding the abuse of new shipper review procedures 
to avoid AD/CVD duties.\6\ One area of abuse in particular involved the 
ability of an importer of a new shipper's merchandise to post a bond or 
security in lieu of cash deposits for entries of that merchandise for 
the duration of the new shipper review.\7\ Therefore, to prevent such 
abuse of these procedures, section 433 of EAPA removed the ability for 
importers to post AD/CVD-specific bonds or security in lieu of AD/CVD 
cash deposits by striking this provision from section 751(a)(2)(B) of 
the Act.\8\
---------------------------------------------------------------------------

    \6\ See H.R. Rep. No. 114-114, at 89 (2015) (``The Committee is 
concerned that the ability of new exporters and producers to obtain 
their own individual weighted average dumping margins or individual 
countervailing duty rates from the Department of Commerce on an 
expedited basis (known as `new shipper reviews') has been abused to 
avoid antidumping and countervailing duties.'')
    \7\ Id. (``One area of abuse is taking advantage of the option 
to post a bond or security, rather than the normally required cash 
deposit, while the Department of Commerce conducts a new shipper 
review. This allows an importer to bring in large quantities of 
dumped or subsidized merchandise from the exporter or producer under 
review without having to provide in cash the full amount of 
estimated duties that could be owed on those imports. Having to put 
up less capital makes it easier for unscrupulous importers to enter 
into schemes to bring in dumped and subsidized merchandise with the 
intent of disappearing or otherwise not being available to pay the 
antidumping and countervailing duties owed on the imports. This 
loophole would be closed by requiring importers of merchandise from 
a producer or exporter in a new shipper review to provide a cash 
deposit of estimated duties.'')
    \8\ See Sec.  433, 130 Stat. at 171; see also H.R. Rep No. 114-
376, at 192 (2015) (Conf. Rep.).
---------------------------------------------------------------------------

    Second, section 433 added a provision that the individual dumping 
margin or countervailing duty rate determined for a new shipper must be 
based on bona fide sales in the United States, and codified the factors 
that Commerce has historically used to determine whether a sale is bona 
fide.\9\ In explaining this proposed change, Congress identified abuse 
of new shipper review procedures where a new shipper ``enter{s{time}  
into a scheme to structure a few sales to show little or no dumping or 
subsidization when those sales are reviewed . . . resulting in a low or 
zero antidumping or countervailing duty rate for that

[[Page 49474]]

producer or exporter.'' \10\ As a result of such scheme: ``An importer 
could then bring in that producer or exporter's merchandise at highly 
dumped or subsidized prices but with little or no cash deposit. The 
problem is further exacerbated if the importer disappears or otherwise 
becomes unavailable to pay the duties owed and U.S. Customs and Border 
Protection (CBP) has little or no cash deposit against which to recover 
the owed duties.'' \11\ Accordingly, to protect against such 
schemes,\12\ section 433 added section 751(a)(2)(B)(iv) to the Act, 
providing that, in determining whether the sales in the United States 
of a new shipper made during the period covered by the review is bona 
fide, Commerce shall consider with respect to such sales: Pricing, 
commercial quantities, timing, expenses, resale at profit, and arm's-
length basis. Additionally, under section 751(a)(2)(B)(iv), Commerce 
may consider any other factor which it determines to be relevant as to 
whether such sales are, or are not, likely to be typical of those the 
new shipper will make after completion of the review.
---------------------------------------------------------------------------

    \9\ See Sec.  433, 130 Stat. at 171; see also H.R. Rep. No. 114-
376 at 192-193.
    \10\ H.R. Rep. No. 114-114 at 89.
    \11\ Id.
    \12\ Id. (``This provision would prevent such arrangements by 
requiring that the U.S. sales in a new shipper review be bona fide 
sales and setting out criteria for identifying bona fide sales, 
reflecting the Department of Commerce's current regulations and 
practices in this area.'')
---------------------------------------------------------------------------

    As a result of the above, Commerce is making conforming amendments 
to section 351.214 discussed below. The modifications to section 
351.214 would clarify the circumstances under which Commerce will 
expend the resources required to reach a determination in a review 
conducted under section 751(a)(2)(B) of the Act, among other issues.
    Revised paragraph (a) would update the introduction to section 
351.214 by including reference to current section 751(a)(2)(B) of the 
Act and the statutory requirement for bona fide sales in a new shipper 
review. Consistent with the revised statutory language in section 
751(a)(2)(B)(iv) of the Act, proposed revisions to paragraph (b)(1), 
pertaining to requests for new shipper reviews, provide that, in 
requesting a new shipper review, an exporter or producer must not only 
satisfy the export or sale requirement but must also demonstrate the 
existence of a bona fide sale. With regard to existing section 
351.214(b), Commerce explained in the 1996 Proposed Rule that it was 
requiring certain certifications from the requestor ``demonstrating 
that the party is a bona fide new shipper.'' \13\ In doing so, Commerce 
explained:
---------------------------------------------------------------------------

    \13\ See 1996 Proposed Rule, 61 FR at 7317-18.

    The purpose of these certifications is to ensure that new 
shipper status is not achieved through mere restructuring of 
corporate organizations or channels of distribution. In accordance 
with the SAA, at 875, this provision also makes clear that parties 
will not be granted new shipper status merely because they were not 
individually examined during the investigation.\14\
---------------------------------------------------------------------------

    \14\ See 1997 Final Rule, 62 FR at 27318-19.

    In responding to comments in the 1997 Final Rule, Commerce noted 
that it had received one request that Commerce ``clarify that a person 
can request a new shipper review as long as there is a bona fide sale 
of subject merchandise to the United States, even if that merchandise 
has not yet been shipped to or entered the United States.'' \15\ 
Although Commerce did not address the ``bona fide'' nature of such 
sale, Commerce explained:
---------------------------------------------------------------------------

    \15\ Id., 62 FR at 27319.

    The initiation of new shipper reviews and the issuance of 
questionnaires requires an expenditure of administrative resources 
by the Department that is not inconsiderable when cumulated across 
all AD/CVD proceedings. In our view, the Department should not 
expend these resources unless there is a reasonable likelihood that 
there ultimately will be a transaction for the Department to review; 
namely, as discussed below, an entry and sale to an unaffiliated 
purchaser.\16\
---------------------------------------------------------------------------

    \16\ Id.

    Consistent with this earlier discussion, and in light of the 
concerns related to circumvention and abuse of new shipper review 
procedures expressed by Congress in enacting section 751(a)(2)(B)(iv) 
of the Act, Commerce proposes to expend its resources in conducting a 
new shipper review only where there is a reasonable likelihood that 
there ultimately will be a bona fide sale for Commerce to review. Thus, 
proposed revisions to paragraph (b)(1) provide that a producer or 
exportermay request a new shipper review if it can demonstrate the 
existence of a bona fide sale. Commerce expects that a producer or 
exporter could make such a demonstration by complying with the proposed 
requirements in proposed paragraph (b)(2)(iv), and proposed revisions 
to paragraph (b)(2)(v).
    Under proposed paragraph (b)(2)(iv), a request for a new shipper 
review must contain (1) a certification from the unaffiliated customer 
in the United States that it did not purchase the subject merchandise 
from the producer or exporter during the period of investigation, and 
(2) a certification from the unaffiliated customer in the United States 
that it will provide necessary information requested by Commerce 
regarding its purchase of subject merchandise. With respect to (1), 
this language was previously discussed in the 1997 Final Rule, among a 
number of other suggestions which were aimed at discouraging meritless 
requests for new shipper reviews.\17\ At the time, Commerce was 
beginning to develop its practice with respect to new shipper reviews, 
which was a new procedure adopted in the URAA in 1994.\18\ In light of 
this limited experience, Commerce declined to adopt a proposal to 
require additional documentation from an exporter claiming to be a new 
shipper, or to require certifications from the purchaser, explaining 
that ``{w{time} hile the Department has no interest in dealing with 
meritless claims for new shipper reviews, by the same token, we do not 
want to discourage meritorious claims.'' \19\ However, in light of 
Commerce's past 20 years of practice in this area, and the 
circumvention and abuse of procedures concerns expressed by Congress in 
adopting the 2016 amendments to the new shipper review statute, we 
believe that the additional requirements above are needed to discourage 
meritless claims, and to preserve Commerce's resources in conducting 
new shipper reviews where there is a reasonable likelihood that the 
unaffiliated customer will participate in the review.
---------------------------------------------------------------------------

    \17\ Id., 62 FR at 27319.
    \18\ See 1996 Proposed Rule, 61 FR at 7317.
    \19\ See 1997 Final Rule, 62 FR at 27319.
---------------------------------------------------------------------------

    Consistent with these same considerations, proposed paragraph 
(b)(2)(v) (currently paragraph (b)(2)(iv)) requires specific 
documentation which would allow Commerce to conduct a bona fides 
analysis under section 751(a)(2)(B)(iv) of the Act. This includes 
information pertaining to whether shipments were made in commercial 
quantities, the date of any subsequent sales, circumstances surrounding 
the sale, such as price, expenses, resale for profit, and the arm's-
length basis of the sale. Additionally, documentation establishing the 
business activities of the producer or exporter would also be required 
under this proposed paragraph (i.e., the producer's or exporter's 
offers to sell merchandise in the United States, identification of the 
complete circumstances surrounding the exporter's or producers' sales 
to the United States, home market or any third country markets (if 
applicable), an explanation of any non-producing exporter's 
relationship with its

[[Page 49475]]

producer/supplier, and identification of the producer's or exporter's 
relationship to the first unrelated U.S. customer).
    Proposed revisions to paragraph (c) provide a conforming amendment 
to reflect the change in numbering in paragraph (b)(2).
    Proposed paragraph (d) would be entitled ``Initiation of new 
shipper review.'' Paragraph (d)(1) would clarify that Commerce will 
initiate a new shipper review if the requirements for a request for new 
shipper review under paragraph (b) are satisfied. Paragraphs (d)(1)-
(3), discussing time limits for the initiation of a new shipper review, 
would remain unchanged (with the exception of a minor grammatical edit 
in paragraph (d)(2)). These provisions would require Commerce to 
initiate a new shipper review in the calendar month immediately 
following the anniversary month, or semi-annual anniversary month of 
the order, as applicable. This is consistent with the statement in the 
SAA that new exporters or producers may request an accelerated new 
shipper review at any time.\20\ Paragraph (d)(4) would provide that if 
Commerce determines that the requirements for a request for new shipper 
review under paragraph (b) have not been satisfied, the Secretary will 
reject the request and provide a written explanation of the reasons for 
the rejection.
---------------------------------------------------------------------------

    \20\ See SAA at 816.
---------------------------------------------------------------------------

    Proposed revisions to paragraph (e) would eliminate language that 
requires Commerce to allow, at the option of the importer, the posting 
of an AD/CVD-specific bond or security in lieu of an AD/CVD cash 
deposit for each entry of the subject merchandise. This proposed 
modification implements the same amendment to section 751(a)(2)(B) of 
the Act under section 433 of the EAPA as discussed above, which 
eliminated the option of posting an AD/CVD bond or security in new 
shipper reviews.\21\ Proposed paragraph (e) would also clarify that, 
when a new shipper review is initiated, Commerce will direct CBP to 
suspend or continue to suspend liquidation of any relevant unliquidated 
entry of subject merchandise at the applicable cash deposit rate.
---------------------------------------------------------------------------

    \21\ See Sec.  433, 130 Stat. at 171; see also H.R. Rep. No. 
114-376 at 192-193.
---------------------------------------------------------------------------

    Proposed revisions to paragraph (f) would expand on Commerce's 
ability to rescind new shipper reviews, in whole or in part, where a 
producer or exporter timely withdraws its request for a new shipper 
review, or where Commerce determines there is an absence of entry or 
sale to an unaffiliated customer. Proposed new paragraph (f)(3) would 
provide that Commerce likewise may rescind a new shipper review, in 
whole or in part, where (1) information that Commerce considers 
necessary to conduct a bona fide sales analysis is not on the record, 
or (2) the producer or exporter at issue has failed to demonstrate, to 
the satisfaction of Commerce, the existence of a bona fide sale to an 
unaffiliated customer. This new provision would be consistent with 
Commerce's existing practice in both new shipper reviews and 
administrative reviews, that Commerce cannot conduct a review where 
there is no bona fide sale.\22\ This would also clarify that Commerce 
has the option to rescind where the information required for its 
analysis is missing. However, nothing in this provision is intended to 
preclude Commerce from completing the new shipper review by applying 
the provision governing facts available in section 776 of the Act where 
necessary.
---------------------------------------------------------------------------

    \22\ See, e.g., Haixing Jingmei Chem. Prods. Sales Co. v. United 
States, 357 F. Supp. 3d 1337, 1351 (Ct. Int'l Trade 2018).
---------------------------------------------------------------------------

    Commerce proposes no changes to paragraphs (g)-(j), and current 
paragraphs (k) and (l) would be re-lettered to (l) and (m), 
respectively. Further, re-lettered paragraph (l) contains minor 
formatting amendments and also removes reference to the posting of an 
AD/CVD-specific bond or security in lieu of an AD/CVD cash deposit 
pursuant to the changes in paragraph (e) discussed above.
    Lastly, proposed paragraph (k) would clarify the factors Commerce 
will consider in making a bona fide sale determination. This paragraph 
would explain that Commerce shall consider the enumerated factors in 
section 751(a)(2)(B)(iv) and identifies, for purposes of section 
751(a)(2)(B)(iv)(VII) of the Act, the additional factors that Commerce 
shall consider in determining whether the examined sale is typical, or 
not, of any future sales by the new shipper. These additional factors 
include whether the parties in the transaction were established for 
purposes of the sale(s) in question after the imposition of the order, 
whether the parties have other lines of business unrelated to the 
subject merchandise, whether there is an established history of duty 
evasion with respect to new shipper reviews under the order or 
circumvention in the same or similar industry, the quantity of sales, 
and any other factor which Commerce determines to be relevant with 
respect to the future selling behavior of the producer or exporter, 
including any other indicia that the sale was not commercially viable. 
These additional factors would aid Commerce in developing a consistent 
practice of evaluating typical behavior of the new shipper. 
Additionally, we believe this proposal reflects Commerce's past twenty 
years of practice in this area, and would address the concerns 
regarding circumvention, duty evasion, and abuse of procedures 
expressed by Congress in adopting the 2016 amendments to the new 
shipper review statute.

Scope--Section 351.225

    Upon issuance of an AD or CVD order, the Act requires Commerce to 
provide a description of the class or kind of merchandise subject to 
the order at issue (i.e., subject merchandise).\23\ That description is 
known as the scope of the AD/CVD order. Because the statute ``does not 
require Commerce to define the class or kind of foreign merchandise in 
any particular manner{,{time}  Commerce has the authority to fill that 
gap and define the scope of an order consistent with the countervailing 
duty and antidumping duty laws.'' \24\ Further, ``under the statutory 
scheme, Commerce owes deference to the intent of the proposed scope of 
an antidumping investigation as expressed in an antidumping petition.'' 
\25\ Thus, Commerce retains considerable discretion to define the scope 
of the order to ensure that all imports causing injury have been 
addressed, and, additionally, may take into account potential 
circumvention and duty evasion concerns in crafting the scope 
language.\26\
---------------------------------------------------------------------------

    \23\ See section 706(a)(2) of the Act; section 736(a)(2) of the 
Act; section 771(25) of the Act.
    \24\ See Canadian Solar, Inc. v. United States, 918 F.3d 909, 
917 (Fed. Cir. 2019) (internal citations and punctuation omitted) 
(Canadian Solar).
    \25\ Ad Hoc Shrimp Trade Action Committee v. United States, 637 
F. Supp. 2d 1166, 1174 (CIT 2009).
    \26\ See Canadian Solar, 918 F.3d at 921-22 (``It is unnecessary 
for Commerce to engage in a game of whack-a-mole when it may 
reasonably define the class or kind of merchandise in a single set 
of orders, and within the context of a single set of investigations, 
to include all imports causing injury.'').
---------------------------------------------------------------------------

    After issuance of an AD/CVD order, Commerce directs CBP to 
``suspend liquidation'' and collect cash deposits, or estimated amounts 
of duties, on appropriate entries subject to the scope of the order 
corresponding to the margins of dumping established under an AD order 
and the countervailable duty rates established under a CVD order.\27\ 
On a yearly basis, interested parties may request that Commerce conduct 
an administrative review to determine the appropriate dumping margin or 
CVD rate for entries subject to

[[Page 49476]]

the order during the previous review year.\28\ Commerce directs CBP to 
``lift suspension of liquidation'' and assess final duties according to 
Commerce's administrative review procedures.\29\ Under this dual 
statutory framework, Commerce is the agency charged with establishing 
and interpreting the scope of AD/CVD orders,\30\ and CBP is the agency 
charged with applying and enforcing the AD/CVD orders by--upon 
instruction from Commerce--collecting appropriate cash deposits and 
assessing final duties on appropriate entries of merchandise into the 
United States covered by the scope of an order.\31\ As part of its 
statutory responsibility ``to fix the amount of duty owed on imported 
goods{,{time} '' CBP ``is both empowered and obligated to determine in 
the first instance whether goods are subject to existing {AD/CVD 
orders{time} .'' \32\ Pursuant to 19 U.S.C. 1514(b) (section 514 of the 
Act), this ``determination is then `final and conclusive' unless an 
interested party seeks a scope ruling from Commerce (which ruling would 
then be reviewable pursuant to {19 U.S.C. 1516a{time} ).'' \33\
---------------------------------------------------------------------------

    \27\ See generally section 706 of the Act; section 736 of the 
Act. See also 19 CFR 351.211.
    \28\ See section 751(a)(1) of the Act.
    \29\ See 19 CFR 351.212-213.
    \30\ See Xerox Corp. v. United States, 289 F.3d 792, 795 (Fed. 
Cir. 2002) (``Commerce should in the first instance decide whether 
an antidumping order covers particular products, because the order's 
meaning and scope are issues particularly within the expertise of 
that agency.'') (internal citations and punctuation omitted).
    \31\ See Sunpreme Inc. v. United States, 892 F.3d 1186, 1188 
(Fed. Cir. 2018) (Sunpreme I). In Sunpreme I, the CAFC held that a 
party cannot invoke the CIT's jurisdiction under 28 U.S.C. 1581(i) 
to challenge CBP's decision to apply an AD/CVD order to the party's 
merchandise where the party had an available remedy by seeking a 
scope ruling from Commerce, which subsequently could have been 
challenged under 28 U.S.C. 1581(c). Id. at 1192-94. In Sunpreme Inc. 
v. United States, 924 F.3d 1198 (Fed. Cir. 2019) (Sunpreme II), the 
CAFC upheld Commerce's affirmative scope ruling, however, a divided 
panel found that CBP had exceeded its authority when it suspended 
liquidation based on its interpretation of ambiguous scope language 
prior to Commerce's scope ruling, and, therefore, Commerce could not 
lawfully order the continuation of suspension of liquidation prior 
to the initiation of Commerce's scope inquiry. See 924 F.3d at 1212-
15. In Sunpreme Inc. v. United States, 946 F.3d 1300 (Fed. Cir. 
2020) (Sunpreme III), the CAFC vacated Sunpreme II in part and held 
that ``it is within Customs'{{time}  authority to preliminarily 
suspend liquidation of goods based on an ambiguous {AD or CVD{time}  
order, such that the suspension may be continued following a scope 
inquiry by Commerce.'' 946 F.3d at 1303.
    \32\ See Sunpreme III, 946 F.3d at 1317 (citing 19 U.S.C. 
1500(c); Section 500(c) of the Act).
    \33\ See TR International Trading Co. v. United States, Ct. No. 
19-00022, Slip Op. 20-34 at *7 (CIT Mar. 16, 2020) (citing Sunpreme 
III, 946 F.3d at 1318) (TR International) (appeal pending) 
(referencing section 516 of the Act); see also Fujitsu Ten Corp. v. 
United States, 957 F. Supp. 245, 248 (CIT 1997) (``The statute 
recognizes Customs makes the initial determination that an existing 
antidumping order applies to a specific entry of merchandise. The 
statute states that such a decision is `final and conclusive' unless 
it is appealed by petition to Commerce.'' (citations omitted)).
---------------------------------------------------------------------------

    Furthermore, each agency has its own authority to ensure the 
effectiveness of the trade remedy laws in accordance with its statutory 
mandate. Congress, and the courts, have long recognized that Commerce 
has the vested authority to administer the trade remedy laws in 
accordance with their intent, and has the discretion to take 
appropriate enforcement measures to ensure the effectiveness of its AD/
CVD orders by preventing duty evasion and circumvention.\34\ As 
discussed below, Commerce has several existing mechanisms to ensure 
effective enforcement of its AD/CVD orders, while CBP has its own 
authority to conduct civil administrative investigations of duty 
evasion of AD/CVD orders, including as provided for in section 517 of 
the Act.\35\ In exercising their separate authorities, Commerce and CBP 
frequently work together to ensure the effectiveness of the trade 
remedy laws. In this proposed rule, Commerce has taken additional steps 
to ensure that it continues to exercise its authority to administer the 
AD/CVD laws, in cooperation with CBP, and in accordance with its 
mandate to prevent duty evasion and circumvention.
---------------------------------------------------------------------------

    \34\ See generally section 781 of the Act; SAA at 892-95; Tung 
Mung Development Co., Ltd. v. United States, 219 F. Supp. 2d 1333, 
1343 (CIT 2002) (Tung Mung) (``Commerce has a duty to avoid the 
evasion of antidumping duties. {Commerce{time}  `has been vested 
with authority to administer the antidumping laws in accordance with 
the legislative intent. To this end, {Commerce{time}  has a certain 
amount of discretion {to act{time}  . . . with the purpose in mind 
of preventing the intentional evasion or circumvention of the 
antidumping duty law.' '') (quoting Mitsubishi Elec. Corp. v. United 
States, 700 F. Supp. 538, 555 (CIT 1988) (Mitsubishi I), aff'd 898 
F.2d 1577, 1583 (Fed. Cir. 1990) (Mitsubishi II)). See also 
Torrington Co. v. United States, 745 F. Supp. 718, 721 (CIT 1990), 
aff'd 938 F.2d 1276 (Fed. Cir. 1991).
    \35\ Additionally, Homeland Security Investigations (HSI), at 
the Department of Homeland Security, has the authority to 
investigate criminal violations related to illegal evasion of 
payment of required duties, including payment of AD/CV duties. See, 
e.g., 18 U.S.C. 542.
---------------------------------------------------------------------------

    Because the scope of an AD/CVD order is written in general terms, 
questions may arise as to whether a certain product is within the 
scope, and therefore covered by the order. In such cases, Commerce's 
existing regulation, section 351.225, describes the applicable 
procedures and standards concerning ``scope rulings'' that Commerce 
will issue upon application of an interested party, or by initiating a 
``scope inquiry.'' Additionally, section 351.225 provides procedures 
concerning circumvention proceedings conducted pursuant to section 781 
of the Act. Under these provisions, Commerce may determine that certain 
products are circumventing existing AD/CVD orders, and thus lawfully 
may be considered within the scope of the order(s), even when the 
products do not fall within the literal scope language.\36\ Commerce 
proposes to revise section 351.225 in its entirety to clarify and 
improve Commerce's procedures and standards related to scope matters 
which have evolved since Commerce's current scope regulations were 
issued in 1997.\37\ As discussed further below, Commerce proposes to 
adopt new section 351.226 to address circumvention matters.
---------------------------------------------------------------------------

    \36\ See Target Corp. v. United States, 609 F.3d 1352, 1355 
(Fed. Cir. 2010).
    \37\ See 1996 Proposed Rule, 61 FR at 7321-22; 1997 Final Rule, 
62 FR at 27327-30. Section 351.225 in its current form adopted many 
of the existing procedures from the preceding regulations, sections 
353.29 and 355.29, which were issued in 1990. See 1996 Proposed 
Rule, 61 FR at 7321 (``With a few exceptions, section 351.225 is 
substantively unchanged from existing Sec. Sec.  353.29 and 
355.29{.{time} ''); see also Antidumping and Countervailing Duties, 
Interim Final Rule, 55 FR 9046 (March 9, 1990) (1990 Interim Final 
Rule) (``To implement section 781 of the Act (as added by section 
1321 of {the Omnibus Trade and Competitiveness Act of 1988{time} ), 
new Sec. Sec.  353.29 and 355.29 establish procedures for the 
Secretary to conduct inquiries to determine whether merchandise is 
included within the scope of an existing antidumping or 
countervailing duty finding or order. The procedures apply to all 
scope determinations, including those under section 781 of the Act. 
In applying these procedures to scope determinations other than 
those under section 781, {Commerce{time}  is codifying existing 
practice.'').
---------------------------------------------------------------------------

    We propose revising paragraph (a) to set forth the general purpose 
and rules which govern scope proceedings. This is distinguished from 
the current paragraph (a), which governs both scope proceedings and 
circumvention proceedings. Commerce is now proposing that circumvention 
proceedings under section 781 of the Act be covered by a new 
regulation, proposed section 351.226. An additional significant change 
in this proposed rule, which would be codified in proposed paragraph 
(a) and throughout revised section 351.225, eliminates the distinction 
between a simpler, or informal, scope ruling procedure (i.e., a ruling 
based upon the application) and a formal scope inquiry. This is 
discussed in further detail below. Proposed paragraph (a) also explains 
that, unless otherwise specified in revised section 351.225, Commerce's 
existing procedures contained in subpart C (i.e., relating to factual 
information (sections 351.102(b)(21) and 351.301) and the extension of 
time limits (section 351.302)) apply to scope inquiries.
    Additionally, regarding the term ``clarify'' in current paragraph 
(a), the courts have used this term to try to draw

[[Page 49477]]

a distinction between scope language which is ``unambiguous'' and 
therefore does not require ``clarification'' under the section 351.225 
procedures, and scope language which is ``ambiguous'' and does require 
such ``clarification.'' In practice, the procedures under section 
351.225 are intended to cover a wide variety of scope questions and are 
not intended to be restrictive to only those scenarios in which certain 
language in the scope requires ``clarification.'' Therefore, we have 
removed the term ``clarify'' from proposed paragraph (a). Additionally, 
proposed paragraph (a) explains that a scope ruling that a product is 
within the scope of the order is a determination that the product has 
always been within the scope of the order. As explained further below 
in the discussion of proposed section 351.225(l), the fact that an 
importer did not declare merchandise as subject to an AD and/or CVD 
order for a period of time before Commerce issued a scope ruling 
finding that such merchandise was covered does not justify treating 
entries that preceded that scope ruling as non-subject merchandise. 
Accordingly, scope rulings will be applied to all unliquidated entries 
of subject merchandise, as discussed further below.
    Furthermore, the procedures under section 351.225 are not intended 
to be the only means by which Commerce may address scope questions that 
arise in its proceedings. The language in paragraph (b) in the current 
version of section 351.225, which states that Commerce ``will'' 
initiate a scope inquiry if certain information is available, also has 
raised questions about the agency's authority to address scope 
questions outside the section 351.225 procedures. For example, Commerce 
has the existing authority to address scope issues in the context of 
another segment of the proceeding under the AD and/or CVD order, such 
as an administrative review or circumvention inquiry. Over time, there 
have been questions about Commerce's discretion to self-initiate a 
scope inquiry under the current regulation when an interested party 
raises the possibility that its product is not covered by an order 
during the course of an administrative review under section 751(a) of 
the Act. Commerce has always argued that it has such authority under 
current laws and regulations. This issue would be addressed by revised 
paragraphs (b) and (i). In particular, revised paragraph (b) would 
clarify that Commerce ``may'' self-initiate a scope inquiry, if it 
believes such initiation is warranted; revised paragraph (i)(1) would 
allow Commerce to address scope questions in another segment of the 
proceeding, such as an administrative review under section 351.213, a 
circumvention inquiry under new section 351.226, or a covered 
merchandise referral under new section 351.227, without separately 
having to initiate a scope inquiry under section 351.225. To be clear, 
Commerce would retain discretion to determine if self-initiation is 
warranted under section 351.225(b) or to address scope questions 
outside the context of a scope inquiry. Moreover, the onus would remain 
on parties who wish to raise scope questions in another segment of a 
proceeding, such as an administrative review under section 351.213, to 
provide Commerce with the relevant information needed to address such 
matters (i.e., by submitting a scope application and supporting 
information as provided in paragraph (c)).
    Paragraph (c) addresses the information needed for interested 
parties \38\ to file a scope ruling application. Domestic industries, 
foreign exporters, foreign producers, importers, and those considering 
exporting or importing merchandise to the United States all have 
different interests in Commerce making scope rulings on particular 
merchandise. This paragraph proposes certain amendments to address 
specific concerns which Commerce has identified with the current scope 
inquiry process. One concern is that scope ruling requests do not 
always include the requisite sufficient description and supporting 
information necessary for Commerce to complete an analysis. This has 
resulted in Commerce issuing numerous requests for further 
clarification and supporting evidence, which have further delayed its 
proceedings. Commerce has determined that one way to make this less 
pervasive is to require parties to fill out and file a standardized 
scope ruling application which would be available to parties on 
Commerce's website. Revised paragraph (c)(2) would list the information 
required which should be contained in the scope ruling application. It 
is understood that interested parties requesting a scope ruling may not 
have access to all of the information that would be requested. For 
example, a domestic interested party seeking a scope ruling on a 
product will not be likely to provide the narrative history of the 
production of the product at issue, including a history of earlier 
versions of the product, if this is not the first model of the product. 
For this reason, the regulation would require that the requested 
information in the scope ruling application be provided to the extent 
reasonably available to the requestor. The applicant would have to 
explain the reason it does not have certain requested information when 
filling out the scope ruling application, and Commerce would retain the 
ability to both ask supplemental questions about those explanations if 
necessary, as well as reject a scope ruling application if the 
information and explanations provided are insufficient.
---------------------------------------------------------------------------

    \38\ The term ``interested party'' is defined in section 771(9) 
of the Act, and pertains, for example, to ``foreign manufacturers,'' 
``producers,'' ``exporters,'' or ``United States importers'' ``of 
subject merchandise.'' However, the nature of a scope ruling is to 
determine whether the merchandise produced, imported by, or exported 
by a party is ``subject'' to an AD or CVD order. Thus, in many 
cases, the question of whether a party is an ``interested party'' is 
tied to the question of whether the merchandise at issue is 
determined to be subject merchandise or not. Accordingly, for 
purposes of these scope regulations, reference to the term 
``interested party'' includes a party that potentially meets the 
definition of ``interested party'' under section 771(9) of the Act, 
depending upon the outcome of the scope inquiry. This clarification 
of the term ``interested party'' for purposes of this regulation is 
in no way intended to negate the requirement that the product is, or 
has been, in actual production as of the filing of the scope ruling 
application, as discussed below.
---------------------------------------------------------------------------

    The use of the term ``particular product'' in the current text of 
paragraphs (a) and (c) of section 351.225 has also generated questions 
over time. In practice, Commerce issues scope rulings, which generally 
apply to a particular interested party's product, relying on the 
description provided by the interested party. Sometimes the description 
of the product does not lend itself to a broader ruling that applies to 
all similar products (for instance, the description of the product is 
specific to a party's specific description, product number, contract, 
packaging, or manufacturing process, etc.). To address these concerns, 
proposed revisions to paragraph (c)(2)(ii) would require parties 
submitting scope ruling applications to provide a concise public 
description of the product at issue. It is Commerce's intent that the 
description used throughout the scope inquiry and in the final scope 
ruling will reflect the ``particular product'' at issue--thereby 
enabling the public and CBP to more easily identify the product at 
issue.
    Proposed revisions to paragraph (c)(2)(v) would also mandate that, 
in requesting a scope ruling on merchandise which has already been 
imported into the United States as of the filing of the scope ruling 
application, to the extent reasonably available, an applicant must 
provide a statement as to whether an entry of the product has been 
classified as subject to an AD/CVD order by the filer or reclassified 
as

[[Page 49478]]

subject to an AD/CVD order by CBP along with documentation, including 
print-outs of the CBP ACE entry summary information, identifying the 
product upon importation and other related commercial documents.
    Additionally, proposed paragraph (c)(1) provides that the applicant 
must demonstrate that the product is or has been in actual production 
as of the filing of the scope ruling application.\39\ It is Commerce's 
expectation that a party will be able to satisfy this requirement by 
providing the requisite information under proposed paragraphs 
(c)(2)(iii), concerning a narrative of the production history, and 
(c)(2)(iv), concerning the volume of annual production of the product 
for the most recently completed fiscal year.
---------------------------------------------------------------------------

    \39\ See Antidumping and Countervailing Duty Proceedings: 
Documents Submission Procedures; APO Procedures, 73 FR 3634, 3639 
(January 22, 2008) (``{Commerce's{time}  practice is to issue a 
scope ruling or conduct a scope inquiry when the party requesting 
the ruling can show that the specific product in question is 
actually in production. The product need not be imported into the 
United States so long as the requestor can show evidence that the 
product is in production. {Commerce{time}  will not issue a scope 
ruling or conduct a scope inquiry on a purely hypothetical 
product.'').
---------------------------------------------------------------------------

    Another procedural matter that has arisen is a party's reference to 
prior agency scope rulings and determinations in scope requests without 
the placement of those scope rulings, or the full source document, on 
the record of the segment of the administrative proceeding. Those 
determinations, along with any other relevant source document 
supporting the party's position, such as the petition or relevant 
documents from the underlying investigation, must be placed on the 
record for Commerce to be able to consider them as part of its 
analysis. Accordingly, paragraph (c)(2)(viii) would also require that 
full copies of relevant prior determinations by the Secretary 
(including scope rulings) and relevant excerpts of other documents 
identified in paragraph (k)(1) be placed on the administrative record 
if cited by an applicant for support of its arguments.
    Additional changes under paragraphs (c), (d), and (e) deal with the 
distinction between an informal scope ruling procedure and a formal 
scope inquiry procedure. In the context of its scope ruling practice, 
there is a 45-day deadline for Commerce to either (A) issue a scope 
ruling based upon the scope ruling application and descriptions of the 
merchandise listed under paragraph (k)(1) pursuant to current 
paragraphs (c)(2) and (d), or (B) initiate a formal inquiry pursuant to 
current paragraph (e), which Commerce adopted in the 1997 
rulemaking.\40\ This was initially intended to streamline the process 
and expedite review of certain, less complex scope issues, but in 
Commerce's experience this has not been the case. Instead, it has led 
to unnecessary delay and questions on the part of outside parties. For 
example, in this 45-day window, Commerce often solicits and receives 
new factual information and comments from numerous parties, leaving 
little time to consider the evidence and argument, and reach a well-
reasoned decision within the time allotted. Frequently, Commerce must 
extend this deadline at least once before ultimately determining to 
formally initiate a scope inquiry (at which point, a new round of 
comments is triggered pursuant to paragraph (f), further delaying 
Commerce's decision). This has also led to questions from parties as to 
whether a decision to formally initiate a scope inquiry is a reflection 
of the difficulty of the issue, thus warranting analysis of the 
additional factors under paragraph (k)(2). Instead, a decision to 
formally initiate is often the result of the limited window in which 
Commerce has to consider the evidence and comments and reach a well-
reasoned decision, even where the issue itself is neither complex nor 
controversial.
---------------------------------------------------------------------------

    \40\ See 1996 Proposed Rule, 61 FR at 7321-22; 1997 Final Rule, 
62 FR at 27327-30. These procedures clarified Commerce's existing 
practice as codified in sections 353.29 and 355.29, adopted in the 
1990 rulemaking. See 1990 Interim Final Rule, 55 FR at 9046.
---------------------------------------------------------------------------

    Thus, one change in these proposed regulations is that there would 
no longer be a distinction between an informal scope ruling procedure 
and a formal scope inquiry procedure, as the distinction between those 
two procedures sometimes causes confusion and adds unnecessary delay to 
the proceedings. Proposed paragraph (d), once a scope ruling 
application has been filed and appropriately served on all necessary 
parties, would allow Commerce 30 days to determine whether to accept or 
reject the scope ruling application. If Commerce determines that the 
scope ruling application is deficient or otherwise unacceptable, 
Commerce could reject it with an explanation. The applicant may correct 
the problems and refile the scope ruling application, restarting the 
regulatory deadlines. On the other hand, if Commerce does not reject 
the scope ruling application, then after 31 days, a scope inquiry would 
be deemed initiated. At that point, Commerce cannot reject the scope 
ruling application for deficiencies, but could demand supplemental 
information if necessary.
    On a related matter, revised section 351.225 would provide that all 
scope rulings be issued pursuant to a scope inquiry consistent with 
this regulatory provision, with certain exceptions. For example, 
Commerce recognizes that there may be instances in which Commerce has 
already expressly considered the product at issue, and thus a new scope 
inquiry is not necessary to address the issue. In such instances, new 
paragraph (m)(1) discussed below would allow for Commerce to notify 
parties that it is applying a prior scope ruling to products with the 
identical physical description from the same country of origin. It is 
Commerce's intent that this notification would serve in place of a 
final scope ruling under new paragraph (h), but the requirements of 
paragraph (h) would still apply. As another example, as noted above and 
discussed further below, under proposed paragraph (i), Commerce would 
be able to address scope questions in the context of another segment of 
the proceeding, as a means of preserving departmental resources. 
Additionally, under revised paragraph (f)(6) discussed below, Commerce 
would be able to rescind a scope inquiry under appropriate 
circumstances.
    Proposed revisions to paragraph (e) would provide new deadlines for 
scope inquiries. The current provision indicates that informal scope 
rulings based upon the application under the current version of Sec.  
351.225(d) would be completed within 45 days of receipt of a scope 
ruling application. But years of experience have shown Commerce that 
this is a difficult and frequently unworkable deadline, for the reasons 
discussed above. Accordingly, the proposed deadlines are timed off the 
initiation of the scope inquiry, with most scope inquiries being 
completed within 120 days (which is consistent with current paragraph 
(f)(5) of Sec.  351.225). If good cause exists, however, such as the 
need for further information on the record, or the issuance of a 
preliminary scope ruling, Commerce would have the authority under 
proposed paragraph (e)(2) to extend the deadline an additional 180 
days, up to 300 days--similar to the deadlines allowed for 
circumvention inquiries under section 781(f) of the Act.
    Proposed revisions to paragraph (f) would clarify certain 
procedures for scope inquiries. As an initial matter, as noted above, 
proposed paragraph (a) explains that, unless otherwise specified in 
proposed section 351.225, Commerce's existing procedures

[[Page 49479]]

contained in subpart C apply to scope inquiries. Proposed paragraph (f) 
therefore identifies procedures which otherwise deviate from subpart C, 
including the deadlines for parties to comment and submit new factual 
information regarding Commerce's self-initiation of a scope inquiry 
under paragraph (b) and a scope ruling application. These deadlines 
would generally maintain the deadlines of current paragraph (f) (i.e., 
20/10 day comment/rebuttal periods). Additionally, proposed paragraph 
(f) would maintain Commerce's ability to issue questionnaires and 
conduct verifications, as appropriate, as well as its discretion to 
limit the number of respondents in a scope inquiry, if warranted. 
However, proposed paragraph (f)(4) would also establish deadlines 
regarding comments and rebuttal comments after a preliminary scope 
ruling under proposed paragraph (g) if the preliminary scope ruling is 
not issued concurrently with the initiation of the scope inquiry. These 
deadlines would be reduced from 20 to 10 days and 10 to 5 days, 
respectively.
    Proposed paragraph (f)(5) would provide Commerce with the ability 
to establish alternative procedures if the preliminary scope ruling 
issued under proposed paragraph (g) is issued concurrently with the 
initiation of the scope inquiry.\41\ Additionally, proposed paragraph 
(f)(6) would allow Commerce to maintain the discretion to rescind a 
scope inquiry, as appropriate. Commerce intends to exercise this 
discretion as a means of preserving departmental resources, for 
example, in instances in which a scope matter may be better addressed 
in another segment of a proceeding (see revised paragraph (i)(1)) or 
instances in which a new scope inquiry or scope ruling is unnecessary 
because of a related or prior scope ruling (see revised paragraph (m)). 
In addition, Commerce may rescind a scope inquiry, for example, if an 
interested party has failed to provide information necessary for 
Commerce to issue a scope ruling.\42\ Finally, proposed paragraph 
(f)(7) would continue to provide Commerce with the discretion to 
consider extension requests and alter the comment deadlines during the 
scope inquiry, as appropriate.
---------------------------------------------------------------------------

    \41\ To be clear, Commerce already has the authority under 
existing regulations to issue a preliminary scope ruling 
concurrently with initiation.
    \42\ Commerce also maintains the discretion to apply facts 
available pursuant to section 776 of the Act, as appropriate, rather 
than rescind a scope inquiry.
---------------------------------------------------------------------------

    Proposed revisions to paragraph (g) address the potential issuance 
of a preliminary scope ruling and mostly tracks paragraph (f)(3) of the 
current regulation, with some exceptions. Under current paragraph 
(f)(3), whenever Commerce determines that a scope inquiry presents an 
issue of significant difficulty, Commerce will issue a preliminary 
scope ruling, based upon the available information at the time, as to 
whether there is a reasonable basis to believe or suspect that the 
product is covered by the scope. Under proposed paragraph (g), Commerce 
would, pursuant to the same ``reasonable basis to believe or suspect'' 
standard, maintain the discretion to issue a preliminary scope ruling, 
but Commerce need not consider whether the inquiry presents an issue of 
significant difficulty. Similar to existing paragraph (g), proposed 
paragraph (g) would allow Commerce to issue a preliminary scope ruling, 
based on available information at the time, as to whether there is a 
reasonable basis to believe or suspect that the product is covered by 
the scope of the order. Further, proposed paragraph (g) would maintain 
Commerce's discretion to issue a preliminary scope ruling at the same 
time Commerce initiates a scope inquiry. This could be done, for 
example, if the scope question before Commerce previously has been 
addressed by Commerce, or Commerce finds the issue to be relatively 
straightforward. In determining whether to issue a preliminary scope 
ruling, Commerce may consider the complexity of the issues and the 
arguments raised by parties.
    It is worth noting that, in accordance with proposed paragraph 
(n)(4), if Commerce issues a preliminary scope ruling, it would no 
longer be required to notify all parties on the scope service list of 
that preliminary ruling. Instead, only parties who are on the segment-
specific public service list or the APO service list (see Sec.  
351.103(d)), as applicable, would receive notice of the preliminary 
scope ruling, as with any other document that is placed on the record 
by the agency, through Commerce's Antidumping and Countervailing Duty 
Centralized Electronic Service System (ACCESS) system.
    Proposed revisions to paragraph (h) largely follow paragraph (f)(4) 
of the current regulation concerning the issuance of final scope 
rulings, with a few exceptions. Significantly, proposed paragraph (h) 
provides that Commerce would ``convey'' the final scope ruling in 
accordance with the requirements of section 516A(a)(2)(A)(ii) of the 
Act, which states that judicial review of ``class or kind'' 
determinations under section 516A(a)(2)(B)(vi) of the Act, such as 
scope rulings, are based off of the date of mailing of such 
determination. Section 516A(a)(2)(A)(ii) of the Act further provides 
that only ``an interested party who is a party to the proceeding'' may 
commence judicial review procedures. Therefore, Commerce proposes to 
convey the final scope ruling in the manner prescribed by section 
516A(a)(2)(A)(ii) of the Act to interested parties who are parties to 
the proceeding (see Sec.  351.102(b)(36)), because these are the only 
parties that have legal standing to appeal the final scope ruling under 
section 516A(a)(2)(A)(ii) of the Act. However, as noted above, as with 
any other document that is placed on the record by the agency, all 
parties on the segment-specific service lists will be notified of the 
final scope ruling through Commerce's electronic ACCESS system.
    Additionally, paragraph (h) states that Commerce will ``promptly'' 
convey the scope ruling to all parties to the proceeding. The use of 
this term is consistent with the use of the same term in new Sec. Sec.  
351.226 and 227. It is Commerce's expectation that prompt conveyance of 
the scope ruling normally would occur no more than 5 business days from 
the issuance of the final scope ruling. Consistent with sections 
516A(a)(2)(A)(ii) and (B)(vi) of the Act, judicial review procedures 
would be commenced based on the date of conveyance, as opposed to the 
date of receipt, of a scope ruling.
    As noted above, proposed paragraph (i) would clarify the 
interaction between scope inquiries and other segments of the 
proceeding and would replace paragraphs (f)(6) and (l)(4). These 
revisions acknowledge Commerce's discretion to determine after 
reviewing all of the information on the record, on a case-by-case 
basis, the most efficient means of addressing a scope question in an 
effort to preserve departmental resources. For example, Commerce would 
be able to address scope questions in another segment of a proceeding, 
such as an administrative review under Sec.  351.213, a circumvention 
inquiry under new Sec.  351.226, or a covered merchandise inquiry under 
new Sec.  351.227, without invoking the Sec.  351.225 procedures; 
conduct a scope inquiry under Sec.  351.225 in addition to another 
segment of the proceeding; or align the deadlines, maintaining them as 
separate segments of the proceeding. Further, under revised paragraph 
(i)(3), during the pendency of a scope inquiry or upon issuance of a 
final scope ruling, Commerce could consider the products

[[Page 49480]]

subject to the scope inquiry in an ongoing administrative review, as 
appropriate (i.e., if sufficient time remains in the administrative 
review to collect and analyze such information), although it would not 
be required to do so.
    Proposed revisions to paragraphs (j) and (k) address the substance 
of Commerce's scope ruling determinations. Aside from the description 
of the merchandise subject to the scope of an order, an essential 
element in determining whether a product is covered by an order is the 
country of origin of the product at issue. Therefore, proposed 
paragraph (j) would codify Commerce's longstanding ``substantial 
transformation'' test or analysis, which is used to determine the 
country of origin of a product or products.\43\ In particular, Commerce 
generally uses a substantial transformation analysis to determine 
whether a product's country of origin has changed as a result of 
processing that occurs in third countries before a product is imported 
into the United States. The courts have upheld Commerce's substantial 
transformation analysis,\44\ which has, in different iterations, looked 
at factors such as whether the processed downstream product is a 
different class or kind of merchandise than the upstream product; the 
technical, physical, and chemical characteristics of the product and 
its parts; the intended end-use of the product; the cost of production 
and value added to the product as a result of further processing in 
third countries; the nature and sophistication of processing in third 
countries; the level of investment in third countries; and where the 
essential component of the product is produced or where the essential 
characteristics of the product are imparted. In addition, Commerce has 
considered other relevant case-specific factors in applying its 
substantial transformation analysis when necessary.
---------------------------------------------------------------------------

    \43\ See Bell Supply Company, LLC v. United States, 888 F.3d 
1222, 1228-29 (Fed. Cir. 2018) (``A substantial transformation 
occurs where, `as a result of manufacturing or processing steps . . 
. {,{time}  the {product{time}  loses its identity and is 
transformed into a new product having a new name, character and 
use.' '') (internal citations omitted).
    \44\ See E.I. DuPont de Nemours & Co. v. United States, 8 F. 
Supp. 2d 854, 858 (CIT 1998) (``The `substantial transformation' 
rule provides a yardstick for determining whether the processes 
performed on merchandise in a country are of such significance as to 
require the resulting merchandise to be considered the product of 
the country in which the transformation occurred.'').
---------------------------------------------------------------------------

    Additionally, Commerce continues to recognize that, in addressing 
country of origin issues in the context of Commerce proceedings, 
Commerce is not bound by the country of origin determinations of other 
agencies, such as CBP.\45\ While such determinations may be 
informative, when determining the scope of AD/CVD orders, Commerce's 
country of origin analysis is ultimately made independently and is 
based upon the information on the record of the proceeding.
---------------------------------------------------------------------------

    \45\ While the ``Department may consider the decisions of 
Customs, it is not obligated to follow, nor is it bound by, the 
classification determinations of Customs. . . .'' Wirth Ltd. v. 
United States, 5 F. Supp. 2d 968, 973 (CIT 1998) (``Commerce, not 
Customs, has authority to clarify the scope of AD/CVD orders and 
findings.'').
---------------------------------------------------------------------------

    Furthermore, if for some reason the substantial transformation test 
is not appropriate for purposes of determining the country of origin of 
a particular product, Commerce would continue to retain the ability to 
apply another reasonable test to determine the country of origin of a 
specific product. This would particularly be the case where ```rote 
application' of the substantial transformation test would be inadequate 
to remedy the unfair pricing decisions and/or unfair subsidization 
because it would exclude the very imports found to injure the domestic 
industry.'' \46\
---------------------------------------------------------------------------

    \46\ See Canadian Solar, 918 F.3d at 919.
---------------------------------------------------------------------------

    Paragraph (k) of current Sec.  351.225 describes the substantive 
basis for Commerce's scope rulings, and, as a result, has been the 
source of much litigation over the life of the regulation. Although the 
U.S. Court of International Trade (CIT) and the U.S. Court of Appeals 
for the Federal Circuit (CAFC) have generally recognized that Commerce 
has ``substantial freedom to interpret and clarify'' the scope of AD/
CVD orders through scope rulings,\47\ the Courts have held that 
Commerce's scope rulings must still be issued in accordance with the 
requirements of its scope ruling regulations, and in particular, the 
sequence of factors to consider set forth in paragraph (k). In light of 
Commerce's years of experience drafting scope rulings, and numerous 
holdings of the CIT and CAFC addressing Commerce's scope 
determinations, Commerce is proposing that certain modifications be 
made to paragraph (k). As an initial matter, current paragraph (k) 
makes no specific reference to the scope language as the starting point 
for any scope analysis. However, the CAFC has added this initial step, 
sometimes referred to as a ``k(0)'' analysis.\48\ Recently, the CAFC 
clarified the legal framework required of a scope ruling determination:
---------------------------------------------------------------------------

    \47\ Duferco Steel, Inc. v. United States, 296 F.3d 1087, 1096 
(Fed. Cir. 2002) (quotation marks and citations omitted).
    \48\ See Meridian Prods., LLC v. United States, 851 F.3d 1375, 
1381 (Fed. Cir. 2017) (``No specific statutory provision governs the 
interpretation of the scope of antidumping or countervailing orders. 
Commerce has filled the statutory gap with a regulation that sets 
forth a two-step test for answering scope questions, 19 CFR 
351.225(k), and our case law has added another layer to the 
inquiry.'') (internal citations and punctuation omitted).

    First, the plain language of an antidumping order is paramount 
in determining whether particular products are included within its 
scope. If the scope is unambiguous, it governs. In reviewing the 
plain language of a duty order, Commerce must consider the 
descriptions of the merchandise contained in the petition, the 
initial investigation, and the determinations of the Secretary 
(including prior scope determinations) and the Commission. Second, 
if the above sources do not dispositively answer the question, 
Commerce may consider the (k)(2) factors.\49\
---------------------------------------------------------------------------

    \49\ Meridian Prods., LLC v. United States, 890 F.3d 1272, 1277-
78 (Fed. Cir. 2018) (Meridian) (internal citations and punctuation 
omitted).

    Accordingly, proposed paragraph (k) would codify this judicially 
created and affirmed framework, explaining that the primary analysis in 
any scope inquiry is the language of the scope itself. Revised 
paragraph (k) also explains that Commerce may issue its scope ruling on 
this basis alone if the language of the scope, including the 
descriptions of merchandise expressly excluded from the scope, and the 
language of the scope as a whole, is dispositive. Furthermore, in light 
of our experience and prior court holdings, proposed paragraph (k)(1) 
indicates that, in considering the plain language of the scope, 
Commerce, at its discretion, could also consider the underlying 
petition, Commerce's investigation, prior Commerce determinations 
(including but not limited to prior scope rulings,\50\ memoranda, or 
clarifications),\51\ and

[[Page 49481]]

determinations of the ITC. In addition to the (k)(1) sources, Commerce 
could also consider traditional interpretive tools, such as a 
dictionary and industry usage of a particular word or phrase, or other 
record evidence, to provide context and understanding in considering 
the plain language of the scope. However, in the event of a conflict 
between these interpretive tools or other record evidence and the 
sources identified in paragraph (k)(1), Commerce would adopt the 
interpretation supported by the (k)(1) sources.\52\
---------------------------------------------------------------------------

    \50\ This is not limited to Commerce's scope rulings within the 
same order, and Commerce may consider its analysis of the same or 
similar scope language used in other orders.
    \51\ Scope clarifications are not defined in the statute or 
regulation. Scope clarifications are sometimes issued during an 
ongoing investigation if arguments or information pertaining to the 
scope of an investigation comes to Commerce's attention following 
the issuance of a scope memorandum and Commerce determines that it 
is necessary to place a clarification on the administrative record 
to address those scope claims. Scope clarifications also may be 
issued after an AD/CVD order has been in place for a period of time 
and Commerce has found that multiple parties have requested scope 
rulings over and over covering the same or similar scope language. 
In that situation, Commerce may issue a scope clarification 
addressing that particular scope language, and then further 
memorialize that clarification in the form of an interpretive 
footnote to the scope of the order. Following the issuance of a 
scope clarification in that context, the interpretive footnote will 
normally accompany the text of the scope itself when it is published 
in Commerce's administrative determinations and instructions to CBP. 
The procedures and timetables set forth in these regulations 
covering scope inquiries and scope rulings do not apply to scope 
clarifications, nor do they inhibit Commerce's ability or discretion 
to issue such scope clarifications.
    \52\ See Meridian, 890 F.3d at 1280-81 (overruling a CIT 
decision that adopted the common and commercial meaning and 
dictionary definition of a scope term over Commerce's interpretation 
in prior scope rulings).
---------------------------------------------------------------------------

    Proposed revisions to paragraph (k)(2) would maintain that if, 
based on the scope language and the factors enumerated above, Commerce 
is unable to determine whether a product is covered by a scope, then 
Commerce would consider the listed five additional factors.\53\ These 
factors are largely consistent with current paragraph (k)(2), with some 
minor clarifications. It is Commerce's intent that the first factor--
the characteristics of the product, including the technical, physical, 
or chemical characteristics of the product--may be given greater weight 
than the other individual factors. Nonetheless, Commerce should 
consider each of the factors in making its determination under 
paragraph (k)(2).
---------------------------------------------------------------------------

    \53\ Those factors are sometimes referred to as the Diversified 
Products factors because they were first articulated in Diversified 
Prods. Corp. v. United States, 572 F. Supp. 883 (CIT 1983). See 
Walgreen Co. of Deerfield, IL v. United States, 620 F.3d 1350, 1355 
& n.2 (Fed. Cir. 2010) (Walgreen).
---------------------------------------------------------------------------

    Finally, proposed paragraph (k)(3) would codify and clarify 
Commerce's analysis for certain products, colloquially referred to as 
``mixed media'' products (i.e., subject merchandise assembled or 
packaged with non-subject merchandise), which has been recognized by 
the courts.\54\ In some instances, the scope language of an order may 
clearly address these types of products.\55\ In such cases, a ``mixed-
media'' analysis may not be necessary. However, because scope language 
is written in general terms, the language itself may not contemplate 
assembled or packaged items that contain subject merchandise as a 
component. Therefore, in conducting a scope inquiry, Commerce may need 
to conduct a ``mixed-media'' analysis to determine whether a 
combination of products or a component thereof constitutes subject 
merchandise. Under such situations, in accordance with Commerce's 
practice and proposed paragraph (k)(3), Commerce could first determine 
whether the component product, if separated from the other component 
products, would be considered covered by the scope. If the 
determination is that the product would be covered by the scope, then 
Commerce would conduct a further analysis and determine if the product 
is nonetheless excluded from the scope through its inclusion in the 
combined product. To determine if the product is covered or excluded 
from the scope of the order, Commerce would consider the practicability 
of separating the in-scope component for repackaging or resale, the 
measurable value of the in-scope component as compared to the 
measurable value of the merchandise as a whole, and the ultimate use or 
function of the in-scope component relative to the ultimate use or 
function of the merchandise as a whole. If Commerce determines that the 
component product at issue is covered by the scope of an order, but the 
other components of the larger merchandise are not covered by the scope 
of an order, the value of the in-scope subject component should be 
reported to CBP for AD/CVD purposes in accordance with CBP's reporting 
requirements.
---------------------------------------------------------------------------

    \54\ See Mid Continent Nail Corporation v. United States, 725 
F.3d 1295, 1302-04 (Fed. Cir. 2013) (Mid Continent Nail) 
(referencing the ``mixed-media'' analysis); Walgreen, 620 F.3d at 
1355-57 (same).
    \55\ See, e.g., Aluminum Extrusions from the People's Republic 
of China: Antidumping Duty Order, 76 FR 30650, 30651 (May 26, 2011) 
(``The scope includes the aluminum extrusion components that are 
attached (e.g., by welding or fasteners) to form subassemblies, 
i.e., partially assembled merchandise unless imported as part of the 
finished goods `kit' defined further below. The scope does not 
include the non-aluminum extrusion components of subassemblies or 
subject kits.''); Narrow Woven Ribbons With Woven Selvedge From 
Taiwan and the People's Republic of China: Amended Antidumping Duty 
Orders, 75 FR 56982, 56983 (September 17, 2010) (``Narrow woven 
ribbons subject to the orders may. . . be included within a kit or 
set such as when packaged with other products, including but not 
limited to gift bags, gift boxes and/or other types of ribbon.'').
---------------------------------------------------------------------------

    Paragraph (l) of the current regulation, governing the suspension 
of liquidation and requirement of cash deposits for entries affected by 
Commerce's scope rulings, also has been the source of varying 
interpretations and litigation and requires revision.
    As an initial matter, as discussed above, AD and CVD orders provide 
the legal basis for the suspension of liquidation of importations of 
subject merchandise that enter for consumption on or after the date of 
publication of that order, throughout the life of the order, and until 
the order is revoked.\56\ Further, the publication in the Federal 
Register of Commerce's preliminary and final investigation 
determinations, as well as the publication of the resulting orders, 
serve as notice to producers, exporters, and importers that their 
merchandise might be covered by those investigations and/or orders, 
and, therefore, it is incumbent upon the importing parties to (1) 
declare the status of their merchandise truthfully to CBP upon entry, 
or (2) seek a scope ruling from Commerce if there is a question as to 
whether the merchandise is covered by an AD and/or CVD order. As 
discussed above for proposed paragraph (a), a scope ruling that a 
product is within the scope of the order is a determination that the 
product has always been within the scope of the order, and Commerce's 
scope regulations must reflect that determination. Put another way, if 
a party has imported merchandise and declared that merchandise as not 
covered by the scope of an order, and then Commerce issues a scope 
ruling finding that such merchandise is subject to an order, under 
these proposed regulations Commerce's scope ruling would apply to all 
unliquidated entries of the merchandise, as discussed below. Importing 
parties are already notified through the publication in the Federal 
Register of Commerce's determinations and/or order, and, therefore, 
cannot claim ignorance or reliance on another agency's determinations 
or actions to avoid the application of Commerce's scope ruling to their 
merchandise. Commerce proposes to amend paragraph (l) as necessary in 
light of these considerations.
---------------------------------------------------------------------------

    \56\ See Ugine & ALZ Belgium v. United States, 551 F.3d 1339, 
1340-43 (Fed. Cir. 2009); Am. Power Pull Corp. v. United States, 121 
F. Supp. 3d 1296, 1300-02 (CIT 2015).
---------------------------------------------------------------------------

    Additionally, current paragraph (l) reflects the distinction 
between a formal scope inquiry as provided under current paragraphs 
(b), (e), and (f) and a final scope ruling based on the application 
under current paragraph (d) (also referred to as an informal scope 
inquiry). Although current paragraph (l) expressly addresses suspension 
of liquidation and requirement of cash deposits under the first 
procedure, it is largely silent with respect to scope rulings based on 
the application--and this silence has been the source of some confusion 
and litigation. As discussed above, we are proposing to eliminate the 
distinction between these two procedures, and, with these proposed 
changes, we are proposing to adapt the current structure of paragraph 
(l)

[[Page 49482]]

accordingly to reflect a single scope inquiry procedure. That is, all 
scope rulings would be subject to the same procedures under revised 
paragraph (l), and there will no longer be any distinction between 
formal and informal scope inquiries (as discussed above).
    Revised paragraph (l)(1) provides that when Commerce initiates a 
scope inquiry under proposed paragraphs (b) or (d), it will notify CBP 
of the initiation and direct CBP to continue the suspension of 
liquidation of all unliquidated entries of products subject to the 
scope inquiry that are already subject to the suspension of 
liquidation,\57\ until appropriate liquidation instructions are 
issued.\58\ Further, Commerce will direct CBP to apply the cash deposit 
rate that would be applicable if the product were determined to be 
covered by the scope of the order. These revisions are consistent with 
current paragraph (l)(1) to the extent that both call for the 
suspension of liquidation and application of cash deposits for already-
suspended entries to continue after initiation of a formal scope 
inquiry.
---------------------------------------------------------------------------

    \57\ Entries may be already subject to the suspension of 
liquidation under a variety of scenarios. As recently affirmed by 
the CAFC and as discussed in more detail above, CBP has independent 
authority to suspend liquidation of entries that CBP determines are 
within the scope of an AD or CVD order; such determinations are 
``final and conclusive'' unless appealed to Commerce through a 
request for a scope ruling. See Sunpreme III, 946 F.3d at 1317-18. 
Additionally, section 517 of the Act (concerning CBP's civil 
administrative investigations of duty evasion of AD/CVD orders) 
authorizes CBP to suspend liquidation of entries for which it has 
reasonable suspicion, or, in the case of final determination, 
substantial evidence, that covered merchandise is entered into the 
United States through evasion under section 517(e) and (d) of the 
Act.
    \58\ At the time Commerce initiates a scope inquiry, there may 
be entries of products subject to the scope inquiry that CBP has 
liquidated but for which liquidation is not yet final (e.g., entries 
under protest pursuant to 19 U.S.C. 1514). Consistent with current 
practice and in accordance with CBP's statutory and regulatory 
authorities, Commerce expects that CBP may stay its action on these 
entries pending the outcome of the scope inquiry. This is consistent 
with the CAFC's decision in Thyssenkrupp Steel North America, Inc. 
v. United States, 886 F.3d 1215 (Fed. Cir. 2018). In Thyssenkrupp, 
the CAFC recognized that instructions revoking an antidumping duty 
order superseded previously issued liquidation instructions, as of 
the effective date of the revocation, and applied to entries under 
protest that entered the United States after the effective date of 
the revocation. Id. at 1223-27. The CAFC explained that this 
``serves the purpose of the protest mechanism--to allow agency 
consideration of issues after an initial liquidation determination--
and respects the longstanding principle . . . that newly governing 
law, if retroactive to particular events, is to be applied to those 
events in ordinary, timely initiated direct-review proceedings.'' 
Id. at 1224. A similar point was recognized in TR International, 
Slip Op. 20-34 at *11, currently on appeal, concerning CBP's 
potential application of a Commerce scope ruling to entries under 
protest.
---------------------------------------------------------------------------

    However, this also deviates from current paragraphs (l)(1) and (2), 
which provide that when Commerce issues a preliminary scope ruling 
finding the product is not covered by the scope of the AD and/or CVD 
order (i.e., a ``negative'' scope ruling), it will instruct CBP to 
terminate suspension of liquidation and refund all cash deposits for 
already-suspended entries.
    Notably, revised paragraph (l)(2) (pertaining to preliminary scope 
rulings) does not require Commerce to notify CBP of a negative 
preliminary scope ruling. In such instances, suspension of liquidation 
and application of cash deposits for already suspended entries (if any) 
under revised paragraph (l)(1) will remain in effect pending Commerce's 
subsequent issuance of a final scope ruling and appropriate 
instructions as described in revised paragraphs (l)(3) or (4). Thus, 
any suspension of liquidation prior to the negative preliminary scope 
ruling will remain in effect until the conclusion of the scope inquiry 
to ensure appropriate application of AD/CVD duties in the event of a 
final scope ruling finding the product is covered by the scope of the 
AD and/or CVD order (i.e., an ``affirmative'' scope ruling). Further, 
under revised paragraph (l)(4), if Commerce issues a negative final 
scope ruling that the product is not covered by an order, and the 
product is not otherwise subject to suspension as a result of another 
segment of a proceeding, such as a circumvention inquiry under Sec.  
351.226 or a covered merchandise inquiry under Sec.  351.227, for 
merchandise that was suspended and for which cash deposit rates were 
paid, Commerce would instruct CBP to terminate suspension of 
liquidation and refund cash deposits (if any) on entries of this non-
subject merchandise.
    Paragraphs (l)(2) and (3) also have been revised to address the 
considerations highlighted above, specifically, to ensure that the 
results of affirmative scope rulings are appropriately applied to all 
entries of subject merchandise, which should be covered by those 
rulings. Therefore, under revised paragraphs (l)(2) and (3), at the 
time of the first affirmative scope ruling (preliminary or final), 
Commerce will direct CBP to suspend liquidation of all unliquidated 
entries of products subject to the scope inquiry that are not already 
subject to the suspension of liquidation (and continue suspension of 
liquidation for any entries already suspended as provided under revised 
paragraph (l)(1)). This action would apply to all such entries dating 
back to the earliest suspension date under the order, which is normally 
the preliminary determination in the underlying investigation. Further, 
Commerce will direct CBP to apply the applicable cash deposit rate to 
all such entries. As provided under revised paragraphs (l)(2) and (3), 
these instructions will remain in place until appropriate liquidation 
instructions are issued pursuant to Sec. Sec.  351.212 and 351.213.\59\
---------------------------------------------------------------------------

    \59\ As discussed above, consistent with current practice and in 
accordance with CBP's statutory and regulatory authorities, CBP may 
stay its action on entries of products that CBP has liquidated but 
for which liquidation is not yet final pending the outcome of a 
scope inquiry. Additionally, any instructions issued by Commerce 
directing CBP to ``lift suspension of liquidation'' and assess 
duties at the applicable AD/CVD rate would not limit CBP's ability 
to (1) suspend liquidation/assess duties/take any other measures 
pursuant to CBP's EAPA investigation authority under section 517 of 
the Act specifically, or (2) take any other action within CBP's or 
HSI's authority with respect to AD/CVD entries.
---------------------------------------------------------------------------

    This deviates from current paragraph (l) in certain respects. As 
stated above, current paragraph (l) expressly addresses suspension of 
liquidation and requirement of cash deposits for entries in a formal 
scope inquiry, but is less clear when Commerce issues a final scope 
ruling based upon the application in an informal scope inquiry. For 
instance, current paragraphs (l)(2) and (3) provide that if Commerce 
issues an affirmative preliminary or final scope ruling pursuant to a 
formal scope inquiry, then ``any suspension of liquidation'' will 
continue. Where there has been no previous suspension of liquidation, 
Commerce will direct CBP (in the event of an affirmative preliminary or 
final scope ruling) to suspend liquidation of unliquidated entries 
dating back to the date of initiation of the scope inquiry.
    Current paragraph (l)(3) also provides that if Commerce issues an 
affirmative final scope ruling based on the application, then ``any 
suspension of liquidation'' will continue. However, paragraph (l) does 
not expressly address instances in which Commerce issues an affirmative 
final scope ruling based upon the application (and thus, there has been 
no initiation of the scope inquiry) and entries have not already been 
suspended. Therefore, in such instances Commerce may direct CBP to 
suspend liquidation of all unliquidated entries subject to the scope 
inquiry not already subject to the suspension of liquidation (and 
continue suspension of liquidation for any entries already suspended), 
and apply the applicable cash deposit rates to such entries. This 
action applies to all such entries dating back to the earliest 
suspension date

[[Page 49483]]

under the order, which is normally the preliminary determination in the 
underlying investigation.
    In short, under the current regulatory framework, Commerce has 
employed two distinct approaches for suspension of liquidation and 
application of cash deposits reflecting the different procedures for 
informal and formal scope inquiries. As Commerce proposes to eliminate 
the distinction between these different procedures, and, in light of 
the considerations highlighted above, revised paragraph (l) largely 
mirrors the approach for informal scope inquiries discussed above. 
Specifically, as stated above, the proposed action under paragraphs 
(l)(2) and (3) would apply to all unliquidated entries dating back to 
the earliest suspension date under the order, which is normally the 
preliminary determination in the underlying investigation, as opposed 
to the date of initiation of the scope inquiry (i.e., the approach 
currently taken in formal scope inquiries).
    The reason that Commerce is proposing to take this approach to 
suspension of liquidation and application of cash deposits is to 
prevent a situation which, in the terms of the CAFC, ``would encourage 
gamesmanship by importers'' and ``permit importers to potentially avoid 
paying duties. . . .'' \60\ Under the proposed approach, importers have 
an incentive to seek a determination as soon as possible whether a 
particular product is subject to the scope of an existing AD/CVD order. 
If they fail to do so, then they may be liable for AD/CVD duties if 
Commerce eventually determines that the products are covered by the 
scope of an existing AD/CVD order. By contrast, the alternative 
approach (i.e., the approach currently taken in rulings based on a 
formal scope inquiry) would encourage gamesmanship, delay, and indeed, 
duty evasion. Foreign producers and exporters, as well as U.S. 
importers, would understand that all entries not already suspended 
prior to the date on which Commerce initiates a scope inquiry are 
essentially excused from AD/CVD duties, even if Commerce finds through 
the scope inquiry that such duties should have applied. In turn, this 
would lead parties to import as much as possible before any request for 
a scope inquiry is filed, and then eliminate AD/CVD duty liability for 
such imports by requesting a scope inquiry. Such manipulation of AD/CVD 
duty liability would undermine the effectiveness and remedial purpose 
of the AD/CVD laws. Accordingly, Commerce proposes to adopt the 
procedures discussed above.
---------------------------------------------------------------------------

    \60\ Sunpreme III, 946 F.3d at 1317 and 1321. In United Steel 
and Fasteners, Inc. v. United States, 947 F.3d 794 (Fed. Cir. 2020) 
(Fasteners), discussed further below, the CAFC did not disagree with 
Commerce's concerns of potential ``gamesmanship and delay'' if 
importers did not report their merchandise to CBP as subject 
merchandise. See Fasteners, 947 F.3d at 803 (finding narrowly that 
``we do not find that such gamesmanship occurred in this case.'')
---------------------------------------------------------------------------

    We recognize that the CAFC recently held that Commerce's current 
regulations did not allow for ``retroactively suspending liquidation to 
the issuance date'' of the antidumping order in that litigation, where 
Commerce issued a final scope ruling based on the application in an 
informal scope inquiry.\61\ However, the CAFC relied on the existing 
regulatory framework that delineates between an informal and formal 
scope inquiry described above, and that Commerce is now proposing to 
change in this proposed rule.\62\ Therefore, notwithstanding the CAFC's 
holding in Fasteners, Commerce is not precluded from amending its 
regulations through notice and comment procedures to adopt the 
procedures discussed herein.
---------------------------------------------------------------------------

    \61\ See Fasteners, 947 F.3d at 800-03.
    \62\ Id.
---------------------------------------------------------------------------

    Additionally, to the extent the CAFC relied on concerns in the 1997 
Final Rule regarding potential retroactive suspension of 
liquidation,\63\ those concerns pertained to the inconvenience to 
importers and exporters if domestic industries filed a scope request 
based ``on nothing more'' than a mere ``allegation'' and Commerce began 
suspension of liquidation on entries not already subject to suspension 
of liquidation.\64\ This was in response to a suggestion that, at the 
time Commerce initiates a formal scope inquiry based on a scope 
request, Commerce should instruct CBP to suspend liquidation of any 
unliquidated entries.\65\ However, Commerce's proposed regulation does 
not adopt such a position. Rather, Commerce proposes that only upon 
issuance of an affirmative preliminary or final scope ruling will 
Commerce direct that any unliquidated entries under the order (dating 
back to the earliest suspension date under the order) be suspended. 
This proposal is consistent with the 1997 Final Rule statement that 
``the Department will not order the suspension of liquidation until it 
makes either a preliminary or final affirmative scope ruling, whichever 
occurs first.'' \66\ The difference is that the 1997 Final Rule as 
promulgated in the current regulation imposes a ``cut-off'' of the 
initiation date of the scope inquiry--the proposed regulation removes 
this limitation so that any unliquidated entries found within the scope 
of the order appropriately will be subject to duties, not just those 
that entered after the initiation date.\67\
---------------------------------------------------------------------------

    \63\ Id. at 802 (citing 1997 Final Rule, 62 FR at 27327-38).
    \64\ See 1997 Final Rule, 62 FR at 27328.
    \65\ Id., 62 FR at 27327-28.
    \66\ Id., 62 FR at 27328.
    \67\ As discussed above, consistent with current practice and in 
accordance with CBP's statutory and regulatory authorities, CBP may 
stay its action on entries of products that CBP has liquidated but 
for which liquidation is not yet final pending the outcome of a 
scope inquiry.
---------------------------------------------------------------------------

    This exercise of Commerce's discretion is reasonable and balanced. 
As explained above, Congress, and the courts, have long recognized that 
Commerce has the vested authority to administer the trade remedy laws 
in accordance with their intent, and has the discretion to take 
appropriate enforcement measures to ensure the effectiveness of its AD/
CVD orders by preventing duty evasion and circumvention.\68\ Further, 
over the last twenty years, the United States has faced various 
complications in fully collecting AD and CVD duties from the obligated 
parties.\69\ Although Commerce is cognizant of the concerns raised in 
the 1997 Final Rule regarding the risk of potential unfairness to 
certain importers who genuinely may not be aware that their products 
are within the scope of an order until Commerce issues a ruling, 
Commerce cannot distinguish between importers with a genuine 
misunderstanding from those who (1) have failed to do their due 
diligence by reviewing Commerce scope descriptions or past scope 
rulings, or (2) are aware of their potential (or actual) AD/CVD 
liability and have opted not to seek a scope ruling or enter their 
merchandise as subject to an AD/CVD order, so as to avoid the likely 
application of AD/CVD duties. On balance, Commerce has determined that 
the very real risk and concerns of duty evasion, circumvention, and 
duty collection should guide its updated regulations.
---------------------------------------------------------------------------

    \68\ See generally section 781 of the Act; SAA at 892-95; Tung 
Mung, 219 F. Supp. 2d at 1343.
    \69\ See, e.g., U.S. Gov't Accountability Office, Report to the 
Chairman, Committee on Finance, U.S. Senate, GAO 16-542, Antidumping 
and Countervailing Duties: CBP Action Needed to Reduce Duty 
Processing Errors and Mitigate Nonpayment Risk, at 13 (July 2016).
---------------------------------------------------------------------------

    Commerce also has considered the practical effect this change in 
policy may have on importers' liability. Significantly, the statute 
generally directs CBP to liquidate entries which have not been declared 
as subject to an AD/CVD order within one year of entry.\70\ Therefore, 
practically speaking, it is unlikely that once Commerce issues

[[Page 49484]]

a preliminary or final scope ruling finding a product covered by an AD/
CVD order that there will be any unliquidated entries, other than those 
already suspended, more than a year old. In light of this, Commerce 
believes that it has settled on a policy which will effectuate its 
authority under the AD/CVD laws, while mitigating the harm to importers 
who may be acting in good faith by importing without paying duties. 
Moreover, should this change in policy be adopted in any final rule, 
the effective date of the policy change would be 30 days after 
publication of the final rule. Therefore, scope inquiries initiated 
prior to this effective date would maintain the initiation date of the 
inquiry as the furthest potential ``retroactive'' date for unliquidated 
entries not already suspended. That said, given that this proposal 
involves complex and technical issues, and given that important trade 
enforcement objectives are implicated, Commerce invites public comment 
on revised Sec.  351.225(l). We will carefully consider all public 
comments before issuing a final rule that revises the existing 
regulation.
---------------------------------------------------------------------------

    \70\ 19 U.S.C. 1504(a); Section 504 of the Act.
---------------------------------------------------------------------------

    Proposed revisions to paragraph (m) address the application of 
scope rulings under two different scenarios. Paragraph (m)(1) would 
clarify that if a scope ruling application requests a scope ruling on a 
product, which is physically identical to that of another product for 
which a scope ruling has already been issued under the same order, 
Commerce could apply the previous scope ruling directly to the 
requested product without conducting a new scope inquiry. In that 
situation, for example, Commerce may issue a letter to the applicant 
and attach the scope ruling upon which it has relied, making its 
determination without the need of a larger, more detailed scope ruling. 
In such instances, the requirements for issuing a final scope ruling 
under paragraph (h) would apply.
    Proposed paragraphs (m) and (n) together address a problem that 
arises when a scope ruling would apply equally to companion AD and CVD 
orders, which cover the same merchandise from the same country. In that 
scenario, an interested party submitting a scope ruling application 
pertaining to both orders pursuant to paragraph (c) must file its scope 
ruling application on the record of the AD proceeding only, and serve 
its scope ruling application to all parties on the annual inquiry 
service list for both the AD and CVD orders. The annual inquiry service 
list and related procedures are discussed in paragraph (n). Once 
Commerce initiates the scope inquiry, Commerce would initiate and 
conduct that inquiry pertaining to both orders only on the record of 
the AD proceeding.\71\ This is because Commerce has noticed over the 
years that, in certain inquiries, interested parties have inadvertently 
placed relevant information, for example, on the AD proceeding record, 
but not on the CVD proceeding record, or vice-versa. Once Commerce 
issues a final scope ruling on the record of the AD proceeding, 
Commerce would include a copy of that scope ruling on the record of the 
CVD proceeding. By limiting the scope inquiry only to the record of one 
proceeding, the chances of incomplete records, or confusing records 
being filed with courts on appeal, should be lessened.
---------------------------------------------------------------------------

    \71\ Commerce will follow the procedures of paragraph (l) for 
both orders.
---------------------------------------------------------------------------

    Proposed revisions to paragraph (n) addresses service requirements. 
The current regulations require that any party that has ever 
participated in proceedings under an order must be served with a scope 
request based on the scope service list maintained on Commerce's 
website. However, because some orders are decades old and the scope 
service list contains dozens of parties who have participated over the 
years, the proposed regulations would require that parties (other than 
the petitioner) who wish to be served with new scope ruling 
applications, under paragraph (c), or be notified of Commerce's self-
initiation of a scope inquiry, under paragraph (b), would have to take 
the affirmative step of filing a request for inclusion on the annual 
inquiry service list. Requests for inclusion on the annual inquiry 
service list must be filed with Commerce during the anniversary month 
of the AD or CVD order at issue, and Commerce would update the list on 
an annual basis at that time.
    In addition, under proposed paragraph (n), once a scope ruling 
application is accepted by Commerce in accordance with paragraph (d), 
and after Commerce has notified parties on the annual inquiry service 
list of its self-initiation of a scope inquiry under paragraph (b), a 
segment-specific service list would be established, under Sec.  
351.103(d)(1), and the requirements of Sec.  351.303(f) would apply. To 
be clear, once the segment-specific service list is established, 
parties on the annual inquiry service list for all orders that may be 
affected by the scope ruling would no longer be served with filings 
made pursuant to the scope inquiry, unless they had followed the 
procedures of Sec.  351.103(d)(1) by filing an entry of appearance in 
the relevant scope segment. However, as discussed further below, 
Commerce proposes to amend Sec.  351.103(d)(1) to reflect that an 
interested party that submits a scope ruling application need not file 
an entry of appearance under Sec.  351.103(d)(1), as that interested 
party would be placed on the segment-specific service list by Commerce.
    Finally, proposed revisions to paragraphs (o) and (p) provide that 
Commerce would publish in the Federal Register on a quarterly basis a 
list of all of the final scope rulings issued within the previous three 
months and that scope rulings may, as appropriate, apply to suspension 
agreements as well, in accordance with Sec.  351.208.

Circumvention--Section 351.226

    When the current scope regulations were drafted, there was a belief 
that there were similarities between scope inquiries and circumvention 
inquiries sufficient to place them both in the same general regulatory 
provision. Circumvention inquiries (sometimes called anti-circumvention 
inquiries) are conducted pursuant to section 781 of the Act, while 
scope inquiries are referenced only in sections 516a(a)(2)(A)(ii) and 
516a(a)(2)(B)(vi) of the Act. As the two latter provisions pertain to 
determinations by Commerce as to ``whether a particular type of 
merchandise is within the class or kind of merchandise described in an 
existing finding of dumping or antidumping or countervailing duty 
order,'' it is clear that Commerce derives its authority to conduct a 
scope ruling from multiple sources, including, for example, sections 
771(25) (defining subject merchandise as a ``class or kind of 
merchandise that is within the scope of an investigation, a review, a 
suspension agreement, (or) an order''), 701(a) (directing Commerce to 
impose duties on a class or kind of merchandise being subsidized), and 
731(a) of the Act (directing Commerce to impose duties on a class or 
kind of merchandise being dumped).
    Because there is unique authority for these different inquiries and 
corresponding determinations, and we conduct the two proceedings 
differently, we have determined that it is appropriate to establish 
separate regulations for each type of proceeding. With respect to 
circumvention inquiries in particular, paragraphs (h), (i), (j), and 
(k) of proposed new Sec.  351.226 are derived directly from section 781 
of the Act and current regulation Sec. Sec.  351.225(g), (h), (i), and 
(j).
    Proposed paragraph (a) introduces new Sec.  351.226 and briefly 
addresses

[[Page 49485]]

section 781 of the Act. Congress enacted section 781 of the Act to 
combat certain forms of circumvention of AD and CVD orders. When 
Congress passed the Omnibus Trade and Competitiveness Act in 1988, it 
explained that ``{a{time} n order on an article presumptively includes 
articles altered in minor respects in form or appearance . . . .'' The 
legislative history explains that the purpose of the circumvention 
statute ``is to authorize the Commerce Department to apply AD and 
{CVD{time}  orders in such a way as to prevent circumvention and 
diversion of U.S. law.'' \72\ Further, it indicates that Congress was 
concerned with the existence of ``loopholes,'' i.e., foreign companies 
evading orders by making slight changes in their method of production, 
because such scenarios ``seriously undermine the effectiveness of the 
remedies provided by the antidumping and countervailing duty 
proceedings, and frustrated the purposes for which these laws were 
enacted.'' \73\ Congress also recognized that ``aggressive 
implementation of {the circumvention statute{time}  by the Commerce 
Department can foreclose these practices.'' \74\ When implementing the 
Uruguay Round Agreements Act of 1994, the Administration expressed 
similar concerns about scenarios limiting the effectiveness of the AD 
duty law (i.e., completion or assembly in a country other than the 
subject country).\75\ Accordingly, Commerce ``has been vested with 
authority to administer the antidumping laws in accordance with the 
legislative intent'' and, thus, ``has a certain amount of discretion 
{to act{time}  . . . with the purpose in mind of preventing the 
intentional evasion or circumvention of the antidumping duty law.'' 
\76\ Proposed paragraph (a), as well as additional paragraphs discussed 
below, would codify these principles. Additionally, proposed Sec.  
351.226(a) tracks proposed Sec.  351.225(a), and explains that, unless 
otherwise specified in proposed new Sec.  351.226, Commerce's existing 
procedures contained in subpart C (i.e., relating to factual 
information (Sec. Sec.  351.102(b)(21) and 351.301) and the extension 
of time limits (Sec.  351.302)) apply to circumvention inquiries.
---------------------------------------------------------------------------

    \72\ Omnibus Trade Act of 1987, Report of the Senate Finance 
Committee, S. Rep. No. 100-71, at 101 (1987).
    \73\ Id.
    \74\ Id.
    \75\ See SAA at 892-95.
    \76\ Tung Mung, 219 F. Supp. 2d at 1343 (quoting Mitsubishi I, 
700 F. Supp. at 555, aff'd 898 F.2d at 1583).
---------------------------------------------------------------------------

    Under proposed paragraph (b), Commerce could self-initiate a 
circumvention inquiry based on information available to it, while under 
proposed paragraph (c), Commerce could initiate a circumvention inquiry 
based on the filing of an inquiry request by an interested party.\77\ 
If Commerce self-initiates, it would publish a notice of initiation in 
the Federal Register. If a circumvention inquiry request is filed with 
Commerce, the filing party would have to notify all parties on the 
annual inquiry service list, set forth in proposed Sec. Sec.  
351.225(n) and 351.226(n). Proposed paragraph (c)(2) would also set 
forth the information to be included in a circumvention inquiry 
request. Commerce expects that such a request would include not only a 
detailed description of the merchandise allegedly circumventing the 
order, but also public identification of any producers, exporters, or 
importers of the merchandise.\78\ As with respect to the revised scope 
ruling application described in proposed Sec.  351.225(c), it is 
understood that not all of the information listed will be available to 
all interested parties requesting a circumvention inquiry. For example, 
the domestic industry may know certain details about a company's 
``further manufacturing'' of a product, but it may not be able to 
supply ``a description of parts, materials, and the production process 
employed in the production of the product.'' For this reason, proposed 
paragraph (c)(2) would require that the described information in the 
circumvention inquiry request be provided to the extent reasonably 
available to the requestor.
---------------------------------------------------------------------------

    \77\ To be clear, Commerce already has the authority to self-
initiate anti-circumvention inquiries under the current regulations. 
See 19 CFR 351.225(b). As noted above with respect to the proposed 
changes to the scope regulations, the term ``interested party'' is 
defined in section 771(9) of the Act, and pertains, for example, to 
``foreign manufacturers,'' ``producers,'' ``exporters,'' or ``United 
States importers'' ``of subject merchandise.'' However, the nature 
of a circumvention proceeding is to determine whether the 
merchandise produced, imported by, or exported by a party is 
circumventing an AD or CVD order. Thus, in many cases, the question 
of whether a party is an ``interested party'' is tied to the 
question of whether the merchandise at issue is determined to be 
subject merchandise, or not. Accordingly, for purposes of these 
circumvention regulations, the term ``interested party'' includes a 
party that potentially meets the definition of ``interested party'' 
under section 771(9) of the Act, depending upon the outcome of the 
circumvention inquiry.
    \78\ Commerce recognizes that the identity of the producers, 
exporters and or importers alleged to be participants to 
circumvention may not be public, but that such information can be 
very important to the conduct of a circumvention inquiry. 
Accordingly, although the regulation requests public names be 
provided, if available, it also stresses that this provision is not 
intended to restrict the inclusion of the business proprietary names 
of those entities in the application if the requester has access to 
that data.
---------------------------------------------------------------------------

    Proposed paragraph (d) would provide the deadlines for initiation 
of a circumvention inquiry. The deadline for initiation would be 
shortened from the current 45 days to 20 days, with a possible 
extension of up to a total of 35 days. However, initiation would only 
occur if Commerce concludes that the request properly alleges that the 
elements necessary for a circumvention determination under section 781 
of the Act exist and is accompanied by information reasonably available 
to the interested party supporting these allegations. If the 
circumvention request is incomplete or otherwise unacceptable, the 
Secretary may reject the request and will reconsider it if it is 
resubmitted with sufficient documentation. Additionally, Commerce could 
defer its initiation of a circumvention inquiry if it determines that a 
scope question should first be addressed in a new or ongoing segment of 
a proceeding, such as a scope inquiry under the proposed revisions to 
Sec.  351.225.
    Paragraph (d)(2) refers to proposed Sec.  351.225(i)(1), which 
expressly allows Commerce to address scope issues in the context of a 
circumvention inquiry, rather than conduct a separate scope inquiry 
under Sec.  351.225. In certain circumstances, a party may submit a 
request for a circumvention inquiry, which requires Commerce to 
consider, in the first instance, whether the product at issue is 
already covered by the scope of the order at issue in its scope ruling 
procedures under Sec.  351.225. If a product is already subject to the 
scope of the order, a circumvention inquiry may not be necessary. To 
consolidate its resources and avoid unnecessary duplication of effort, 
proposed Sec. Sec.  351.226(d)(2) and 351.225(i)(1) would allow 
Commerce to address scope and circumvention issues more efficiently, by 
allowing scope issues to be addressed within the context of a 
circumvention inquiry.
    Proposed paragraph (e) would provide the deadlines for Commerce to 
conduct circumvention inquiries, consistent with section 781(f) of the 
Act, which sets a deadline for circumvention determinations within 300 
days from the date of publication of the initiation notice, to the 
maximum extent practicable. Proposed paragraph (e)(1) would establish a 
new deadline for preliminary determinations of 150 days from the date 
of publication of the initiation notice. Proposed paragraph (e)(2) 
restates the statutory deadline, and also sets forth that Commerce 
would only be able to extend the 300-

[[Page 49486]]

day statutory deadline by no more than 65 days if it determined that an 
inquiry was extraordinarily complicated. It is Commerce's understanding 
that for an inquiry to be extraordinarily complicated there would 
exist, for example, novel facts or issues (such as facilities being 
ravaged by natural disasters or unusual or complicated government or 
business practices), or a large number of firms involved in the 
inquiry.
    Proposed paragraph (f) would provide the procedures for 
circumvention inquiries, and largely tracks the proposed new scope 
inquiry procedures provided under proposed Sec.  351.225(f), as well as 
the requirements provided under current Sec.  351.225(f)(7) concerning 
notification to the ITC. This provision also explains that Commerce 
could limit the issuance of questionnaires to a reasonable number of 
respondents. In practice, Commerce could do this through a respondent 
selection process.
    Proposed paragraph (f)(4) would also establish deadlines regarding 
comments and rebuttal comments after a preliminary circumvention 
determination under proposed paragraph (g) if the preliminary 
circumvention determination is not issued concurrently with the 
initiation of the circumvention inquiry. Proposed paragraph (f)(5) 
would provide Commerce with the ability to establish alternative 
procedures if the preliminary circumvention determination issued under 
proposed paragraph (g) is issued concurrently with the initiation of 
the circumvention inquiry.\79\ Additionally, proposed paragraph (f)(6) 
would allow Commerce to forego or rescind a circumvention inquiry, in 
whole or in part, if a circumvention request is withdrawn or if 
Commerce issues a final determination in another segment of the 
proceeding under an AD and/or CVD order that the merchandise at issue 
in the circumvention inquiry is covered by that order (or orders). 
Commerce could also rescind if the basis for the initiation of the 
circumvention inquiry included multiple provisions under section 781 of 
the Act, and Commerce need only reach a final determination with 
respect to one of those provisions. This most frequently happens if a 
circumvention inquiry examines whether merchandise is altered in minor 
respects or later-developed merchandise, and Commerce need only address 
one of those provisions to reach an affirmative determination. Proposed 
paragraph (f)(7) would allow Commerce to alter deadlines under this 
paragraph, as appropriate, including to align the deadlines of the 
circumvention inquiry with another segment of the proceeding, such as a 
scope inquiry, under proposed new Sec.  351.225.
---------------------------------------------------------------------------

    \79\ To be clear, Commerce already has the authority under 
existing regulations to issue a preliminary circumvention 
determination concurrently with initiation.
---------------------------------------------------------------------------

    Finally, proposed paragraph (f)(8) would also maintain provisions 
regarding notification to the ITC under current Sec.  351.225(f)(7). 
Unless otherwise specified, Commerce's current procedural regulations 
concerning factual information (19 CFR 351.102(b)(21) and 19 CFR 
351.301), including the extension of time limits (19 CFR 351.302), 
apply to circumvention procedures and would continue to apply under the 
proposed revisions.
    Proposed paragraph (g) follows proposed Sec. Sec.  351.225(g) and 
(h) with respect to preliminary and final circumvention determinations. 
However, unlike preliminary and final scope rulings, preliminary and 
final circumvention determinations will both be published in the 
Federal Register. Similar to proposed Sec.  351.225(g), proposed 
paragraph (g)(1) would allow Commerce to issue a preliminary 
circumvention determination, based on available information at the 
time, as to whether there is a reasonable basis to believe or suspect 
that the elements necessary for a circumvention determination under 
section 781 of the Act exist. Proposed paragraph (g)(2) largely tracks 
the similar provision under proposed Sec.  351.225(h) concerning the 
issuance of final scope rulings. Thus, proposed paragraph (g)(2) 
provides that Commerce would ``convey'' the final circumvention 
determination in accordance with the requirements of section 
516A(a)(2)(A)(ii) of the Act, which states that judicial review of 
``class or kind'' determinations under section 516A(a)(2)(B)(vi) of the 
Act, such as scope rulings and circumvention determinations, are based 
off of the date of mailing of such determination. Section 
516A(a)(2)(A)(ii) of the Act further provides that only ``an interested 
party who is a party to the proceeding'' may commence judicial review 
procedures. Therefore, aside from its obligation to publish notice of 
the final circumvention determination in the Federal Register, Commerce 
proposes to convey a copy of the final circumvention determination in 
the manner prescribed by section 516A(a)(2)(A)(ii) of the Act (i.e., 
mailing) to interested parties who are parties to the proceeding (see 
Sec.  351.102(b)(36)), because these are the only parties that have 
legal standing to appeal the final circumvention determination under 
section 516A(a)(2)(A)(ii) of the Act.
    Furthermore, paragraph (g)(2) states that Commerce will 
``promptly'' convey a copy of the final circumvention determination 
after publication in the Federal Register. The use of the term 
``promptly'' is consistent with the use of the same term in revised 
section 225 and new section 227. It is Commerce's expectation that 
prompt conveyance of a copy of the final circumvention determination 
normally would occur no more than 5 business days from the publication 
of the determination in the Federal Register. Consistent with sections 
516A(a)(2)(A)(ii) and (B)(vi) of the Act, judicial review procedures 
would be commenced based on the date of conveyance, as opposed to the 
date of receipt, of a final circumvention determination. Additionally, 
as with any other document that is placed on the record by the agency, 
all interested parties on the segment-specific service lists will be 
notified of the final circumvention determination through Commerce's 
electronic ACCESS system.
    Proposed paragraphs (h) and (i) relate to the current regulatory 
provisions for products completed or assembled in the United States or 
other foreign countries found in current Sec. Sec.  351.225(g) and (h), 
respectively, with two important proposed revisions. First, we have 
removed statements that no one single factor under sections 781(a)(2) 
and 781(b)(2) of the Act will be controlling. We recognize that this 
language adopts similar language from the SAA.\80\ However, this 
statement alone, without additional context, has raised questions. In 
particular, the SAA states: ``Commerce will evaluate each of {the 
factors under sections 781(a)(2) and 781(b)(2) of the Act{time}  as 
they exist either in the United States or a third country, depending on 
the particular circumvention scenario. No single factor will be 
controlling.'' The SAA also provides that these provisions ``do not 
establish rigid numerical standards for determining the significance of 
the assembly (or completion) activities in the United States or for 
determining the significance of the value of the imported parts or 
components.'' \81\ Therefore, although no one single factor should 
control Commerce's analysis, this statement in the SAA should be 
considered in light of the evidence before Commerce in a given case and 
is not intended to limit Commerce's discretion to evaluate the 
particularities of the circumvention scenario.

[[Page 49487]]

Accordingly, we are proposing to remove the statement from paragraphs 
(h) and (i).
---------------------------------------------------------------------------

    \80\ See SAA at 893.
    \81\ Id. at 894.
---------------------------------------------------------------------------

    Second, we propose removing specific reference to the major input 
rule under section 773(f)(3) of the Act in paragraphs (h) and (i). 
Under current Sec. Sec.  351.225(g) and (h), in determining the value 
of parts or components purchased from an affiliated person under 
sections 781(a)(1)(D) and 781(b)(1)(D) of the Act, or of processing 
performed by an affiliated person under sections 781(a)(2)(E) and 
781(b)(2)(E) of the Act, the value of the part or component may be 
based on the cost of producing the part or component under section 
773(f)(3) of the Act. The 1996 Proposed Rule added this reference to 
the ``transactions disregarded'' and ``major input'' rules applicable 
to affiliated transactions set forth in 773(f)(3) of the Act in 
response to comments raised before Commerce at the time.\82\ 
Additionally, the 1997 Final Rule further explained that the SAA 
clearly contemplates the use of the major input rule in appropriate 
circumstances, and, in response to comments, also explained that cost 
of production may be used as the basis of the value for inputs from 
affiliated persons.\83\ Based on our more recent experience, we believe 
it would be beneficial to codify that determinations of the value of 
parts or components on the basis of the cost of producing the part or 
component may be conducted under the various applicable provisions of 
section 773--in this case, section 773(e) (constructed value) and 
773(c) (factors of production under the nonmarket economy methodology) 
of the Act. The major input rule under section 773(f)(3) will still 
apply, as appropriate, in accordance with this applicable statutory 
framework.
---------------------------------------------------------------------------

    \82\ See 1996 Proposed Rule, 61 FR at 7322. Clarifying edits to 
this language were made in the 1997 Final Rule. See 1997 Final Rule, 
62 FR at 27328 (clarifying that application of the major input rule 
is discretionary for purposes of both U.S. and third country 
assembly).
    \83\ See 1997 Final Rule, 62 FR at 27328 (citing SAA at 894).
---------------------------------------------------------------------------

    Proposed paragraph (j) would incorporate the current regulatory 
provision, Sec.  351.225(i), pertaining to minor alteration of 
merchandise under section 781(c) of the Act, with some additions. 
Although the statute is silent regarding what factors to consider in 
determining whether alterations are properly considered ``minor,'' the 
legislative history of this provision indicates there are certain 
criteria that should be considered before reaching a circumvention 
determination.\84\ Previous circumvention cases conducted by Commerce 
have relied on those enumerated criteria.\85\ These would now be 
incorporated into paragraph (j). Additionally, in conducting a minor 
alteration circumvention inquiry, under section 781(c) of the Act, we 
have analyzed other factors, as appropriate on a case-by-case basis, 
including the circumstances under which the products enter the United 
States, the timing of the entries during the circumvention review 
period, and the quantity of merchandise entered during the 
circumvention review period.\86\ We would incorporate these additional 
factors, which is a non-exhaustive list, in paragraph (j).
---------------------------------------------------------------------------

    \84\ See Omnibus Trade Act of 1987, Report of the Senate Finance 
Committee, S. Rep. No. 100-71, at 100 (1987) (stating that Commerce 
``should apply practical measurements regarding minor alterations, 
so that circumvention can be dealt with effectively, even where such 
alterations to an article technically transform it into a 
differently designated article{,{time} '' and providing a list of 
criteria to be considered).
    \85\ See, e.g., Final Results of Anti-Circumvention Review of 
Antidumping Order: Corrosion-Resistant Carbon Steel Flat Products 
From Japan, 68 FR 33676, 33677 (June 5, 2003).
    \86\ See Preliminary Determination of Circumvention of 
Antidumping Order; Cut to Length Carbon Steel Plate from Canada, 65 
FR 64926, 64929-31 (October 31, 2000), unchanged in Final 
Determination of Circumvention of Antidumping Order; Cut to Length 
Carbon Steel Plate from Canada, 66 FR 7617 (January 24, 2001).
---------------------------------------------------------------------------

    Proposed paragraph (k) would incorporate the current regulatory 
provision, Sec.  351.225(j), pertaining to later-developed merchandise, 
under section 781(d) of the Act, with some additions. In conducting a 
later-developed merchandise circumvention inquiry, under section 
78l(d)(l) of the Act, and in determining whether the merchandise is 
``later-developed,'' Commerce first examines whether the merchandise at 
issue was commercially available at the time of the initiation of the 
AD and CVD investigation.\87\ We would incorporate the commercial 
availability standard into paragraph (k), as this is judicially-
affirmed and well-established in our practice. Commerce intends to 
consider whether a product is ``commercially available'' on a case-by-
case basis in light of the record of the proceeding. If Commerce 
determines that such merchandise was not commercially available at the 
time of the investigation, and is, thus, later-developed, Commerce 
would consider whether the later-developed merchandise is covered by 
the orders pursuant to the statutory factors identified in section 
781(d)(1) of the Act.
---------------------------------------------------------------------------

    \87\ See Later-Developed Merchandise Anticircumvention Inquiry 
of the Antidumping Duty Order on Petroleum Wax Candles from the 
People's Republic of China: Affirmative Preliminary Determination of 
Circumvention of the Antidumping Duty Order, 71 FR 32033, 32037-40 
(June 2, 2006), unchanged in Later-Developed Merchandise 
Anticircumvention Inquiry of the Antidumping Duty Order on Petroleum 
Wax Candles from the People's Republic of China: Affirmative Final 
Determination of Circumvention of the Antidumping Duty Order, 71 FR 
59075 (October 6, 2006); Candles Anticircumvention Final, 71 FR at 
59077 and accompanying Issues and Decision Memorandum at Comment 4, 
amended by Redetermination Pursuant to Court Remand Order in Target 
Corporation v. United States, 578 F. Supp. 2d 1369 (CIT 2008) 
(November 7, 2008), affirmed by Target Corp. v. United States, 626 
F. Supp. 2d 1285 (CIT 2009), and Target Corp., 609 F.3d at 1358-60 
(holding that Commerce's interpretation of later-developed, as 
turning on whether the merchandise was commercially available at the 
time of the investigation, is reasonable). See also Erasable 
Programmable Read Only Memories from Japan; Final Scope Ruling, 57 
FR 11599 (April 6, 1992); Electrolytic Manganese Dioxide from Japan; 
Final Scope Ruling, 57 FR 395 (January 6, 1992); Portable Electronic 
Typewriters from Japan, 55 FR 47358 (November 13, 1990).
---------------------------------------------------------------------------

    Proposed paragraph (l) of Sec.  351.226 would alter the suspension 
of liquidation requirements found in current Sec.  351.225(l) (which 
apply to circumvention inquiries) and mirror the proposals to Sec.  
351.225(l) pertaining to scope, which have already been described 
above.
    Thus, proposed paragraph (l)(1) of Sec.  351.226 provides that when 
Commerce initiates a circumvention inquiry under proposed paragraphs 
(b) or (d), it will notify CBP of the initiation and direct CBP to 
continue the suspension of liquidation of all unliquidated entries of 
products subject to the circumvention inquiry that are currently 
suspended by CBP \88\ at the applicable cash deposit rate that would 
apply if the product were determined to be circumventing the order.
---------------------------------------------------------------------------

    \88\ As discussed above, entries may be ``currently suspended by 
CBP'' under a variety of scenarios. See Sunpreme III, 946 F.3d at 
1317-18 (discussing CBP's authority to suspend liquidation of 
entries that CBP determines are within the scope of an AD/CVD order 
unless appealed to Commerce); section 517 of the Act (authorizing 
CBP to suspend liquidation of entries for which it has reasonable 
suspicion, or, in the case of final determination, substantial 
evidence, that covered merchandise is entered into the United States 
through evasion under section 517(e) and (d) of the Act). 
Additionally, as discussed above, consistent with current practice 
and in accordance with CBP's statutory and regulatory authorities, 
CBP may stay its action on entries of products that CBP has 
liquidated but for which liquidation is not yet final pending the 
outcome of a circumvention inquiry.
---------------------------------------------------------------------------

    Further, proposed paragraph (l)(2) of Sec.  351.226 provides that 
if Commerce issues a preliminary circumvention determination under 
proposed paragraph (g)(1) that the product at issue is circumventing an 
AD and/or CVD order, Commerce will direct CBP to: (1) Continue 
suspension of liquidation of already suspended entries; (2) suspend

[[Page 49488]]

liquidation of all other products at issue that are unliquidated; and 
(3) apply the applicable cash deposit rate under the order to 
unliquidated entries.
    Proposed paragraph (l)(4) provides that if Commerce issues a 
negative final determination under paragraph (g)(2), and the product is 
not otherwise subject to suspension as a result of another segment of a 
proceeding, such as a covered merchandise inquiry under Sec.  351.227, 
for merchandise that was suspended and for which cash deposit rates 
were paid, Commerce would instruct CBP to terminate suspension of 
liquidation and refund cash deposits (if any) on entries of this non-
subject merchandise.
    On the other hand, if Commerce concludes in a final determination 
under proposed paragraph (g)(2) that circumvention has occurred, then 
under proposed paragraph (l)(3) Commerce would direct CBP to: (1) 
Continue suspension of liquidation of already suspended entries, 
including those entries subject to suspension of liquidation as a 
result of another segment of a proceeding, such as an administrative 
review under Sec.  351.213; (2) suspend liquidation of all products at 
issue which are unliquidated; and (3) apply the applicable cash deposit 
rate under the order to unliquidated entries, until appropriate 
liquidation instructions are issued pursuant to Sec. Sec.  351.212 and 
351.213.\89\
---------------------------------------------------------------------------

    \89\ As discussed above, consistent with current practice and in 
accordance with CBP's statutory and regulatory authorities, CBP may 
stay its action on entries of products that CBP has liquidated but 
for which liquidation is not yet final pending the outcome of a 
circumvention inquiry. Additionally, any instructions issued by 
Commerce directing CBP to ``lift suspension of liquidation'' and 
assess duties at the applicable AD/CVD rate are not intended to 
impugn CBP's ability to (1) suspend liquidation/assess duties/take 
any other measures pursuant to CBP's EAPA investigation authority 
under section 517 of the Act specifically, or (2) take any other 
action within CBP's or HSI's authority with respect to AD/CVD 
entries.
---------------------------------------------------------------------------

    As described in further detail above in the discussion of proposed 
paragraph (l) of Sec.  351.225, these procedures deviate from the 
current Sec.  351.225 framework in two key respects. First, upon an 
affirmative preliminary or final circumvention determination, Commerce 
will instruct CBP to suspend liquidation of any unliquidated entries, 
not only those that entered on or after the date of initiation of the 
circumvention inquiry. Second, the proposed regulation does not require 
Commerce to notify CBP of a negative preliminary circumvention 
determination, and, therefore, suspension of liquidation for already 
suspended entries (if any) will remain in effect pending Commerce's 
issuance of a final circumvention determination.
    These suspension of liquidation procedures and cash deposit 
requirements will result in a more effective application of 
circumvention determinations. As discussed above, Congress enacted 
section 781 of the Act to combat certain forms of circumvention of AD 
and CVD orders, however, neither section 781 of the Act nor any other 
provision of the Act contains specific guidance regarding when 
merchandise found to be circumventing an AD and/or CVD order should be 
subject to suspension of liquidation and cash deposit requirements. 
When Congress passed the Omnibus and Trade Competitiveness Act of 1988, 
it explained that the purpose of the circumvention statute ``is to 
authorize the Commerce Department to apply antidumping and 
countervailing duty orders in such a way as to prevent circumvention 
and diversion of U.S. law.'' \90\ Congress also recognized that 
``aggressive implementation of {the circumvention statute{time}  by the 
Commerce Department can foreclose these practices.'' \91\ Consistent 
with Congress's intent when enacting the circumvention statute, these 
proposals for paragraph (l) of Sec.  351.226 will help prevent 
companies from eluding the payment of duties if Commerce ultimately 
concludes that the merchandise is circumventing an AD and/or CVD order.
---------------------------------------------------------------------------

    \90\ Omnibus Trade Act of 1987, Report of the Senate Finance 
Committee, S. Rep. No. 100-71, at 101 (1987).
    \91\ Id.
---------------------------------------------------------------------------

    Proposed paragraph (m) would address the effect and application of 
circumvention determinations. In its experience, Commerce has witnessed 
scenarios in which the circumvention determined to exist was unique to 
the interested party under review. In that situation, a company-
specific circumvention determination is warranted. However, Commerce 
has also found circumvention to exist in other cases in which the 
circumvention warranted a country-wide determination. Accordingly, the 
regulation would recognize that section 781 of the Act provides 
Commerce with the discretion to apply a circumvention decision on a 
country-wide basis, and therefore allows for Commerce to consider 
whether a country-wide application is warranted on a case-by-case basis 
in circumvention inquiries. One of the factors Commerce may consider in 
making such a determination is the possibility of subsequent 
circumvention by other producers, exporters, or importers following the 
issuance of an affirmative company-specific circumvention 
determination.
    Proposed paragraph (m) would also address the potential overlap 
between a circumvention inquiry and other segments of the proceeding 
and would allow Commerce to take appropriate action in such other 
proceedings. For example, Commerce could request information concerning 
the product that is the subject of the circumvention inquiry for 
purpose of an administrative review under Sec.  351.213.
    Proposed paragraphs (m) and (n) would together address a problem 
that arises when a circumvention determination would apply equally to 
companion AD and CVD orders, which cover the same merchandise from the 
same country, and largely mirror the same paragraphs under the proposed 
revisions to Sec.  351.225. In that scenario, an interested party 
requesting a circumvention inquiry pertaining to both orders pursuant 
to paragraph (c) must file its request on the record of the AD duty 
proceeding only, and serve its circumvention inquiry request to all 
parties on the annual inquiry service list for both the AD and CVD 
orders. The annual inquiry service list and related procedures are 
discussed in proposed Sec.  351.225(n). Once Commerce initiates the 
circumvention inquiry, Commerce would initiate and conduct that inquiry 
pertaining to both orders only on the record of the AD duty 
proceeding.\92\ Once Commerce issues a final circumvention 
determination on the record of the AD proceeding, Commerce would 
include a copy of that determination on the record of the CVD 
proceeding and notify CBP in accordance with paragraph (l). As noted 
above, by limiting the circumvention inquiry only to the record of one 
proceeding, the chances of incomplete records, or confusing records 
being filed with courts on appeal, should be lessened.
---------------------------------------------------------------------------

    \92\ Under that scenario, Commerce would follow the procedures 
of paragraph (l) for both orders.
---------------------------------------------------------------------------

    Proposed paragraph (n) would address service requirements and 
largely tracks the same provision under proposed Sec.  351.225(n), 
i.e., interested parties filing a circumvention inquiry request must 
serve all parties on the annual inquiry service list for that order and 
any companion order. Under proposed paragraph (n), once a circumvention 
inquiry is initiated under paragraph (b) or (d), a segment-specific 
service list would be established, under Sec.  351.103(d)(1), and the 
requirements of

[[Page 49489]]

Sec.  351.303(f) would apply. Once the segment-specific service list is 
established, parties on the annual inquiry service list would no longer 
be served with filings made pursuant to the circumvention inquiry, 
unless they follow the procedures of Sec.  351.103(d)(1) by filing an 
entry of appearance in the relevant circumvention segment. However, as 
discussed further below, Commerce proposes to amend Sec.  351.103(d)(1) 
to reflect that an interested party that submits a request for 
circumvention inquiry need not file an entry of appearance under Sec.  
351.103(d)(1), as that party will be placed on the segment-specific 
service list by Commerce. Additionally, as discussed further below, 
Commerce proposes to amend Sec.  351.305(d) to adopt special filing 
requirements for importers seeking access to business proprietary 
information in circumvention inquiries.
    Finally, proposed paragraph (o) would allow for the circumvention 
inquiry procedures of Sec.  351.226, discussed above, to apply to 
suspended investigations and suspension agreements.

Covered Merchandise Referrals--Section 351.227

    As discussed above, Commerce and CBP work together to ensure the 
effectiveness of AD/CVD orders, and both agencies have their own 
independent authority to examine potential circumvention and duty 
evasion of existing orders.\93\ Pursuant to section 421 of the Enforce 
and Protect Act of 2015,\94\ effective August 22, 2016, section 517 was 
added to the Act, which establishes a formal process for CBP to conduct 
civil administrative investigations of potential duty evasion of AD and 
CVD orders on the basis of an allegation by an interested party or upon 
referral by another Federal agency (referred to herein as an ``EAPA 
investigation'').\95\ Pursuant to section 517(b)(4)(A) of the Act, if 
CBP is conducting an EAPA investigation based on an allegation from an 
interested party, and is unable to determine whether the merchandise at 
issue is ``covered merchandise'' within the meaning of section 
517(a)(3) of the Act, it shall refer the matter to Commerce to make a 
covered merchandise determination (referred to herein as a ``covered 
merchandise referral'').\96\
---------------------------------------------------------------------------

    \93\ Additionally, HSI has the authority to investigate criminal 
violations related to illegal evasion of payment of required duties, 
including payment of AD/CV duties. See, e.g., 18 U.S.C. 542.
    \94\ Public Law 114-125, 130 Stat. 122, 155 (2016).
    \95\ Id., sections 421(a)-(d), 130 Stat. at 161-169.
    \96\ See H.R. Rep. No. 114-376, at 190 (2015) (EAPA Conf. Rep.) 
(``If the Commissioner is unable to determine whether the 
merchandise at issue is covered merchandise, the Commissioner shall 
refer the matter to the Department of Commerce to determine whether 
the merchandise is covered merchandise. The Department of Commerce 
is to make this determination pursuant to its applicable statutory 
and regulatory authority, and the determination shall be subject to 
judicial review under 19 U.S.C. 1516a(a)(2). The Conferees intend 
that such determinations include whether the merchandise at issue is 
subject merchandise under 19 U.S.C. 1677j.'') (referencing sections 
516 and 781 of the Act).
---------------------------------------------------------------------------

    Section 421 of the EAPA requires that the Secretary of the Treasury 
prescribe regulations as necessary to implement the amendments.\97\ 
Although the EAPA does not mandate that Commerce promulgate 
regulations, in order to provide clarity and consistency to the public, 
Commerce proposes to adopt Sec.  351.227, a new regulation to address 
procedures and standards specific to Commerce's consideration of 
covered merchandise referrals. In particular, this new regulation would 
govern Commerce's receipt of a covered merchandise referral, Commerce's 
initiation and conduct of a covered merchandise inquiry, and Commerce's 
covered merchandise determination, pursuant to section 517(b)(4) of the 
Act. The proposed rulemaking is intended to provide for efficient 
notice and service requirements, expedited deadlines, and streamlined 
opportunities to solicit information and comment from interested 
parties. These proposed changes are procedural in nature and pertain to 
the agency's internal process in conducting its covered merchandise 
inquiry. In addition, these changes would not alter the current 
statutory or regulatory framework under which Commerce may already 
request participation of interested parties and issue a substantive 
determination that certain merchandise is within the scope of an AD/CVD 
order, as detailed above.
---------------------------------------------------------------------------

    \97\ See also Investigation of Claims of Evasion of Antidumping 
and Countervailing Duties, Interim Regulations, 81 FR 56477 (August 
22, 2016) (setting forth CBP's interim regulations under section 517 
of the Act).
---------------------------------------------------------------------------

    In promulgating the proposed procedures, Commerce is mindful of 
three aspects of the EAPA. First, as discussed above, section 517(b)(4) 
of the Act requires CBP to make a covered merchandise referral to 
Commerce if it is unable to determine whether the merchandise at issue 
is covered merchandise within the meaning of section 517(a)(3) of the 
Act. To date, Commerce has received only a few covered merchandise 
referrals,\98\ and, thus, we are still familiarizing ourselves with the 
facts and circumstances that would lead CBP to choose to make such a 
referral, as well as the facts and circumstances that would be 
appropriate for Commerce to consider in reaching its covered 
merchandise determination. For instance, there may be a need for 
Commerce to seek further information to establish a more detailed 
description of the merchandise at issue, or engage in a complex 
analysis, before determining whether the merchandise is covered 
merchandise. Commerce, therefore, needs to maintain flexibility in both 
its opportunities to request information and the issues that it 
considers in its analysis, before reaching a covered merchandise 
determination.
---------------------------------------------------------------------------

    \98\ See Wooden Bedroom Furniture From the People's Republic of 
China: Notice of Covered Merchandise Referral, 83 FR 9272 (March 5, 
2018); Hydrofluorocarbon Blends From the People's Republic of China: 
Notice of Covered Merchandise Referral, 83 FR 9277 (March 5, 2018); 
and Diamond Sawblades and Parts Thereof From the People's Republic 
of China: Notice of Covered Merchandise Referral, 83 FR 9280 (March 
5, 2018).
---------------------------------------------------------------------------

    Second, the EAPA does not prescribe timing requirements for 
Commerce to reach its covered merchandise determination. Nevertheless, 
section 517(b)(4)(B) of the Act instructs Commerce to promptly transmit 
its determination to CBP. In addition, the EAPA (section 517(b)(4)(C) 
of the Act) provides that CBP's own deadlines to complete its EAPA 
investigation will be stayed pending completion of Commerce's covered 
merchandise determination. In drafting the proposed regulations, 
Commerce is taking timeliness into account, which we believe is 
consistent with the intent of Congress in drafting the EAPA.
    Third, section 517(b)(4)(D) of the Act provides that the statutory 
scheme for judicial review under section 516A(a)(2) of the Act applies 
to Commerce's covered merchandise determinations.\99\ Under the 
applicable standard of review, Commerce's determinations must be 
supported by substantial evidence and in accordance with law (see 
section 516A(b)(1)(B) of the Act). Thus, to ensure that its covered 
merchandise determinations meet this standard, Commerce intends to 
ensure that parties are afforded opportunities to submit evidence and 
argument for Commerce's consideration in reaching its determination. 
Further, Commerce intends to allow sufficient time for it to consider 
such evidence and arguments for purposes of drafting a well-reasoned 
determination that may be subject to judicial review.
---------------------------------------------------------------------------

    \99\ See EAPA Conf. Rep. at 190.
---------------------------------------------------------------------------

    In short, in proposing new Sec.  351.227, we have taken into 
account considerations relating to: (1) Flexibility

[[Page 49490]]

in Commerce's ability to request information necessary for its analysis 
in reaching a covered merchandise determination; (2) timeliness; and 
(3) scheduling that allows Commerce sufficient time to analyze the 
issues and the record evidence and issue a determination that may be 
subject to judicial review. However, although we are setting forth 
these proposed regulations, as noted above, covered merchandise 
inquiries constitute a new type of segment of a proceeding at Commerce 
and, therefore, Commerce will continue to develop its practice and 
procedures in this area. Further, as detailed below, Commerce 
recognizes the potential significant overlap between a covered 
merchandise inquiry, scope inquiry and circumvention inquiry procedures 
discussed above under Sec. Sec.  351.225 and 351.226, and possibly any 
other segment of a proceeding that may address scope issues.\100\ 
Therefore, in crafting these regulations, Commerce has allowed for the 
flexibility to address CBP's covered merchandise referrals in the 
context of another segment of the proceeding, or to otherwise rely on 
the standards under section 351.225 and 226, in issuing a covered 
merchandise determination.
---------------------------------------------------------------------------

    \100\ Id. (``The Department of Commerce is to make this 
determination pursuant to its applicable statutory and regulatory 
authority, and the determination shall be subject to judicial review 
under 19 U.S.C. 1516a(a)(2). The Conferees intend that such 
determinations include whether the merchandise at issue is subject 
merchandise under 19 U.S.C. 1677j.'').
---------------------------------------------------------------------------

    Proposed section 351.227(a) would introduce the new section and 
briefly describes the framework of CBP's EAPA investigations and 
covered merchandise referrals under section 517 of the Act. 
Additionally, paragraph (a) tracks the similar provision in proposed 
sections 351.225 (scope inquiries) and 351.226 (circumvention 
inquiries), explaining that, unless otherwise specified in new section 
351.227, Commerce's existing procedures contained in subpart C (i.e., 
relating to factual information (sections 351.102(b)(21) and 351.301) 
and the extension of time limits (section 351.302)), apply to covered 
merchandise inquiries.
    Proposed paragraph (b) would provide that, within 15 days after 
receiving a covered merchandise referral that Commerce determines to be 
sufficient, Commerce will take one of three actions. First, under 
paragraph (b)(1), Commerce may initiate a covered merchandise inquiry 
and will publish notice of its initiation in the Federal Register. 
Second, under paragraph (b)(2), Commerce may self-initiate a 
circumvention inquiry in accordance with proposed section 351.226(b) 
and publish notice of its initiation in the Federal Register. Third, 
under paragraph (b)(3), if Commerce determines that the covered 
merchandise referral can be addressed in an ongoing segment of a 
proceeding, such as a scope inquiry, under the proposed revisions to 
section 351.225, or circumvention inquiry, under proposed section 
351.226, Commerce will publish a notice in the Federal Register that it 
intends to address the referral in the context of such other segment.
    In determining whether a covered merchandise referral is 
sufficient, Commerce may consider, among other things, whether the 
referral has provided the name and contact information of the parties 
to CBP's EAPA investigation, including the name and contact information 
of any known representative acting on behalf of such parties; an 
adequate description of the alleged covered merchandise; identification 
of the applicable AD or CVD orders; and any necessary information 
reasonably available to CBP regarding whether the merchandise at issue 
is covered merchandise. Additionally, Commerce will review the covered 
merchandise referral and any accompanying documentation to ensure any 
business proprietary information is properly redacted in accordance 
with Commerce's statutory and regulatory requirements. Regardless of 
which of the three actions Commerce takes with respect to the covered 
merchandise referral, Commerce will place the documents on the record 
of the segment of the proceeding under which Commerce intends to 
address the referral.
    Proposed paragraph (c) would provide the deadline for Commerce to 
conduct covered merchandise inquiries and would also set forth that 
Commerce could only extend the deadline if it determines that the 
inquiry is extraordinarily complicated. This tracks similar language 
under new section 351.226 (circumvention inquiries).
    Proposed paragraph (d) would provide the procedures for covered 
merchandise inquiries, and largely tracks the new procedures provided 
under proposed sections 351.225(f) (scope inquiries) and 351.226(f) 
(circumvention inquiries), with some exceptions. For example, paragraph 
(d)(5) would allow Commerce to forego or rescind a covered merchandise 
inquiry, in whole or in part, for one of three reasons: First, if CBP 
withdraws its covered merchandise referral; second, if the Secretary 
issues a final determination in another segment of a proceeding, which 
can provide the basis for the Secretary's covered merchandise 
determination, thus negating the need for a separate covered 
merchandise inquiry; and, third, where Commerce otherwise determines 
that it is not necessary to initiate or conduct a covered merchandise 
inquiry in response to a covered merchandise referral because the 
matter at issue may be addressed by other means. With respect to this 
third category, this could happen where Commerce believes a prior scope 
ruling or circumvention determination can provide the basis for 
Commerce's covered merchandise determination. In such instances, 
Commerce will issue a final covered merchandise determination in 
accordance with the requirements of paragraph (e)(2) of this section.
    Proposed paragraph (e) would incorporate preliminary and final 
covered merchandise determinations, which will both be published in the 
Federal Register, and largely tracks the requirements under proposed 
section 351.226 pertaining to circumvention inquiries. Similar to 
proposed section 351.226(g)(1), proposed paragraph (e)(1) would allow 
Commerce to issue a preliminary covered merchandise determination, 
based on available information at the time, as to whether there is a 
reasonable basis to believe or suspect that the product that is the 
subject of the covered merchandise inquiry is covered by the scope of 
the order. Proposed paragraph (e)(2), which tracks proposed section 
351.226(g)(2), would provide that, promptly after publication of the 
final covered merchandise determination, Commerce would convey a copy 
of the final determination, in the manner prescribed by section 
516A(a)(2)(A)(ii) of the Act, to all parties to the proceeding, and 
transmit a copy of the final determination to CBP, thus fulfilling its 
obligation under section 517(b)(4)(B) of the Act. The use of the term 
``promptly'' is not defined in section 517(b)(4)(B) of the Act. 
Consistent with the use of the same term in revised section 351.225 and 
new section 351.226, it is Commerce's expectation that prompt 
conveyance and transmittal of a copy of the final covered merchandise 
determination normally would occur no more than 5 business days from 
the publication of the determination in the Federal Register. 
Consistent with sections 516A(a)(2)(A)(ii) and (B)(vi) of the Act, 
judicial review procedures would be commenced based on the date of 
conveyance, as opposed to the date of receipt, of a final covered 
merchandise determination.

[[Page 49491]]

    Paragraph (e)(3) would also clarify that if Commerce addresses the 
covered merchandise referral in the context of another segment of the 
proceeding, or issues a scope ruling, under section 351.225, or a 
circumvention determination, under section 351.226, which provides the 
basis for the covered merchandise determination, Commerce would 
promptly transmit a copy of the final action in that segment to CBP in 
accordance with section 517(b)(4)(B) of the Act.
    Proposed paragraph (f) would explain that, if Commerce issues a 
covered merchandise determination after conducting a covered 
merchandise inquiry, Commerce may rely on the standards provided under 
proposed sections 351.225(j) (country of origin) or (k) (scope 
rulings). Commerce also could rely on the provisions of section 781 of 
the Act regarding the four forms of circumvention (proposed sections 
351.226(h), (i), (j), or (k)). We believe this is consistent with the 
legislative history, which specifically identifies that Commerce may 
follow its existing statutory and regulatory authority in issuing a 
covered merchandise determination.\101\
---------------------------------------------------------------------------

    \101\ See id. at 190.
---------------------------------------------------------------------------

    To maintain consistency with proposed sections 351.225 and 351.226, 
proposed paragraphs (g)-(k) would be reserved. Additionally, the 
following paragraphs would largely mirror the same provisions in 
proposed sections 351.225 and 351.226, which have been discussed in 
detail above: Paragraph (l) concerning suspension of liquidation; 
paragraph (m) concerning applicability of covered merchandise 
determinations; other segments of the proceeding, and companion AD and 
CVD orders; paragraph (n) concerning service; and paragraph (o) 
concerning suspended investigations and suspension agreements. 
Additionally, with respect to proposed paragraph (l), as discussed 
above, any instructions issued by Commerce directing CBP to ``lift 
suspension of liquidation'' and assess duties at the applicable AD/CVD 
rate are not intended to impugn CBP's ability to (1) suspend 
liquidation/assess duties/take any other measures pursuant to CBP's 
EAPA investigation authority under section 517 of the Act specifically, 
or (2) take any other action within CBP's or HSI's authority with 
respect to AD/CVD entries.

Certifications--Section 351.228

    At various points throughout its history of administering the AD 
and CVD laws, Commerce has determined that the establishment of a 
certification scheme is necessary to ensure the enforcement of the AD/
CVD orders or suspension agreements. For example, to carry out the 
terms of certain suspension agreements, Commerce has required 
importers, producers, and exporters to certify to certain requirements 
with respect to the entries and sales of merchandise subject to the 
agreement.\102\ Commerce has also required certifications for various 
AD and CVD orders.\103\ Additionally, Commerce has established a 
certification scheme in the context of its circumvention inquiries to 
ensure that parties claiming merchandise is not subject to an AD/CVD 
order, as a result of a circumvention determination, must certify and 
maintain documentation to that effect.\104\
---------------------------------------------------------------------------

    \102\ See, e.g., Sugar From Mexico: Suspension of Countervailing 
Duty Investigation, 79 FR 78044 (December 29, 2014).
    \103\ See, e.g., Notice of Amended Final Determination of Sales 
at Less Than Fair Value and Antidumping Duty Order: Low Enriched 
Uranium From France, 67 FR 6680 (February 13, 2002) (requiring 
certifications of the importer and end user).
    \104\ See, e.g., Glycine From the People's Republic of China: 
Final Partial Affirmative Determination of Circumvention of the 
Antidumping Duty Order, 77 FR 73426 (December 10, 2012).
---------------------------------------------------------------------------

    Proposed section 351.228 would codify and enhance Commerce's 
existing authority and practice to require certifications by importers 
and other interested parties as to whether merchandise is subject to an 
AD/CVD order. Under proposed section 351.228(b), where that party fails 
to comply with the certification requirements by failing to provide the 
certification upon request, or providing a certification that contains 
materially false, fictitious, or fraudulent statements or 
representations, or material omissions, to Commerce or CBP, as 
appropriate, Commerce would have the authority to instruct CBP to 
collect from the importer cash deposits for the AD or CVD at the 
applicable rate. Commerce recognizes that CBP has its own independent 
authority to address import documentation related to negligence, gross 
negligence, or fraud.\105\ This provision is not intended to supplant 
CBP's authority, nor is a formal finding by CBP required for Commerce 
to determine, within its own authority, that the certification is 
deficient and unreliable for the reasons discussed above. Whether a 
certification contains ``material'' or ``fraudulent'' information is a 
determination that would be made by Commerce pursuant to its own 
authority and consideration of the normal meaning of those terms.\106\
---------------------------------------------------------------------------

    \105\ Additionally, HSI has the authority to investigate 
criminal violations related to illegal evasion of payment of 
required duties, including payment of AD/CV duties. See, e.g., 18 
U.S.C. 542.
    \106\ Commerce does not intend to be restricted by the 
interpretations or policies set forth by other agencies in 
interpreting those terms in applying other areas of law.
---------------------------------------------------------------------------

Importer Reimbursement Certification--Section 351.402(f)(2)

    Section 351.402(f)(1)(i) of Commerce's regulations provide that in 
calculating the export price, or constructed export price in 
determining an AD margin, Commerce will deduct any AD or CVD duties 
that the exporter or producer paid on behalf of the importer or 
reimbursed to the importer. Section 351.402(f)(1)(ii) provides an 
exception that in calculating export price or constructed export price, 
Commerce will not deduct AD or CVD duties if an exporter or producer 
granted to the importer before initiation of the AD investigation in 
question a warranty of nonapplicability of AD/CVD duties with respect 
to subject merchandise (1) sold before the date of publication of the 
notice of first suspension of liquidation, and (2) exported before the 
date of publication of the final AD determination.
    Section 351.402(f)(2) currently requires importers of AD entries to 
file prior to liquidation a certificate with CBP that identifies 
whether the importer has or has not entered into an agreement for the 
payment or reimbursement of AD or CVD duties. This certificate is 
required for each entry (or a group of entries) subject to AD duties, 
and must identify the relevant merchandise to which it relates. 
Consistent with section 351.402(f)(1)(i), if an importer certifies that 
it has entered into an agreement for the payment or reimbursement of AD 
or CVD duties, Commerce will deduct any AD or CVD duties that the 
exporter or producer paid on behalf of the importer or reimbursed to 
the importer. However, consistent with section 351.402(f)(2)(ii), 
Commerce will not deduct AD or CVD duties paid or reimbursed with 
respect to subject merchandise (1) sold before the date of publication 
of the notice of first suspension of liquidation, and (2) exported 
before the date of publication of the final AD determination where, 
before the initiation of the AD investigation in question, the exporter 
or producer granted a warranty of nonapplicability of AD or CVD duties 
with respect to the merchandise. Additionally, under section 
351.402(f)(3), if the importer does not provide the certificate prior 
to liquidation, Commerce presumes that the exporter or producer paid or 
reimbursed such duties and will deduct

[[Page 49492]]

the applicable AD or CVD duties that the exporter or producer is 
presumed to have paid on behalf of the importer or reimbursed to the 
importer. The current regulation, which is largely unchanged as it 
existed 40 years ago,\107\ is otherwise silent regarding the specific 
filing requirements for the certificate.
---------------------------------------------------------------------------

    \107\ See 19 CFR 153.49 (``Reimbursement of dumping duties'') 
(1979).
---------------------------------------------------------------------------

    Section 405 of the Security and Accountability for Every (SAFE) 
Port Act of 2006, Public Law 109-347, established the International 
Data Trade System (ITDS), the purpose of which ``is to eliminate 
redundant information requirements, to efficiently regulate the flow of 
commerce, and to effectively enforce laws and regulations relating to 
international trade, by establishing a single portal system, operated 
by CBP, for the collection and distribution of standard electronic 
import and export data required by all participating Federal 
agencies.'' Flowing from this, one goal of the ITDS is to encourage and 
facilitate the transition of paper filing requirements for certain 
import documentation to electronic format.
    Accordingly, Commerce proposes to modify section 351.402(f)(2) to 
clarify that for all entries subject to AD duties, the importer must 
file a reimbursement certification in either electronic or paper form 
in accordance with CBP's requirements, as applicable. Additionally, 
Commerce proposes to remove the requirement for specific certification 
language, and instead allow importers to certify to the substance of 
the certification. Moreover, for ease of administration, Commerce 
proposes to clarify that a certification is required for each entry of 
merchandise subject to AD duties imported on or after the date of the 
first suspension of liquidation.\108\ Furthermore, although such 
certification is required prior to liquidation, Commerce proposes to 
clarify that CBP may also accept the reimbursement certification in 
accordance with its protest procedures under 19 U.S.C. 1514. Commerce 
is also proposing non-substantive restructuring of the regulation.
---------------------------------------------------------------------------

    \108\ Sections 351.402(f)(1(i) and (ii) are unchanged in this 
proposed rule. Therefore, Commerce will not deduct AD or CVD duties 
paid or reimbursed with respect to subject merchandise (1) sold 
before the date of publication of the notice of first suspension of 
liquidation, and (2) exported before the date of publication of the 
final AD determination where, before the initiation of the AD 
investigation in question, the exporter or producer granted a 
warranty of nonapplicability of AD or CVD duties with respect to the 
merchandise.
---------------------------------------------------------------------------

Other Procedural Amendments--Sections 351.103(d)(1) and 305(d)

    Consistent with the substantive proposed rules discussed above, 
Commerce proposes to adopt necessary changes to two procedural 
regulations, section 351.103(d)(1) pertaining to letters of appearance 
and public service lists, and section 351.305(d) pertaining to importer 
filing requirements for access to business proprietary information in 
Commerce's proceedings. As discussed above, under revised section 
351.225, pertaining to scope inquiries, Commerce proposes to amend 
section 351.103(d)(1) to reflect that an interested party that submits 
a scope ruling application need not file an entry of appearance, under 
section 351.103(d)(1), as that interested party will be placed on the 
segment-specific service list for that scope inquiry by Commerce. 
Similarly, as discussed above, under revised section 351.226, 
pertaining to circumvention inquiries, Commerce proposes to amend 
section 351.103(d)(1) to reflect that an interested party that submits 
a request for a circumvention inquiry need not file an entry of 
appearance under section 351.103(d)(1) to be placed on the segment-
specific service list for that circumvention inquiry. We have also made 
minor amendments to section 351.103(d)(1) to reflect the filing of an 
``entry of appearance,'' rather than a ``letter of appearance,'' to 
more accurately describe Commerce's electronic filing process.
    Further, current section 351.305(d) would provide special filing 
requirements for importers seeking access to business proprietary 
information in Commerce's proceedings, and would mandate that for scope 
segments of a proceeding, under existing section 351.225, an applicant 
seeking access to business proprietary information on behalf of an 
importer must demonstrate that the party is an importer, or has taken 
steps to import, the merchandise subject to the scope inquiry. This 
language would be unchanged with respect to importers in scope 
inquiries, but we have added similar language for importers in 
circumvention inquiries, under proposed section 351.226.
    Lastly, with respect to covered merchandise inquiries under 
proposed section 351.227, we propose changes to both sections 
351.103(d)(1) and 305(d). Specifically, under revised section 
351.103(d)(1), any publicly identified parties in a covered merchandise 
referral from CBP, under section 517 of the Act, need not file an entry 
of appearance in the covered merchandise inquiry to be added to the 
segment-specific service list for that segment of the proceeding. 
Additionally, under revised section 351.305(d), an applicant for access 
to business proprietary information on behalf of a party that has been 
publicly identified by CBP as the importer in a covered merchandise 
referral is exempt from the requirements of demonstrating that the 
party is an importer for purposes of a covered merchandise inquiry.

Classifications

Executive Order 12866

    OMB has determined that this proposed rule is significant for 
purposes of Executive Order 12866.

Executive Order 13771

    This rule is not subject to the requirements of E.O. 13771 because 
this rule results in no more than de minimis costs.

Paperwork Reduction Act

    This proposed rule contains no collection of information subject to 
the Paperwork Reduction Act, 44 U.S.C. chapter 35.

Executive Order 13132

    This proposed rule does not contain policies with federalism 
implications as that term is defined in section 1(a) of Executive Order 
13132, dated August 4, 1999 (64 FR 43255 (August 10, 1999)).

Regulatory Flexibility Act

    The Chief Counsel for Regulation has certified to the Chief Counsel 
for Advocacy of the Small Business Administration under the provisions 
of the Regulatory Flexibility Act, 5 U.S.C. 605(b), that the proposed 
rule would not have a significant economic impact on a substantial 
number of small business entities. A summary of the need for, 
objectives of, and legal basis for this rule is provided in the 
preamble, and is not repeated here.
    The entities upon which this rulemaking could have an impact 
include foreign governments, foreign exporters and producers, some of 
whom are affiliated with U.S. companies, and U.S. importers. 
Enforcement & Compliance currently does not have information on the 
number of entities that would be considered small under the Small 
Business Administration's size standards for small businesses in the 
relevant industries. However, some of these entities may be considered 
small entities under the appropriate industry size standards. Although 
this proposed rule may indirectly impact small entities that are 
parties to individual AD and CVD proceedings, it

[[Page 49493]]

will not have a significant economic impact on any such entities 
because the proposed rule applies to administrative enforcement 
actions, only clarifying and establishing streamlined procedures; it 
does not impose any significant costs on regulated entities. Therefore, 
the proposed rule would not have a significant economic impact on a 
substantial number of small business entities. For this reason, an 
Initial Regulatory Flexibility Analysis is not required and one has not 
been prepared.

List of Subjects in 19 CFR Part 351

    Administrative practice and procedure, Antidumping, Business and 
industry, Cheese, Confidential business information, Countervailing 
duties, Freedom of information, Investigations, Reporting and 
recordkeeping requirements.

    Dated: July 7, 2020.
Jeffrey I. Kessler,
Assistant Secretary for Enforcement and Compliance.

    For the reasons stated in the preamble, the Department of Commerce 
proposes to amend 19 CFR part 351 as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

0
1. The authority citation for 19 CFR part 351 continues to read as 
follows:

    Authority:  5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.

0
2. Revise paragraph (d)(1) of Sec.  351.103 to read as follows:


Sec.  351.103  Central Records Unit and Administrative Protective Order 
and Dockets Unit.

* * * * *
    (d) * * *
    (1) With the exception of a petitioner filing a petition in an 
investigation pursuant to Sec.  351.202, an interested party filing a 
scope ruling application pursuant to Sec.  351.225(c), an interested 
party filing a request for a circumvention inquiry pursuant to Sec.  
351.226(c), and those relevant parties identified by the Customs 
Service in a covered merchandise referral pursuant to Sec.  351.226, 
all persons wishing to participate in a segment of a proceeding must 
file an entry of appearance. The entry of appearance must identify the 
name of the interested party, how that party qualifies as an interested 
party under Sec.  351.102(b)(29) and section 771(9) of the Act, and the 
name of the firm, if any, representing the interested party in that 
particular segment of the proceeding. All persons who file an entry of 
appearance and qualify as an interested party will be included in the 
public service list for the segment of the proceeding in which the 
entry of appearance is submitted. The entry of appearance may be filed 
as a cover letter to an application for APO access. If the 
representative of the interested party is not requesting access to 
business proprietary information under APO, the entry of appearance 
must be filed separately from any other document filed with the 
Department. If the interested party is a coalition or association as 
defined in subparagraph (A), (E), (F) or (G) of section 771(9) of the 
Act, the entry of appearance must identify all of the members of the 
coalition or association.
* * * * *
0
3. Add paragraph (g) to Sec.  351.203 to read as follows:


Sec.  351.203  Determination of sufficiency of petition.

* * * * *
    (g) Time limits for filing interested party comments on industry 
support. For purposes of sections 702(c)(4)(E) and 732(c)(4)(E) of the 
Act, the Secretary will consider comments or information on the issue 
of industry support submitted no later than 5 business days before the 
date referenced in paragraph (b)(1) of this section by any interested 
party under section 771(9) of the Act. The Secretary will consider 
rebuttal comments or information to rebut, clarify, or correct such 
information on industry support submitted by any interested party no 
later than two calendar days from the time limit for filing comments.
0
4. Revise Sec.  351.214 to read as follows:


Sec.  351.214  New shipper reviews under section 751(a)(2)(B) of the 
Act.

    (a) Introduction. Section 751(a)(2)(B) of the Act provides a 
procedure by which so-called ``new shippers'' can obtain their own 
individual dumping margin or countervailable subsidy rate on an 
expedited basis. In general, a new shipper is an exporter or producer 
that did not export, and is not affiliated with an exporter or producer 
that did export, to the United States during the period of 
investigation. Furthermore, section 751(a)(2)(B)(iv) requires that the 
Secretary make a determination of whether the sales under review are 
bona fide. This section contains rules regarding requests for new 
shipper reviews and procedures for conducting such reviews, as well as 
requirements for determining whether sales are bona fide under section 
751(a)(2)(B)(iv) of the Act. In addition, this section contains rules 
regarding requests for expedited reviews by non-investigated exporters 
in certain countervailing duty proceedings and procedures for 
conducting such reviews.
    (b) Request for new shipper review--(1) Requirement of sale or 
export. Subject to the requirements of section 751(a)(2)(B) of the Act 
and this section, an exporter or producer may request a new shipper 
review if it has exported, or sold for export, subject merchandise to 
the United States and can demonstrate the existence of a bona fide 
sale.
    (2) Contents of request. A request for a new shipper review must 
contain the following:
    (i) If the person requesting the review is both the exporter and 
producer of the merchandise, a certification that the person requesting 
the review did not export subject merchandise to the United States (or, 
in the case of a regional industry, did not export the subject 
merchandise for sale in the region concerned) during the period of 
investigation;
    (ii) If the person requesting the review is the exporter, but not 
the producer, of the subject merchandise:
    (A) The certification described in paragraph (b)(2)(i) of this 
section; and
    (B) A certification from the person that produced or supplied the 
subject merchandise to the person requesting the review that that 
producer or supplier did not export the subject merchandise to the 
United States (or, in the case of a regional industry, did not export 
the subject merchandise for sale in the region concerned) during the 
period of investigation;
    (iii)(A) A certification that, since the investigation was 
initiated, such exporter or producer has never been affiliated with any 
exporter or producer who exported the subject merchandise to the United 
States (or in the case of a regional industry, who exported the subject 
merchandise for sale in the region concerned) during the period of 
investigation, including those not individually examined during the 
investigation; and
    (B) In an antidumping proceeding involving imports from a nonmarket 
economy country, a certification that the export activities of such 
exporter or producer are not controlled by the central government;
    (iv)(A) A certification from the unaffiliated customer in the 
United States that it did not purchase the subject merchandise from the 
producer or exporter during the period of investigation; and
    (B) A certification from the unaffiliated customer in the United 
States that it will provide necessary

[[Page 49494]]

information requested by the Secretary regarding its purchase of 
subject merchandise.
    (v) Documentation establishing:
    (A) The date on which subject merchandise of the exporter or 
producer making the request was first entered, or withdrawn from 
warehouse, for consumption, or, if the exporter or producer cannot 
establish the date of first entry, the date on which the exporter or 
producer first shipped the subject merchandise for export to the United 
States;
    (B) The volume of that and subsequent shipments, including whether 
such shipments were made in commercial quantities;
    (C) The date of the first sale, and any subsequent sales, to an 
unaffiliated customer in the United States; and
    (D) The circumstances surrounding such sale(s), including but not 
limited to:
    (1) The price of such sales;
    (2) Any expenses arising from such sales;
    (3) Whether the subject merchandise involved in such sales was 
resold in the United States at a profit;
    (4) Whether such sales were made on an arms-length basis;
    (E) Additional documentation regarding the business activities of 
the producer or exporter, including but not limited to:
    (1) The producer or exporter's offers to sell merchandise in the 
United States;
    (2) An identification of the complete circumstance surrounding the 
producer or exporter's sales to the United States, as well as any home 
market or third country sales;
    (3) In the case of a non-producing exporter, an explanation of the 
exporter's relationship with its producer/supplier; and
    (4) An identification of the producer's or exporter's relationship 
to the first unrelated U.S. purchaser;
    (vi) In the case of a review of a countervailing duty order, a 
certification that the exporter or producer has informed the government 
of the exporting country that the government will be required to 
provide a full response to the Department's questionnaire.
    (c) Deadline for requesting review. An exporter or producer may 
request a new shipper review within one year of the date referred to in 
paragraph (b)(2)(v)(A) of this section.
    (d) Initiation of new shipper review--(1) In general. If the 
requirements for a request for new shipper review under paragraph (b) 
of this section are satisfied, the Secretary will initiate a new 
shipper review under this section in the calendar month immediately 
following the anniversary month or the semiannual anniversary month if 
the request for the review is made during the 6-month period ending 
with the end of the anniversary month or the semiannual anniversary 
month (whichever is applicable).
    (2) Semiannual anniversary month. The semiannual anniversary month 
is the calendar month that is 6 months after the anniversary month.
    (3) Example. An order is published in January. The anniversary 
month would be January, and the semiannual anniversary month would be 
July. If the Secretary received a request for a new shipper review at 
any time during the period February-July, the Secretary would initiate 
a new shipper review in August. If the Secretary received a request for 
a new shipper review at any time during the period August-January, the 
Secretary would initiate a new shipper review in February.
    (4) Exception. If the Secretary determines that the requirements 
for a request for new shipper review under paragraph (b) of this 
section have not been satisfied, the Secretary will reject the request 
and provide a written explanation of the reasons for the rejection.
    (e) Suspension of liquidation. When the Secretary initiates a new 
shipper review under this section, the Secretary will direct the 
Customs Service to suspend or continue to suspend liquidation of any 
unliquidated entries of the subject merchandise from the relevant 
exporter or producer at the applicable cash deposit rate.
    (f) Rescission of new shipper review--(1) Withdrawal of request for 
review. The Secretary may rescind a new shipper review under this 
section, in whole or in part, if a producer or exporter that requested 
a review withdraws its request not later than 60 days after the date of 
publication of notice of initiation of the requested review.
    (2) Absence of entry and sale to an unaffiliated customer. The 
Secretary may rescind a new shipper review, in whole or in part, if the 
Secretary concludes that:
    (i) As of the end of the normal period of review referred to in 
paragraph (g) of this section, there has not been an entry and sale to 
an unaffiliated customer in the United States of subject merchandise; 
and
    (ii) An expansion of the normal period of review to include an 
entry and sale to an unaffiliated customer in the United States of 
subject merchandise would be likely to prevent the completion of the 
review within the time limits set forth in paragraph (i) of this 
section;
    (3) Absence of bona fide sale to an unaffiliated customer. The 
Secretary may rescind a new shipper review, in whole or in part, if the 
Secretary concludes that:
    (i) Information that the Secretary considers necessary to conduct a 
bona fide sale analysis is not on the record; or
    (ii) The producer or exporterseeking a new shipper review has 
failed to demonstrate to the satisfaction of the Secretary the 
existence of a bona fide sale to an unaffiliated customer.
    (4) Notice of Rescission. If the Secretary rescinds a new shipper 
review (in whole or in part), the Secretary will publish in the Federal 
Register notice of ``Rescission of Antidumping (Countervailing Duty) 
New Shipper Review'' or, if appropriate, ``Partial Rescission of 
Antidumping (Countervailing Duty) New Shipper Review.''
    (g) Period of review--(1) Antidumping proceeding--(i) In general. 
Except as provided in paragraph (g)(1)(ii) of this section, in an 
antidumping proceeding, a new shipper review under this section 
normally will cover, as appropriate, entries, exports, or sales during 
the following time periods:
    (A) If the new shipper review was initiated in the month 
immediately following the anniversary month, the twelve-month period 
immediately preceding the anniversary month; or
    (B) If the new shipper review was initiated in the month 
immediately following the semiannual anniversary month, the period of 
review will be the six-month period immediately preceding the 
semiannual anniversary month.
    (ii) Exceptions. (A) If the Secretary initiates a new shipper 
review under this section in the month immediately following the first 
anniversary month, the review normally will cover, as appropriate, 
entries, exports, or sales during the period from the date of 
suspension of liquidation under this part to the end of the month 
immediately preceding the first anniversary month.
    (B) If the Secretary initiates a new shipper review under this 
section in the month immediately following the first semiannual 
anniversary month, the review normally will cover, as appropriate, 
entries, exports, or sales during the period from the date of 
suspension of liquidation under this part to the end of the month 
immediately preceding the first semiannual anniversary month.

[[Page 49495]]

    (2) Countervailing duty proceeding. In a countervailing duty 
proceeding, the period of review for a new shipper review under this 
section will be the same period as that specified in Sec.  
351.213(e)(2) for an administrative review.
    (h) Procedures. The Secretary will conduct a new shipper review 
under this section in accordance with Sec.  351.221.
    (i) Time limits--(1) In general. Unless the time limit is waived 
under paragraph (j)(3) of this section, the Secretary will issue 
preliminary results of review (see Sec.  351.221(b)(4)) within 180 days 
after the date on which the new shipper review was initiated, and final 
results of review (see Sec.  351.221(b)(5)) within 90 days after the 
date on which the preliminary results were issued.
    (2) Exception. If the Secretary concludes that a new shipper review 
is extraordinarily complicated, the Secretary may extend the 180-day 
period to 300 days, and may extend the 90-day period to 150 days.
    (j) Multiple reviews. Notwithstanding any other provision of this 
subpart, if a review (or a request for a review) under Sec.  351.213 
(administrative review), Sec.  351.214 (new shipper review), Sec.  
351.215 (expedited antidumping review), or Sec.  351.216 (changed 
circumstances review) covers merchandise of an exporter or producer 
subject to a review (or to a request for a review) under this section, 
the Secretary may, after consulting with the exporter or producer:
    (1) Rescind, in whole or in part, a review in progress under this 
subpart;
    (2) Decline to initiate, in whole or in part, a review under this 
subpart; or
    (3) Where the requesting producer or exporter agrees in writing to 
waive the time limits of paragraph (i) of this section, conduct 
concurrent reviews, in which case all other provisions of this section 
will continue to apply with respect to the exporter or producer.
    (k) Determinations based on bona fide sales. In determining whether 
the U.S. sales of an exporter or producer made during the period 
covered by the review are bona fide, the Secretary shall consider the 
factors identified at section 752(a)(2)(B)(iv) of the Act. In 
accordance with section 751(a)(2)(B)(iv)(VII) of the Act, the Secretary 
shall consider the following factors:
    (1) Whether the producer, exporter, or customer was established for 
purposes of the sale(s) in question after the imposition of the 
relevant antidumping or countervailing duty order;
    (2) Whether the producer, exporter, or customer has lines of 
business unrelated to the subject merchandise;
    (3) Whether there is an established history of duty evasion with 
respect to new shipper reviews or circumvention under the relevant 
antidumping or countervailing duty order;
    (4) Whether there is an established history of duty evasion with 
respect to new shipper reviews or circumvention under any antidumping 
or countervailing duty orders in the same or similar industry;
    (5) The quantity of sales; and
    (6) Any other factor that the Secretary determines to be relevant 
with respect to the future selling behavior of the producer or 
exporter, including any other indicia that the sale was not 
commercially viable.
    (l) Expedited reviews in countervailing duty proceedings for 
noninvestigated exporters--(1) Request for review. If, in a 
countervailing duty investigation, the Secretary limited the number of 
exporters or producers to be individually examined under section 
777A(e)(2)(A) of the Act, an exporter that the Secretary did not select 
for individual examination or that the Secretary did not accept as a 
voluntary respondent (see Sec.  351.204(d)) may request a review under 
this paragraph (l). An exporter must submit a request for review within 
30 days of the date of publication in the Federal Register of the 
countervailing duty order. A request must be accompanied by a 
certification that:
    (i) The requester exported the subject merchandise to the United 
States during the period of investigation;
    (ii) The requester is not affiliated with an exporter or producer 
that the Secretary individually examined in the investigation; and
    (iii) The requester has informed the government of the exporting 
country that the government will be required to provide a full response 
to the Department's questionnaire.
    (2) Initiation of review--(i) In general. The Secretary will 
initiate a review in the month following the month in which a request 
for review is due under paragraph (l)(1) of this section.
    (ii) Example. The Secretary publishes a countervailing duty order 
on January 15. An exporter would have to submit a request for a review 
by February 14. The Secretary would initiate a review in March.
    (3) Conduct of review. The Secretary will conduct a review under 
this paragraph (l) in accordance with the provisions of this section 
applicable to new shipper reviews, subject to the following exceptions:
    (i) The period of review will be the period of investigation used 
by the Secretary in the investigation that resulted in the publication 
of the countervailing duty order (see Sec.  351.204(b)(2));
    (ii) The final results of a review under this paragraph (l) will 
not be the basis for the assessment of countervailing duties; and
    (iii) The Secretary may exclude from the countervailing duty order 
in question any exporter for which the Secretary determines an 
individual net countervailable subsidy rate of zero or de minimis (see 
Sec.  351.204(e)(1)), provided that the Secretary has verified the 
information on which the exclusion is based.
    (m) Exception from assessment in regional industry cases. For 
procedures relating to a request for the exception from the assessment 
of antidumping or countervailing duties in a regional industry case, 
see Sec.  351.212(f).
0
5. Revise Sec.  351.225 to read as follows:


Sec.  351.225   Scope rulings.

    (a) Introduction. Questions sometimes arise as to whether a 
particular product is covered by the scope of an antidumping or 
countervailing duty order. Such questions may arise for a variety of 
reasons given that the description of the merchandise subject to the 
scope is written in general terms. The Secretary will initiate and 
conduct a scope inquiry and issue a scope ruling to determine whether 
or not a product is covered by the scope of an order at the request of 
an interested party or on the Secretary's initiative. A scope ruling 
that a product is within the scope of the order is a determination that 
the product has always been within the scope of the order. This section 
contains rules and procedures regarding scope rulings, including scope 
ruling applications, scope inquiries, and standards used in determining 
whether a product is covered by the scope of an order. Unless otherwise 
specified, the procedures as described in subpart C of this part 
(Sec. Sec.  351.301 through 351.308 and Sec. Sec.  351.312 through 
351.313) apply to this section.
    (b) Self-initiation of a scope inquiry. If the Secretary determines 
from available information that an inquiry is warranted to determine 
whether a product is covered by the scope of an order, the Secretary 
may initiate a scope inquiry and notify, electronically or otherwise, 
all parties on the annual inquiry service list (see paragraph (n) of 
this section).
    (c) Scope ruling application--(1) Contents. An interested party may 
submit a scope ruling application

[[Page 49496]]

requesting that the Secretary conduct a scope inquiry to determine 
whether a product, which is or has been in actual production by the 
time of the filing of the application, is covered by the scope of an 
order. The Secretary will make available a scope ruling application, 
which the applicant must fully complete and serve in accordance with 
the requirements of paragraph (n) of this section. To the extent 
reasonably available to the applicant, the scope ruling application 
must include the requested information under paragraph (c)(2) of this 
section and relevant supporting documentation.
    (2) Requested information. (i) A detailed physical description of 
the product, including:
    (A) The characteristics (including technical, physical, chemical or 
otherwise) of the product;
    (B) The uses of the product;
    (C) The product's tariff classification under the Harmonized Tariff 
Schedule of the United States;
    (D) Clear and legible photographs, schematic drawings, 
specifications, standards, marketing materials, and any other exemplars 
providing a visual depiction of the product; and
    (E) A description of parts, materials, and the production process 
employed in the production of the product.
    (ii) A concise public description of the product and public 
identification of the name and address of the producer, exporter, and 
importer of the product, if reasonably available to the applicant.
    (iii) A narrative history of the production of the product at 
issue, including a history of earlier versions of the product if this 
is not the first model of the product.
    (iv) The volume of annual production of the product for the most 
recently completed fiscal year.
    (v) If the product has been imported into the United States as of 
the date of the filing of the scope ruling application:
    (A) An explanation as to whether an entry of the product has been 
classified as subject to an order; and
    (B) Relevant documentation, including dated copies of the Customs 
and Border Protection entry summary forms (or electronic entry 
processing system documentation) identifying the product upon 
importation and other related commercial documents, including, but not 
limited to, invoices and contracts, which reflect the details 
surrounding the sale and purchase of that imported product.
    (vi) A statement as to whether the product undergoes any additional 
processing in the United States after importation, or in a third 
country before importation, and a statement as to the relevance of this 
processing to the scope of the order.
    (vii) The applicant's statement as to whether the product is 
covered by the scope of the order, including:
    (A) An explanation with specific reference to paragraph (j) and (k) 
of this section, as appropriate;
    (B) Citations to any applicable legal authority; and
    (C) Whether there are companion orders as described in paragraph 
(m)(2) of this section.
    (viii) Factual information supporting the applicant's position, 
including full copies of prior scope determinations and relevant 
excerpts of other documents identified in paragraph (k)(1) of this 
section.
    (d) Initiation of a scope inquiry based on a scope ruling 
application. (1) Within 30 days after the filing of a scope ruling 
application, the Secretary will determine whether to accept or reject 
the scope ruling application. If the Secretary determines that a scope 
ruling application is incomplete or otherwise unacceptable, the 
Secretary may reject the scope ruling application and will provide a 
written explanation of the reasons for the rejection. If the scope 
ruling application is rejected, the applicant may resubmit the full 
application at any time, with all identified deficiencies corrected.
    (2) If the Secretary does not reject the scope ruling application, 
it will be deemed accepted 31 days after filing and the scope inquiry 
will be deemed initiated.
    (e) Time limits--(1) In general. The Secretary shall issue a final 
scope ruling within 120 days after the date on which the scope inquiry 
was initiated under paragraph (b) or (d) of this section. (2) 
Extension. The Secretary may extend the deadline in paragraph (e)(1) of 
this section by no more than 180 days if the Secretary determines that 
good cause exists to warrant an extension. Situations in which good 
cause has been demonstrated may include, but are not limited to, the 
following:
    (i) If the Secretary has issued questionnaires to the applicant or 
other interested parties; received responses to those questionnaires; 
and determined that an extension is warranted to request further 
information or consider and address the parties' responses on the 
record adequately; or
    (ii) The Secretary has issued a preliminary scope ruling (see 
paragraph (g) of this section).
    (f) Scope inquiry procedures. (1) Within 20 days of the Secretary's 
self-initiation of a scope inquiry under paragraph (b) of this section, 
interested parties are permitted one opportunity to submit comment and 
factual information addressing the self-initiation. Within 10 days of 
the filing of such comments, any interested party is permitted one 
opportunity to submit comment and factual information to rebut, 
clarify, or correct factual information submitted by the other 
interested parties.
    (2) Within 20 days of the initiation of a scope inquiry under 
paragraph (d)(2) of this section, an interested party other than the 
applicant is permitted one opportunity to submit comment and factual 
information to rebut, clarify, or correct factual information contained 
in the scope ruling application. Within 10 days of the filing of such 
rebuttal, clarification, or correction, the applicant is permitted one 
opportunity to submit comment and factual information to rebut, 
clarify, or correct factual information submitted in the interested 
party's rebuttal, clarification or correction.
    (3) Following initiation of a scope inquiry under paragraph (b) or 
(d) of this section, the Secretary may issue questionnaires and verify 
submissions received, where appropriate. The Secretary may limit 
issuance of questionnaires to a reasonable number of respondents. 
Questionnaire responses are due on the date specified by the Secretary. 
Within 10 days after a questionnaire response has been filed with the 
Secretary, an interested party other than the original submitter is 
permitted one opportunity to submit comment and factual information to 
rebut, clarify, or correct factual information contained in the 
questionnaire response. Within five days of the filing of such 
rebuttal, clarification, or correction, the original submitter is 
permitted one opportunity to submit comment and factual information to 
rebut, clarify, or correct factual information submitted in the 
interested party's rebuttal, clarification or correction.
    (4) If the Secretary issues a preliminary scope ruling under 
paragraph (g) of this section, which is not issued concurrently with 
the initiation of the scope inquiry, the Secretary will establish a 
schedule for the filing of scope comments and rebuttal comments. Unless 
otherwise specified, any interested party may submit scope comments 
within 10 days after the issuance of the preliminary scope ruling, and 
any interested party may submit rebuttal comments within 5 days 
thereafter. Unless otherwise specified, no factual information will be 
accepted in the scope or rebuttal comments.

[[Page 49497]]

    (5) If the Secretary issues a preliminary scope ruling concurrently 
with the initiation of a scope inquiry under paragraph (g) of this 
section, paragraphs (f)(1) through (4) of this section will not apply. 
In such a situation, the Secretary will establish appropriate 
procedures on a case-specific basis.
    (6) If the Secretary determines it is appropriate to do so, the 
Secretary may rescind a scope inquiry under this section.
    (7) The Secretary may alter any deadlines under this paragraph or 
establish a separate schedule for the filing of comments and/or factual 
information during the scope inquiry, as appropriate.
    (g) Preliminary scope ruling. The Secretary may issue a preliminary 
scope ruling, based upon the available information at the time, as to 
whether there is a reasonable basis to believe or suspect that the 
product subject to a scope inquiry is covered by the scope of the 
order. In determining whether to issue a preliminary scope ruling, the 
Secretary may consider the complexity of the issues and arguments 
raised in the scope inquiry. The Secretary may issue a preliminary 
scope ruling concurrently with the initiation of a scope inquiry under 
paragraph (b) or (d) of this section.
    (h) Final scope ruling. The Secretary will issue a final scope 
ruling as to whether the product that is the subject of the scope 
inquiry is covered by the scope of the order, including an explanation 
of the factual and legal conclusions on which the final scope ruling is 
based. The Secretary will promptly convey a copy of the final scope 
ruling in the manner prescribed by section 516A(a)(2)(A)(ii) of the Act 
to all parties to the proceeding (see Sec.  351.102(b)(36)).
    (i) Other segments of the proceeding. (1) Notwithstanding any other 
provision of this section, the Secretary may, but is not required to, 
address scope issues in another segment of the proceeding, such as an 
administrative review under Sec.  351.213, a circumvention inquiry 
under Sec.  351.226, or a covered merchandise inquiry under Sec.  
351.227, without initiating or conducting a scope inquiry under this 
section. For example, the Secretary may forego or rescind a scope 
inquiry under this section and determine whether the product at issue 
is covered by the scope of the order in another segment of the 
proceeding (including another scope inquiry, see paragraph (m)(1) of 
this section).
    (2) Notwithstanding any other provision of this section, the 
Secretary may modify the deadlines of the scope inquiry to align with 
the deadlines of another segment of the proceeding or make no changes 
to its scope inquiry deadlines.
    (3) During the pendency of a scope inquiry or upon issuance of a 
final scope ruling under paragraph (h) of this section, the Secretary 
may take any further action, as appropriate, with respect to another 
segment of the proceeding. For example, if the Secretary considers it 
appropriate, the Secretary may request information concerning the 
product that is the subject of the scope inquiry for purpose of an 
administrative review under Sec.  351.213.
    (j) Country of origin determinations. In considering whether a 
product is covered by the scope of the order at issue, the Secretary 
may need to determine the country of origin of the product. To make 
such a determination, the Secretary may use any reasonable method and 
is not bound by the determinations of any other agency, including 
tariff classification and country of origin marking rulings issued by 
the Customs Service. In determining the country of origin, the 
Secretary may conduct a substantial transformation analysis that 
considers relevant factors that arise on a case-by-case basis, 
including:
    (1) Whether the processed downstream product is a different class 
or kind of merchandise than the upstream product;
    (2) The characteristics (including technical, physical, chemical or 
otherwise) and intended end-use of the product;
    (3) The cost of production/value added of further processing in the 
third country or countries;
    (4) The nature and sophistication of processing in the third 
country or countries; and
    (5) The level of investment in the third country or countries.
    In conducting a country of origin determination, the Secretary also 
may consider where the essential component of the product is produced 
or where the essential characteristics of the product are imparted.
    (k) Scope rulings. In determining whether a product is covered by 
the scope of the order at issue, the Secretary will consider the 
language of the scope and may make its determination on this basis 
alone if the language of the scope, including the descriptions of 
merchandise expressly excluded from the scope, is dispositive.
    (1) In considering the language of the scope, at the Secretary's 
discretion, the following may also be considered:
    (i) The descriptions of the merchandise contained in the petition;
    (ii) The descriptions of the merchandise contained in the initial 
investigation;
    (iii) Determinations of the Secretary, including, but not limited 
to, prior scope rulings, memoranda, or clarifications; and
    (iv) Determinations of the Commission, including reports issued 
pursuant to the Commission's initial investigation.
    (2) If the Secretary determines that the above sources are not 
dispositive, the Secretary will then further consider:
    (i) The characteristics (including technical, physical, chemical or 
otherwise) of the product;
    (ii) The expectations of the ultimate purchasers;
    (iii) The ultimate use of the product;
    (iv) The channels of trade in which the product is sold; and
    (v) The manner in which the product is advertised and displayed.
    (3) If merchandise contains two or more components and the product 
at issue in the scope inquiry is a component of that merchandise, the 
Secretary will first analyze the scope language and the criteria above 
to determine if the product, standing alone, would be covered by an 
order. If the Secretary determines that a component product would 
otherwise be covered by the scope of an order, the Secretary next will 
examine the same criteria to determine if the component product's 
inclusion in the larger merchandise is directly addressed by the scope 
of the order for purposes of inclusion or exclusion from the coverage 
of the scope. Finally, if the scope language and the criteria above do 
not address that situation, then the Secretary will consider, as 
appropriate, relevant factors that may arise on a product-specific 
basis to determine whether the component product's inclusion in the 
larger merchandise results in its exclusion from the scope of the 
order, or leaves it within the coverage of the scope. Such relevant 
factors include:
    (i) The practicability of separating the in-scope component for 
repackaging or resale;
    (ii) The measurable value of the in-scope component as compared to 
the measurable value of the merchandise as a whole; and
    (iii) The ultimate use or function of the in-scope component 
relative to the ultimate use or function of the merchandise as a whole.
    (l) Suspension of liquidation. (1) When the Secretary initiates a 
scope inquiry under paragraph (b) or (d) of

[[Page 49498]]

this section, the Secretary will notify the Customs Service of the 
initiation and direct the Customs Service to continue the suspension of 
liquidation of entries of products subject to the scope inquiry that 
were already subject to the suspension of liquidation, and to apply the 
cash deposit rate that would be applicable if the product were 
determined to be covered by the scope of the order, until appropriate 
liquidation instructions are issued.
    (2) If the Secretary issues a preliminary scope ruling under 
paragraph (g) of this section that the product at issue is covered by 
the scope of the order, the Secretary will direct the Customs Service 
as follows:
    (i) To continue the suspension of liquidation of previously 
suspended entries of the product at issue as directed under paragraph 
(l)(1) of this section; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue, and apply the applicable cash deposit rate under 
the order to those entries.
    (3) If the Secretary issues a final scope ruling under paragraph 
(h) of this section that the product at issue is covered by the scope 
of the order, the Secretary will direct the Customs Service as follows:
    (i) To continue the suspension of liquidation of entries suspended 
as directed under paragraph (l)(1) and/or (l)(2) of this section 
(including entries of the product at issue that are subject to 
suspension of liquidation as a result of another segment of a 
proceeding, such as an administrative review under Sec.  351.213 or a 
circumvention inquiry under Sec.  351.226) and apply the applicable 
cash deposit rate under the order until appropriate liquidation 
instructions are issued pursuant to Sec. Sec.  351.212 and 351.213; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue that are not otherwise subject to suspension of 
liquidation, and apply the applicable cash deposit rate under the order 
until appropriate liquidation instructions are issued pursuant to 
Sec. Sec.  351.212 and 351.213.
    (4) If the Secretary issues a final scope ruling under paragraph 
(h) of this section that the product is not covered by the scope of the 
order, and entries of the product at issue are not otherwise subject to 
suspension of liquidation as a result of another segment of a 
proceeding, such as a circumvention inquiry under Sec.  351.226 or a 
covered merchandise inquiry under Sec.  351.227, the Secretary will 
direct the Customs Service to terminate the suspension of liquidation 
and refund any cash deposits for such entries.
    (m) Applicability of scope rulings; companion orders--(1) In 
general. To the extent practicable, the Secretary normally will 
initiate and conduct a single scope inquiry and issue a single scope 
ruling for an order under this section with respect to all products 
with the identical physical description from the same country of origin 
as the particular product at issue, regardless of producer, exporter, 
or importer. If the Secretary has previously issued a scope ruling for 
an order with respect to a particular product, the Secretary may apply 
that scope ruling to all products with the identical physical 
description from the same country of origin as the particular product 
at issue, regardless of producer, exporter, or importer, without 
initiating or conducting a new scope inquiry under this section. In 
such instances, the requirements of paragraph (h) of this section will 
apply.
    (2) Companion antidumping and countervailing duty orders. If there 
are companion antidumping and countervailing duty orders covering the 
same merchandise from the same country of origin, the requesting 
interested party under paragraph (c) of this section must file the 
scope ruling application pertaining to both orders only on the record 
of the antidumping duty proceeding. Should the Secretary determine to 
initiate a scope inquiry under paragraph (b) or (d) of this section, 
the Secretary will initiate and conduct a single inquiry with respect 
to the merchandise at issue for both orders only on the record of the 
antidumping proceeding. Once the Secretary issues a final scope ruling 
on the record of the antidumping duty proceeding, the Secretary will 
include a copy of that scope ruling on the record of the countervailing 
duty proceeding.
    (n) Service of scope ruling application; annual inquiry service 
list; entry of appearance. (1) The requirements of Sec.  351.303(f) 
apply to this section, except that an interested party that submits a 
scope ruling application under paragraph (c) of this section must serve 
a copy of the application on all persons on the annual inquiry service 
list for that order, as well as the companion order, if any, as 
described in paragraph (m)(2) of this section. If a scope ruling 
application is rejected and resubmitted pursuant to paragraph (d)(1) of 
this section, service of the resubmitted application is not required 
under this paragraph, unless otherwise specified.
    (2) For purposes of this section, the ``annual inquiry service 
list'' will include the petitioner(s) and those parties that file a 
request for inclusion on the annual inquiry service list for a 
proceeding, in accordance with the Secretary's established procedures. 
(3) A new ``annual inquiry service list'' will be established on a 
yearly basis. Parties filing a request for inclusion on that list must 
file a request during the anniversary month of the publication of the 
antidumping or countervailing duty order. Only the petitioner will be 
automatically placed on the new annual inquiry service list once the 
previous year's list has been replaced.
    (4) Once a scope ruling application is accepted by the Secretary, a 
segment-specific service list will be established and the requirements 
of Sec.  351.303(f) will apply. Parties other than the scope ruling 
applicant that wish to participate in the scope inquiry must file an 
entry of appearance in accordance with Sec.  351.103(d)(1).
    (o) Publication of list of final scope rulings. On a quarterly 
basis, the Secretary will publish in the Federal Register a list of 
final scope rulings issued within the previous three months. This list 
will include the case name, and a brief description of the ruling. The 
Secretary also may include complete public versions of its scope 
rulings on its website, should the Secretary determine such placement 
is warranted.
    (p) Suspended investigations; suspension agreements. The Secretary 
may, as appropriate, apply the procedures set forth in this section in 
determining the scope of a suspended investigation or a suspension 
agreement (see Sec.  351.208).
0
6. Add Sec.  351.226 as follows:


Sec.  351.226   Circumvention inquiries.

    (a) Introduction. Section 781 of the Act addresses the 
circumvention of antidumping and countervailing duty orders. This 
provision recognizes that circumvention seriously undermines the 
effectiveness of the remedies provided by the antidumping and 
countervailing duty proceedings, and frustrates the purposes for which 
these laws were enacted. Section 781 of the Act allows the Secretary to 
apply antidumping and countervailing duty orders in such a way as to 
prevent circumvention by including within the scope of the order four 
distinct categories of merchandise. The Secretary will initiate and 
conduct a circumvention inquiry at the request of an interested party 
or on the Secretary's initiative, and issue a circumvention 
determination as provided for under section 781 of the Act and the 
rules and procedures in this section. Unless otherwise specified, the 
procedures as described in subpart C of

[[Page 49499]]

this part (Sec. Sec.  351.301 through 351.308 and Sec. Sec.  351.312 
through 351.313) apply to this section.
    (b) Self-initiation of circumvention inquiry. If the Secretary 
determines from available information that an inquiry is warranted into 
the question of whether the elements necessary for a circumvention 
determination under section 781 of the Act exist, the Secretary may 
initiate a circumvention inquiry and publish a notice of initiation in 
the Federal Register.
    (c) Circumvention inquiry request--(1) In general. An interested 
party may submit a request for a circumvention inquiry that alleges 
that the elements necessary for a circumvention determination under 
section 781 of the Act exist and that is accompanied by information 
reasonably available to the interested party supporting these 
allegations. The circumvention inquiry request must be served in 
accordance with the requirements of paragraph (n) of this section.
    (2) Contents of request. To the extent reasonably available to the 
requestor, a circumvention inquiry request must include the requested 
information under paragraph (c)(1) of this section and the following:
    (i) A detailed physical description of the merchandise allegedly 
circumventing the antidumping or countervailing duty order, including:
    (A) The characteristics (including technical, physical, chemical or 
otherwise) of the product;
    (B) The uses of the product;
    (C) The product's tariff classification under the Harmonized Tariff 
Schedule of the United States;
    (D) Clear and legible photographs, schematic drawings, 
specifications, standards, marketing materials, and any other exemplars 
providing a visual depiction of the product; and
    (E) A description of parts, materials, and the production process 
employed in the production of the product.
    (ii) A concise public description of the product and public 
identification of the name and address of any producer, exporter, and 
importer of the product allegedly circumventing the antidumping or 
countervailing duty order if reasonably available to the requesting 
interested party. If the full universe of parties allegedly 
circumventing the order(s) is unknown, then examples are sufficient. 
Furthermore, this provision is not intended to restrict the inclusion 
of business proprietary information in the request where appropriate.
    (iii) A statement of the requestor's position as to the nature of 
the alleged circumvention under section 781 of the Act, such as a 
description of the procedures, channels of trade, and foreign countries 
involved (including a description of the processes occurring in each 
country), as appropriate.
    (iv) A statement of the requestor's position as to whether the 
circumvention inquiry, if initiated, should be conducted on a country-
wide basis.
    (iv) Factual information supporting this position, including import 
and export data relevant to the merchandise allegedly circumventing the 
antidumping or countervailing duty order.
    (d) Initiation of a circumvention inquiry based on a request. 
Within 20 days after the filing of a request for a circumvention 
inquiry, the Secretary will determine whether to accept or reject the 
request. If it is not practicable to determine whether to accept or 
reject a request within 20 days, the Secretary may extend that deadline 
by an additional 15 days.
    (1) If the Secretary determines that the request is incomplete or 
otherwise unacceptable, the Secretary may reject the request, and will 
provide a written explanation of the reasons for the rejection. If the 
request is rejected, the requestor may resubmit the full request at any 
time, with all identified deficiencies corrected.
    (2) If the Secretary determines upon review of a request for a 
circumvention inquiry that a scope ruling is warranted before the 
Secretary can conduct a circumvention analysis, the Secretary may 
either, in accord with Sec.  351.225(i)(1), initiate the circumvention 
inquiry and address scope issues in the context of the circumvention 
inquiry, or defer initiation of the circumvention inquiry pending the 
completion of any ongoing or new segment of the proceeding addressing 
the scope issue. When initiation is deferred pending another segment of 
the proceeding, if the result of that other segment is that the product 
at issue is not covered by the scope of the antidumping and/or 
countervailing duty order(s) at issue, the Secretary may immediately 
initiate the circumvention inquiry upon the issuance of the final 
decision in that other segment.
    (3) If the Secretary determines that a request for a circumvention 
inquiry satisfies the requirements of paragraph (c) of this section, 
the Secretary will accept the request and initiate a circumvention 
inquiry. The Secretary will publish a notice of initiation in the 
Federal Register.
    (e) Time limits--(1) Preliminary Determination. The Secretary will 
issue a preliminary determination under paragraph (g)(1) of this 
section no later than 150 days from the date of publication of the 
notice of initiation of a circumvention inquiry under paragraph (b) or 
(d) of this section.
    (2) Final Determination. In accordance with section 781(f) of the 
Act, the Secretary shall, to the maximum extent practicable, issue a 
final determination under paragraph (g)(2) of this section no later 
than 300 days from the date of publication of the notice of initiation 
of a circumvention inquiry under paragraph (b) or (d) of this section. 
If the Secretary concludes that the inquiry is extraordinarily 
complicated and additional time is necessary to issue a final 
circumvention determination, then the Secretary may extend the 300-day 
deadline by no more than 65 days.
    (f) Circumvention inquiry procedures. (1) Within 20 days of the 
publication of the Secretary's self-initiation of a circumvention 
inquiry under paragraph (b) of this section, interested parties are 
permitted one opportunity to submit comment and factual information 
addressing the self-initiation. Within 10 days of the filing of such 
comments, any interested party is permitted one opportunity to submit 
comment and factual information to rebut, clarify, or correct factual 
information submitted by the other interested parties.
    (2) Within 20 days of the publication of the initiation of a 
circumvention inquiry under paragraph (d) of this section, an 
interested party other than the requestor is permitted one opportunity 
to submit comment and factual information to rebut, clarify, or correct 
factual information contained in the request. Within 10 days of the 
filing of such rebuttal, clarification, or correction, the requestor is 
permitted one opportunity to submit comment and factual information to 
rebut, clarify, or correct factual information contained in the 
interested party's rebuttal, clarification or correction.
    (3) Following initiation of a circumvention inquiry under paragraph 
(b) or (d) of this section, the Secretary may issue questionnaires and 
verify submissions received, where appropriate. The Secretary may limit 
issuance of questionnaires to a reasonable number of respondents. 
Questionnaire responses are due on the date specified by the Secretary. 
Within 10 days after a questionnaire response has been filed with the 
Secretary, an interested party other than the original submitter is 
permitted one opportunity to submit comment and factual information to 
rebut, clarify, or correct factual information contained in the 
questionnaire response. Within 5 days

[[Page 49500]]

of the filing of such rebuttal, clarification, or correction, the 
original submitter is permitted one opportunity to submit comment and 
factual information to rebut, clarify, or correct factual information 
contained in the interested party's rebuttal, clarification or 
correction.
    (4) If the Secretary issues a preliminary circumvention 
determination under paragraph (g)(1) of this section, which is not 
issued concurrently with the initiation of the circumvention inquiry, 
the Secretary will establish a schedule for the filing of comments and 
rebuttal comments. Unless otherwise specified, any interested party may 
submit comments within 10 days after the issuance of the preliminary 
circumvention determination, and any interested party may submit 
rebuttal comments within 5 days thereafter. Unless otherwise specified, 
no factual information will be accepted in the comments or rebuttal 
comments.
    (5) If the Secretary issues a preliminary circumvention 
determination concurrently with the initiation of the circumvention 
inquiry under paragraph (g)(1) of this section, paragraphs (g)(1) 
through (4) will not apply. In such a situation, the Secretary will 
establish appropriate procedures on a case-specific basis.
    (6) Notwithstanding any other provision of this section, the 
Secretary may forego or rescind a circumvention inquiry, in whole or in 
part, under this section for the following reasons:
    (i) The requestor timely withdraws its request for a circumvention 
inquiry under paragraph (c) of this section;
    (ii) The Secretary issues a final determination in another segment 
of a proceeding, and has determined that the merchandise at issue in 
the circumvention inquiry is covered by the scope of the antidumping or 
countervailing duty order;
    (iii) Where the Secretary has initiated a circumvention inquiry 
under paragraph (b) or (d) of this section to examine circumvention 
under two or more provisions under paragraphs (h), (i), (j), or (k) of 
this section, and determines that it is not necessary to issue a final 
circumvention determination with respect to one of those paragraphs. 
For example, if the Secretary initiates a circumvention inquiry to 
examine whether merchandise is altered in minor respects under 
paragraph (j) of this section or later-developed merchandise under 
paragraph (k) of this section, the Secretary may rescind the inquiry in 
part to address only one of those provisions.
    (7) The Secretary may alter any deadlines under this paragraph or 
establish a separate schedule for the filing of comments and/or factual 
information during the circumvention inquiry, as appropriate. 
Notwithstanding any other provision of this section, the Secretary may 
modify the deadlines of the circumvention inquiry to align with the 
deadlines of another segment of the proceeding or make no changes to 
its inquiry deadlines.
    (8)(i) The Secretary will notify the Commission in writing of the 
proposed inclusion of products in an order prior to issuing a final 
determination under paragraph (g)(2) of this section based on a 
determination under:
    (A) Section 781(a) of the Act (paragraph (h) of this section) with 
respect to merchandise completed or assembled in the United States 
(other than minor completion or assembly);
    (B) Section 781(b) of the Act (paragraph (i) of this section) with 
respect to merchandise completed or assembled in other foreign 
countries; or
    (C) Section 781(d) of the Act (paragraph (k) of this section) with 
respect to later-developed products that incorporate a significant 
technological advance or significant alteration of an earlier product.
    (ii) If the Secretary notifies the Commission under paragraph 
(f)(7)(i) of this section, upon the written request of the Commission, 
the Secretary will consult with the Commission regarding the proposed 
inclusion, and any such consultation will be completed within 15 days 
after the date of such request. If, after consultation, the Commission 
believes that a significant injury issue is presented by the proposed 
inclusion of a product within an order, the Commission may provide 
written advice to the Secretary as to whether the inclusion would be 
inconsistent with the affirmative injury determination of the 
Commission on which the order is based.
    (g) Circumvention determinations--(1) Preliminary determination. 
The Secretary will issue a preliminary determination, based upon the 
available information at the time, as to whether there is a reasonable 
basis to believe or suspect that the elements necessary for a 
circumvention determination under section 781 of the Act exist. The 
preliminary determination will be published in the Federal Register. 
The Secretary may publish notice of a preliminary determination 
concurrently with the notice of initiation of a circumvention inquiry 
under paragraph (b) or (d) of this section.
    (2) Final determination. The Secretary will issue a final 
determination as to whether the elements necessary for a circumvention 
determination under section 781 of the Act exist, in which case the 
merchandise at issue will be included within the scope of the order. As 
part of its determination, the Secretary will include an explanation of 
the factual and legal conclusions on which the final determination is 
based. The final determination will be published in the Federal 
Register. Promptly after publication, the Secretary will convey a copy 
of the final determination in the manner prescribed by section 
516A(a)(2)(A)(ii) of the Act to all parties to the proceeding (see 
Sec.  351.102(b)(36)).
    (h) Products completed or assembled in the United States. Under 
section 781(a) of the Act, the Secretary may include within the scope 
of an antidumping or countervailing duty order imported parts or 
components referred to in section 781(a)(1)(B) of the Act that are used 
in the completion or assembly of the merchandise in the United States 
at any time such order is in effect. In determining the value of parts 
or components (including such purchases from another person) under 
section 781(a)(1)(D) of the Act, or of processing performed (including 
by another person) under section 781(a)(2)(E) of the Act, the Secretary 
may determine the value of the part or component on the basis of the 
cost of producing the part or component under section 773(e) of the 
Act--or, in the case of nonmarket economies, on the basis of section 
773(c) of the Act.
    (i) Products completed or assembled in other foreign countries. 
Under section 781(b) of the Act, the Secretary may include within the 
scope of an antidumping or countervailing duty order, at any time such 
order is in effect, imported merchandise completed or assembled in a 
foreign country other than the country to which the order applies. In 
determining the value of parts or components (including such purchases 
from another person) under section 781(b)(1)(D) of the Act, or of 
processing performed (including by another person) under section 
781(b)(2)(E) of the Act, the Secretary may determine the value of the 
part or component on the basis of the cost of producing the part or 
component under section 773(e) of the Act--or, in the case of nonmarket 
economies, on the basis of section 773(c) of the Act.
    (j) Minor alterations of merchandise. Under section 781(c) of the 
Act, the Secretary may include within the scope of an antidumping or 
countervailing duty order articles altered in form or

[[Page 49501]]

appearance in minor respects. The Secretary may consider such criteria 
including, but not limited to, the overall physical characteristics of 
the merchandise, the expectations of the ultimate users, the use of the 
merchandise, the channels of marketing and the cost of any modification 
relative to the total value of the imported products. The Secretary 
also may consider the circumstances under which the products enter the 
United States, including but not limited to the timing of the entries 
and the quantity of merchandise entered during the circumvention review 
period.
    (k) Later-developed merchandise. In determining whether later-
developed merchandise is within the scope of an antidumping or 
countervailing duty order, the Secretary will apply section 781(d) of 
the Act. In determining whether merchandise is ``later-developed'' the 
Secretary will examine whether the merchandise at issue was 
commercially available at the time of the initiation of the underlying 
antidumping or countervailing duty investigation.
    (l) Suspension of liquidation. (1) When the Secretary publishes a 
notice of initiation of a circumvention inquiry under paragraph (b) or 
(d) of this section, the Secretary will notify the Customs Service of 
the initiation and direct the Customs Service to continue the 
suspension of liquidation of entries of products subject to the 
circumvention inquiry that were already subject to the suspension of 
liquidation, and to apply the cash deposit rate that would be 
applicable if the product were determined to be covered by the scope of 
the order, until appropriate liquidation instructions are issued.
    (2) If the Secretary issues an affirmative preliminary 
determination under paragraph (g)(1) of this section, the Secretary 
will direct the Customs Service as follows:
    (i) To continue the suspension of liquidation of previously 
suspended entries of the product at issue as directed under paragraph 
(l)(1) of this section; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue, and apply the applicable cash deposit rate under 
the order to those entries.
    (3) If the Secretary issues an affirmative final determination 
under paragraph (g)(2) of this section, the Secretary will direct the 
Customs Service as follows:
    (i) To continue the suspension of liquidation of entries suspended 
as directed under paragraph (l)(1) and/or (l)(2) of this section 
(including entries of the product at issue that are subject to 
suspension of liquidation as a result of another segment of a 
proceeding, such as an administrative review under Sec.  351.213) and 
apply the applicable cash deposit rate under the order until 
appropriate liquidation instructions are issued pursuant to Sec. Sec.  
351.212 and 351.213; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue that are not otherwise subject to suspension of 
liquidation, and apply the applicable cash deposit rate under the order 
until appropriate liquidation instructions are issued pursuant to 
Sec. Sec.  351.212 and 351.213.
    (4) If the Secretary issues a negative final determination under 
paragraph (g)(2) of this section, and entries of the product are not 
otherwise subject to suspension of liquidation as a result of another 
segment of a proceeding, such as a covered merchandise inquiry under 
Sec.  351.227, the Secretary will order the Customs Service to 
terminate the suspension of liquidation and refund any cash deposits 
for such entries.
    (m) Applicability of circumvention determination; other segments of 
the proceeding; companion orders--(1) Applicability of circumvention 
determination. In conducting a circumvention inquiry under this 
section, the Secretary shall consider, based on the available record 
evidence, whether the circumvention determination should be applied on 
a country-wide basis.
    (2) Other segments of the proceeding. During the pendency of a 
circumvention inquiry or upon issuance of a final circumvention 
determination under paragraph (g)(2) of this section, the Secretary may 
take any further action, as appropriate, with respect to another 
segment of the proceeding. For example, if the Secretary considers it 
appropriate, the Secretary may request information concerning the 
product that is the subject of the circumvention inquiry for purpose of 
an administrative review under Sec.  351.213.
    (3) Companion antidumping and countervailing duty orders. If there 
are companion antidumping and countervailing duty orders covering the 
same merchandise from the same country of origin, the requesting 
interested party under paragraph (c) of this section must file the 
request pertaining to both orders only on the record of the antidumping 
duty proceeding. Should the Secretary determine to initiate a 
circumvention inquiry under paragraph (b) or (d) of this section, the 
Secretary will initiate and conduct a single inquiry with respect to 
the merchandise at issue for both orders only on the record of the 
antidumping proceeding. Once the Secretary issues a final circumvention 
determination on the record of the antidumping duty proceeding, the 
Secretary will include a copy of that determination on the record of 
the countervailing duty proceeding.
    (n) Service of circumvention inquiry request; annual inquiry 
service list; entry of appearance. (1) The requirements of Sec.  
351.303(f) apply to this section, except that an interested party that 
submits a circumvention inquiry request under paragraph (c) of this 
section must serve a copy of that inquiry request on all persons on the 
annual inquiry service list for that order, as well as the companion 
order, if any, as described in paragraph (m)(3) of this section. The 
procedures and description pertaining to the ``annual inquiry service 
list'' are set forth in Sec.  351.225(n)(1)-(3).
    (2) Once a circumvention inquiry request is accepted by the 
Secretary, a segment-specific service list will be established and the 
requirements of Sec.  351.303(f) will apply. Parties other than the 
interested party requesting a circumvention inquiry that wish to 
participate in the circumvention inquiry must file an entry of 
appearance in accordance with Sec.  351.103(d)(1).
    (o) Suspended investigations; suspension agreements. The Secretary 
may, in accordance with section 781 of the Act, apply the procedures 
set forth in this section in determining whether the elements necessary 
for a circumvention determination under section 781 of the Act exist 
with respect to a suspended investigation or a suspension agreement 
(see Sec.  351.208).
0
7. Add Sec.  351.227 to read as follows:


Sec.  351.227   Covered merchandise referrals.

    (a) Introduction. The Trade Facilitation and Trade Enforcement Act 
of 2015 contains Title IV-Prevention of Evasion of Antidumping and 
Countervailing Duty Orders (short title ``Enforce and Protect Act of 
2015'' or ``EAPA'') (Pub. L. 114-125, sections 401, 421, 130 Stat. 122, 
155, 161 (2016)). The Enforce and Protect Act of 2015 added section 517 
to the Act, which established a new framework by which the Customs 
Service can conduct civil administrative investigations of potential 
duty evasion of an antidumping and/or countervailing duty order 
(referred to herein as an ``EAPA investigation''). Section 
517(b)(4)(A)(i) of the Act provides a procedure whereby if, during the 
course of an EAPA investigation, the Customs Service is unable to 
determine whether the merchandise at issue is covered

[[Page 49502]]

merchandise within the meaning of section 517(a)(3) of the Act, it 
shall refer the matter to the Secretary to make such a determination 
(referred to herein as a ``covered merchandise referral''). Section 
517(b)(4)(B) of the Act directs the Secretary to determine whether the 
merchandise is covered merchandise and promptly transmit the 
determination to the Customs Service. The Secretary shall consider a 
covered merchandise referral and issue a covered merchandise 
determination in accordance with the rules and procedures in this 
section. Unless otherwise specified, the procedures as described in 
subpart C of this part (Sec. Sec.  351.301 through 351.308 and 
Sec. Sec.  351.312 through 351.313) apply to this section.
    (b) Actions with respect to covered merchandise referral. Within 15 
days after receiving a covered merchandise referral from the Customs 
Service pursuant to section 517(b)(4)(A)(i) of the Act that the 
Secretary determines to be sufficient, the Secretary will take the 
following action.
    (1) Initiate a covered merchandise inquiry (the Secretary will 
publish a notice of initiation in the Federal Register);
    (2) Self-initiate a circumvention inquiry pursuant to Sec.  
351.226(b) to address the covered merchandise referral; or
    (3) If the Secretary determines upon review of the covered 
merchandise referral that the question before the Secretary can be 
addressed in an ongoing segment of the proceeding, such as a scope 
inquiry under Sec.  351.225 or a circumvention inquiry under Sec.  
351.226, the Secretary will publish a notice of its intent to address 
the covered merchandise referral in the context of such other segment 
in the Federal Register.
    (c) Time limits--(1) In general. When the Secretary initiates a 
covered merchandise inquiry under paragraph (b)(1) of this section, the 
Secretary shall issue a final covered merchandise determination within 
120 days from the date of publication of the notice of initiation.
    (2) Extension. If the Secretary concludes that the inquiry is 
extraordinarily complicated and additional time is necessary to issue a 
final covered merchandise determination, then the Secretary may extend 
the deadline in paragraph (c)(1) by no more than 60 days.
    (d) Covered merchandise inquiry procedures. (1) Within 20 days of 
the date of publication of the notice of a covered merchandise inquiry 
under paragraph (b)(1) of this section, interested parties are 
permitted one opportunity to submit comment and factual information 
addressing the initiation. Within 10 days of the filing of such 
comments, any interested party is permitted one opportunity to submit 
comment and factual information to rebut, clarify, or correct factual 
information submitted by the other interested parties.
    (2) Following initiation of a covered merchandise inquiry under 
paragraph (b)(1) of this section, the Secretary may issue 
questionnaires and verify submissions received, where appropriate. The 
Secretary may limit issuance of questionnaires to a reasonable number 
of respondents. Questionnaire responses are due on the date specified 
by the Secretary. Within 10 days after a questionnaire response has 
been filed with the Secretary, an interested party other than the 
original submitter is permitted one opportunity to submit comment and 
factual information to rebut, clarify, or correct factual information 
contained in the questionnaire response. Within five days of the filing 
of such rebuttal, clarification, or correction, the original submitter 
is permitted one opportunity to submit comment and factual information 
to rebut, clarify, or correct factual information submitted in the 
interested party's rebuttal, clarification or correction.
    (3) If the Secretary issues a preliminary covered merchandise 
determination under paragraph (e)(1) of this section, which is not 
issued concurrently with a covered merchandise inquiry, the Secretary 
will establish a schedule for the filing of comments and rebuttal 
comments. Unless otherwise specified, any interested party may submit 
comments within 10 days after the issuance of the preliminary covered 
merchandise determination, and any interested party may submit rebuttal 
comments within five days thereafter. Unless otherwise specified, no 
factual information will be accepted in the comments or rebuttal 
comments.
    (4) If the Secretary issues a preliminary covered merchandise 
determination concurrently with the initiation of the covered 
merchandise inquiry under paragraph (e)(1) of this section, paragraphs 
(e)(1) through (3) will not apply. In such a situation, the Secretary 
will establish appropriate procedures on a case-specific basis.
    (5) Notwithstanding any other provision of this section, the 
Secretary may forego or rescind a covered merchandise inquiry, in whole 
or in part, under this section for the following reasons:
    (i) The Customs Service withdraws its request for a covered 
merchandise inquiry under paragraph (b) of this section;
    (ii) The Secretary issues a final determination in another segment 
of a proceeding that can provide the basis for the Secretary's covered 
merchandise determination.
    (iii) Where the Secretary otherwise determines that it is not 
necessary to initiate or conduct a covered merchandise inquiry to 
address the covered merchandise referral, in which case the 
requirements of paragraph (e)(2) of this section will apply.
    (6) The Secretary may alter any deadlines under this paragraph or 
establish a separate schedule for the filing of comments and/or factual 
information during the covered merchandise inquiry, as appropriate. 
Notwithstanding any other provision of this section, the Secretary may 
modify the deadlines of the covered merchandise inquiry to align with 
the deadlines of another segment of the proceeding or make no changes 
to its inquiry deadlines.
    (e) Covered merchandise determinations--(1) Preliminary 
determination. The Secretary may issue a preliminary determination, 
based upon the available information at the time, as to whether there 
is a reasonable basis to believe or suspect that the product that is 
the subject of the covered merchandise inquiry is covered by the scope 
of the order. In determining whether to issue a preliminary 
determination, the Secretary may consider the complexity of the issues 
and arguments raised in the context of the covered merchandise inquiry. 
The preliminary determination will be published in the Federal 
Register. The Secretary may publish notice of a preliminary 
determination concurrently with the notice of initiation of a covered 
merchandise inquiry under paragraph (b)(1) of this section.
    (2) Final determination. The Secretary will issue a final 
determination as to whether the product that is the subject of the 
covered merchandise inquiry is covered by the scope of the order. As 
part of its determination, the Secretary will include an explanation of 
the factual and legal conclusions on which the final determination is 
based. The final determination will be published in the Federal 
Register. Promptly after publication, the Secretary will:
    (i) Convey a copy of the final determination in the manner 
prescribed by section 516A(a)(2)(A)(ii) of the Act to all parties to 
the proceeding (see Sec.  351.102(b)(36)); and

[[Page 49503]]

    (ii) Transmit a copy of the final covered merchandise determination 
to the Customs Service in accordance with section 517(b)(4)(B) of the 
Act.
    (3) Covered merchandise determinations in other segments of the 
proceeding. If the Secretary addresses the covered merchandise referral 
in the context of another segment of the proceeding as provided for 
under this section, or issues a scope ruling under Sec.  351.225 or a 
circumvention determination under Sec.  351.226 that can provide the 
basis for the Secretary's covered merchandise determination, the 
Secretary will promptly transmit a copy of the final action in that 
segment to the Customs Service in accordance with section 517(b)(4)(B) 
of the Act.
    (f) Basis for covered merchandise determination. In issuing a 
determination under paragraph (e)(1) or (2) of this section, the 
Secretary may base its determination on paragraphs (j) and (k) of Sec.  
351.225 or any provision under section 781 of the Act (paragraphs (h), 
(i), (j), or (k) of Sec.  351.226).
    (g)-(k) [Reserved]
    (l) Suspension of liquidation. (1) When the Secretary publishes a 
notice of initiation of a covered merchandise inquiry under paragraph 
(b)(1) of this section, the Secretary will notify the Customs Service 
of the initiation and direct the Customs Service to continue the 
suspension of liquidation of entries of products subject to the covered 
merchandise inquiry that were already subject to the suspension of 
liquidation, and to apply the cash deposit rate that would be 
applicable if the product were determined to be covered by the scope of 
the order until appropriate liquidation instructions are issued.
    (2) If the Secretary issues an affirmative preliminary 
determination under paragraph (e)(1) of this section that the product 
at issue is covered by the scope of the Order, the Secretary will 
direct the Customs Service as follows:
    (i) To continue the suspension of liquidation of previously 
suspended entries of the product at issue as described under paragraph 
(l)(1) of this section; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue, and apply the applicable cash deposit rate under 
the order to those entries.
    (3) If the Secretary issues an affirmative final determination 
under paragraph (e)(2) of this section that the product at issue is 
covered by the scope of the order, the Secretary will direct the 
Customs Service as follows:
    (i) To continue the suspension of liquidation of entries suspended 
as directed under paragraph (l)(1) and/or (l)(2) of this section 
(including entries of the product at issue that are subject to 
suspension of liquidation as a result of another segment of a 
proceeding, such as an administrative review under Sec.  351.213) and 
apply the applicable cash deposit rate under the order until 
appropriate liquidation instructions are issued pursuant to Sec. Sec.  
351.212 and 351.213; and
    (ii) To suspend liquidation of all other unliquidated entries of 
the product at issue that are not otherwise subject to suspension of 
liquidation, and apply the applicable cash deposit rate under the order 
until appropriate liquidation instructions are issued pursuant to 
Sec. Sec.  351.212 and 351.213.
    (4) If the Secretary issues a negative final determination under 
paragraph (e)(2) of this section, and entries of the product are not 
otherwise subject to suspension of liquidation as a result of another 
segment of a proceeding, such as a circumvention inquiry under Sec.  
351.226, the Secretary will direct the Customs Service to terminate the 
suspension of liquidation and refund any cash deposits for such 
entries.
    (m) Applicability of covered merchandise determination; other 
segments of the proceeding; companion orders--(1) Applicability of 
covered merchandise determination. In conducting a covered merchandise 
inquiry under this section, the Secretary shall consider, based on the 
available record evidence, whether the covered merchandise 
determination should be applied on a country-wide basis.
    (2) Other segments of the proceeding. During the pendency of a 
covered merchandise inquiry or upon issuance of a final covered 
merchandise determination under paragraph (e)(2) of this section, the 
Secretary may take any further action, as appropriate, with respect to 
another segment of the proceeding. For example, if the Secretary 
considers it appropriate, the Secretary may request information 
concerning the product that is the subject of the covered merchandise 
inquiry for purpose of an administrative review under Sec.  351.213.
    (3) Companion antidumping and countervailing duty orders. If there 
are companion antidumping and countervailing duty orders covering the 
same merchandise from the same country of origin, and should the 
Secretary determine to initiate a covered merchandise inquiry under 
paragraph (b)(1) of this section, the Secretary will initiate and 
conduct a single inquiry with respect to the merchandise at issue only 
on the record of the antidumping duty proceeding. Once the Secretary 
issues a final covered merchandise determination on the record of the 
antidumping duty proceeding, the Secretary will include a copy of that 
determination on the record of the countervailing duty proceeding, and 
notify the Customs Service in accordance with paragraph (l) of this 
section.
    (n) Service list. Once the Secretary initiates a covered 
merchandise inquiry under paragraph (b)(1) of this section, a segment-
specific service list will be established and the requirements of Sec.  
351.303(f) will apply. Parties other than those relevant parties 
identified by the Customs Service in the covered merchandise referral 
that wish to participate in the covered merchandise inquiry must file 
an entry of appearance in accordance with Sec.  351.103(d)(1).
    (o) Suspended investigations; suspension agreements. The Secretary 
may apply the procedures set forth in this section in determining 
whether the elements necessary for a circumvention determination under 
section 781 of the Act exist with respect to a suspended investigation 
or a suspension agreement (see Sec.  351.208).
0
8. Add Sec.  351.228 to read as follows:


Sec.  351.228   Certification by importer or other interested party.

    (a) Certification Requirements. The Secretary may determine in the 
context of an antidumping or countervailing duty proceeding that an 
importer or other interested party shall:
    (1) Maintain a certification for entries of merchandise into the 
customs territory of the United States; or
    (2) Provide a certification by electronic means at the time of 
entry or entry summary; or
    (3) Otherwise demonstrate compliance with a certification 
requirement as determined by the Secretary, in consultation with the 
Customs Service. Where the certification is required to be maintained 
by the importer or other interested party, the Secretary and/or the 
Customs Service may require the importer or other interested party to 
provide such a certification to the requesting agency upon request.
    (b) Consequences For No Provision of a Certificate; Provision of a 
False Certificate. The Secretary may instruct the Customs Service to 
suspend liquidation of an importer's or other interested party's 
entries and require the importer to post a cash deposit for the 
antidumping duty or countervailing duty at the applicable rate if:
    (1) The importer or other interested party has not provided to the 
Secretary or the Customs Service, as appropriate,

[[Page 49504]]

the certification required under paragraph (a) of this section upon 
request; or
    (2) The importer or other interested party provided a certification 
in accordance with paragraph (a) of this section, but the certification 
contained materially false, fictitious or fraudulent statements or 
representations, or contained material omissions. Under either of these 
scenarios, the Secretary may also instruct the Customs Service to 
assess an antidumping duty or countervailing duty at the applicable 
rate at the time of liquidation or reliquidation of the entry.
0
9. Revise paragraph (d) of Sec.  351.305 to read as follows:


Sec.  351.305   Access to business proprietary information.

* * * * *
    (d) Additional filing requirements for importers. If an applicant 
represents a party claiming to be an interested party by virtue of 
being an importer, then the applicant shall submit, along with the Form 
ITA-367, documentary evidence demonstrating that during the applicable 
period of investigation or period of review the interested party 
imported subject merchandise. For a scope segment of a proceeding 
pursuant to Sec.  351.225 or a circumvention segment of a proceeding 
pursuant to Sec.  351.226, the applicant must present documentary 
evidence that the interested party imported subject merchandise, or 
that it has taken steps towards importing the merchandise subject to 
the scope or circumvention inquiry. For a covered merchandise referral 
segment of a proceeding pursuant to Sec.  351.227, an applicant 
representing an interested party that has been identified by the 
Customs Service as the importer in a covered merchandise referral is 
exempt from the requirements of providing documentary evidence to 
demonstrate that it is an importer for purposes of that segment of a 
proceeding.
0
10. Revise paragraph (f)(2) of Sec.  351.402 to read as follows:


Sec.  351.402   Calculation of export price and constructed export 
price; reimbursement of antidumping and countervailing duties.

* * * * *
    (f) * * *
    (2) Reimbursement Certification. (i) The importer must certify with 
the Customs Service prior to liquidation whether the importer has or 
has not been reimbursed or entered into any agreement or understanding 
for the payment or for the refunding to the importer by the 
manufacturer, producer, seller, or exporter for all or any part of the 
antidumping and countervailing duties, as appropriate. Such 
certifications should identify the commodity, the country, and the 
relevant entry number(s).
    (ii) The reimbursement certification may be filed either 
electronically or in paper in accordance with the Customs Service's 
requirements, as applicable.
    (iii) If an importer does not provide its reimbursement 
certification prior to liquidation, the Customs Service may accept the 
reimbursement certification in accordance with its protest procedures 
under 19 U.S.C. 1514.
    (iv) Reimbursement certifications are applicable to entries for the 
relevant commodity that has been imported on or after the date of 
publication of the antidumping notice in the Federal Register that 
first suspended liquidation in that proceeding.
* * * * *
[FR Doc. 2020-15283 Filed 8-12-20; 8:45 am]
BILLING CODE 3510-DS-P