The Enforce and Protect Act of 2015 (EAPA) and
subsequent regulations promulgated by U.S. Customs and Border
Protection (CBP) allow the agency to conduct intensive
investigations of alleged customs evasion, including avoidance of
antidumping and countervailing duty orders. The EAPA is an
administrative proceeding that permits and encourages participation
by domestic industry, the alleged evading party, and CBP. This
article explores the top five considerations for those alleged
evading parties against whom EAPA investigations are
lodged.
CBP has 15 business days from receipt of an allegation to
determine whether an investigation under the EAPA is appropriate.
CBP will initiate such an investigation if the merchandise
described in the allegation has been entered for consumption into
the customs territory of the U.S. through evasion. [19 CFR §
165.15(b))] At the end of the EAPA process, CBP will conclude its
investigation by issuing a determination as to whether evasion
occurred. The determination, and what it means for the parties
alleged to be in violation, are then subject to optional
administrative and judicial reviews.
The period between initiation of an investigation and the
ultimate determination can be a complex and labor-intensive
process. In our experience, the top five considerations when
embarking on defense of an EAPA investigation are: (1) the precise
sequence of events and timing; (2) the burden of proof and
information requirements; (3) the breadth for negative adverse
inferences and their impact on other supplier relationships; (4)
the public nature of proceedings and mechanisms to protect
confidentiality; and (5) the potential for review of an initial
adverse determination.
Consideration 1 – EAPA Sequence of Events and Timing
Recipients of EAPA investigation notices must bear in mind that
the process proceeds on a strict timeline with a potentially wide
range of participants. During its investigation, CBP may choose to
request information from: (1) the party making the allegation; (2)
the party alleged to have evaded AD/CV duties; (3) the foreign
producer or exporter of the merchandise; or (4) the foreign
government of the country from which the merchandise was exported.
[19 CFR. § 165.23] The deadline for responses are provided in
CBP’s written request. [Id.] CBP will not consider
information that is submitted outside of the required periods.
The cadence of filings generally involves long periods for
initial submissions due to the volume of information involved, with
much shorter periods to rebut or otherwise respond to another
parties’ submission. For example, all parties to the
investigation may voluntarily submit factual information within 200
calendar days of initiation. [19 CFR. § 165.23] Rebuttal
information may be submitted within 10 days of service of the
factual information. Likewise, parties may also submit written
arguments to CBP within 230 calendar days of initiation. [19 CFR.
§ 165.26] Other parties may respond to those written arguments
and must submit responses no later than 15 calendar days after the
written arguments were filed. [Id.]
Fortunately, good faith extensions are available. For good
cause, any party may request an extension of any time limit, but
must do so in a separate, stand-alone submission. [19 C.F.R. §
165.5] The request must be submitted no less than 3 business days
before the time limit expires unless there are extraordinary
circumstances. CBP has broad discretion to grant or deny the
request for an extension.
CBP’s timeline for its own analysis and determination also
involves a relatively long but certain period. CBP must determine
whether evasion occurred within 300 days of initiating the
investigation unless that period must be adjusted due to extension
of deadlines. [19 CFR § 165.22] Still, if the investigation is
extraordinarily complicated, CBP may extend the determination
deadline, but may not extend beyond 60 calendar days. Within 5
business days of the determination as to evasion, CBP will issue a
summary of the determination to all parties to the
investigation.
If any party is unsatisfied with a determination then it may
request an administrative review.1 Requests for review must be filed no
later than 30 business days after the issuance of the initial
determination. Written responses to third-party requests for review
are available and must be submitted no later than 10 business days
from the commencement of the administrative review. [19 CFR §
165.42] The administrative review will be completed within 60
business days of its commencement. [19 CFR § 165.45] The final
administrative determination is subject to judicial review and must
be filed with the Court of International Trade (CIT) within 30 days
of the administrative review decision.
Consideration 2 – Burden of Proof and Informational
Requirements
The objective of CBP’s investigation is to determine whether
“substantial evidence” exists to show that merchandise
was entered through evasion. [19 CFR § 165.45] Evasion means
“the entry of covered merchandise into the customs territory
of the United States for consumption by means of any document or
electronically transmitted data or information, written or oral
statement, or act that is material and false, or any omission that
is material, and that results in any cash deposit or other security
or any amount of applicable antidumping or countervailing duties
being reduced or not being applied with respect to the covered
merchandise.” [19 CFR § 165.1]
Critically, the alleged violator’s level of culpability is
not a determining factor into CBP’s decision. In practical
terms this means that defense of EAPA investigations requires a
showing through documentary evidence that the underlying violation
amounting to evasion did not in fact occur. In fact, the entirety
of CBP’s review is based upon information in the administrative
record developed during investigation. This information includes,
for example, materials obtained by CBP through the course of an
investigation, factual information submitted by the parties and
results of any verification conducted pursuant to § 165.25,
materials from other agencies provided to CBP pursuant to the
investigation, written arguments and rebuttals, and summaries of
oral discussions with interested parties relevant to the
investigation. [19 C.F.R. § 165.21]
Consideration 3 – Potential Adverse Inferences
Another critical point is contending with the fact that CBP is
permitted to make negative adverse inferences where its questions
go unanswered to its satisfaction. Essentially, CBP is free to
“fill in the blanks” in ways against the interest of the
alleged evader. This can necessitate fulsome disclosure as well as
prompting any third parties, such as foreign manufacturers, who may
also receive information requests to likewise comply. If any party
fails to cooperate and comply “to the best of its
ability” with CBP’s requests for information, then CBP is
free to apply an adverse inference to the interests of that party
when making an evasion determination. [19 CFR § 165.6] CBP may
also apply an inference adverse based on a prior CBP determination
or “any other available information.”
Consideration 4 – Confidentiality of Information Submitted
Generating fulsome responses to CBP queries can mean offering
high volumes of competitively sensitive information such as
supplier or customer contacts and the cost of goods. CBP will treat
a party’s information submitted in response to the
investigation as business confidential information (BCI) so long as
the submitting party properly designates it as such.2 [19
CFR § 165.4] To designate BCI, the party must submit both a
public version and a BCI version. The first page of the BCI version
must clearly state that the submission contains BCI. The party must
then identify the BCI by enclosing the claimed confidential
information within single brackets. The party must also provide an
explanation of why each item of bracketed information is entitled
to business confidential treatment.
The public version must be filed on the same date as the BCI
version and must be clearly marked as a public version on the first
page. This version must “contain a summary of the bracketed
information in sufficient detail to permit a reasonable
understanding of the substance of the information.” When
applicable, any information that CBP places on the administrative
record will include the public summary of the BCI. When providing
the public version, the party must certify that the information is
either information from its own business records (and not BCI of
another entity) or information that was publicly obtained or in the
public domain.
CBP will reject a submission that includes a request for
business confidential treatment but does not meet the precise
documentary requirements. Still, CBP will treat the relevant
portion of the submission as BCI until the appropriate corrective
action is taken or the submission is rejected.
Consideration 5 – Right of Appeal and CIT Review
Administrative reviews of initial CBP determinations may be
requested, but thereafter they cannot bet withdrawn. [19 CFR §
165.43] The standard of review is “de novo,” which means
that CBP will review the entire administrative record upon which
the initial determination was made, the filed request(s) for review
and responses, and any additional information that was received.
[19 CFR § 165.45] After the administrative review is decided,
a party to the administrative review may file suit with the Court
of International Trade (CIT) to contest CBP’s determination.
The CIT will examine: (1) whether the CBP fully complied with all
regulatory procedures; and (2) whether any determination, finding,
or conclusion is arbitrary, capricious, an abuse of discretion, or
otherwise not in accordance with law.
How EAPA Investigations End
CBP’s determination is not final until the right of appeal
is closed and, even then, the immediate consequences of an adverse
determination may not be immediately clear. If CBP determines that
evasion occurred, CBP will cease applying any interim measures and
liquidate the entries in the normal course. It is reasonable to
expect that the evading party will be required to pay any lost
duties, plus interest, and any penalties or damages CBP seeks to
impose. CBP may choose to conduct additional investigations or
enforcement actions, including by notifying other government
agencies, such as the U.S. Department of Commerce, so that those
sister agencies may take action within their jurisdiction as well.
[19 CFR §§ 165.47, 165.28(b)]
Footnotes
1 The
contents of the administrative review are found at 19 CFR §
165.41(f).
2 Still,
certain information will not be treated as “business
confidential.” See 1 9 C.F.R. §
165.4(c).
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
