01-23562. Distribution of Continued Dumping and Subsidy Offset to Affected Domestic Producers

AGENCY:

U.S. Customs Service, Department of the Treasury.

ACTION:

Final rule.

SUMMARY:

This document amends the Customs Regulations to implement the Continued Dumping and Subsidy Offset Act of 2000, by prescribing the administrative procedures, including the time and manner, under which antidumping and countervailing duties assessed on imported products would be distributed to affected domestic producers as an offset for certain qualifying expenditures. This distribution to the affected producers is known as the continued dumping and subsidy offset.

EFFECTIVE DATE:

September 21, 2001.

FOR FURTHER INFORMATION CONTACT:

Jeffrey J. Laxague, Office of Regulations and Rulings, (202-927-0505).

SUPPLEMENTARY INFORMATION:

Background

Antidumping duties are imposed upon imported merchandise that the U.S. Department of Commerce has found is, or is likely to be, sold in the United States at less than its fair value. Countervailing duties are imposed upon imported merchandise that the Department of Commerce determines benefits from actionable subsidies bestowed by a foreign government. In all antidumping cases, and in most countervailing duty cases, these duties are only assessed if the U.S. International Trade Commission determines that the imported goods cause material injury or the threat of material injury to a domestic industry. The rules and procedures concerning proceedings leading to orders or findings under which antidumping and countervailing duties are assessed are found in 19 U.S.C. 1671 et seq., in part 207 of the regulations of the U.S. International Trade Commission (19 CFR chapter II, part 207), and in part 351 of the regulations of the International Trade Administration, U.S. Department of Commerce (19 CFR chapter III, part 351).

The Continued Dumping and Subsidy Offset Act of 2000 (“CDSOA”) was enacted on October 28, 2000, as part of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2001 (“Act”) (Pub. L. 106-387; 114 Stat. 1549). The provisions of the CDSOA are contained in Title X (sections 1001-1003) of the Act.

The CDSOA, in section 1003 of the Act, amended Title VII of the Tariff Act of 1930, by adding a new section 754 (codified at 19 U.S.C. 1675c) in order to provide that assessed duties received pursuant to a countervailing duty order, an antidumping duty order, or an antidumping duty finding under the Antidumping Act of 1921, would be distributed by Customs to affected domestic producers for certain qualifying expenditures that these producers incur after the issuance of such an antidumping duty order or finding, or countervailing duty order. This distribution is called the continued dumping and subsidy offset. It is noted that the continued dumping and subsidy offset under 19 U.S.C. 1675c covers all antidumping and countervailing duty assessments made on or after October 1, 2000, in connection with all antidumping duty orders or findings, or countervailing duty orders, in effect as of January 1, 1999, or issued thereafter. Pursuant to 19 U.S.C. 1675c, the Commissioner of Customs shall prescribe procedures for distribution of the continued dumping and subsidy offset.

Customs Rulemaking

Accordingly, by a document published in the Federal Register (66 FR 33920) on June 26, 2001, Customs proposed to amend the Customs Regulations to add a new subpart F to part 159 (19 CFR part 159, subpart F; §§ 159.61-159.64) that principally prescribed the procedures, including the time and manner, and the required information necessary for the distribution of antidumping and countervailing duties assessed under an appropriate order or finding, that would be payable as a continued dumping and subsidy offset to those affected domestic producers for their qualifying expenditures, in accordance with section 754 of the Tariff Act of 1930, as amended (19 U.S.C. 1675c).

In addition, under the Background heading of the proposed rule document (66 FR at 33922-33923), Customs provided several illustrations of the administrative process by which Customs would make distributions of the continued dumping and subsidy offset to affected domestic producers.

Discussion of Comments

The June 26, 2001, notice of proposed rulemaking made provision for the submission of public comments on the proposed regulations for consideration before adoption of those regulations as a final rule. The prescribed comment period closed on July 26, 2001. Forty comments were received by Customs. The issues raised in the comments are summarized and addressed below.

Affected Domestic Producers

Comment: Several commenters requested that Customs clarify the term “producer”. It was asked in this context whether companies that have filed for bankruptcy could still be affected domestic producers for purposes of the statute.

Customs Response: Customs agrees. Companies that have filed for bankruptcy would be affected domestic producers for purposes of section 1675c, if they remained in operation and continued to produce the product covered by the relevant order or finding, and provided further that such companies complied with the other requirements of the statute.

In addition, companies will be considered to have ceased production if they did not produce the product covered by an order or finding at all during the fiscal year that is the subject of the disbursement. This latter requirement is added in § 159.61(b)(1) which is redesignated as § 159.61(b)(2)(i) in this final rule document.

Comment: Several commenters proposed that domestic parties not on the list of affected domestic producers, as prepared by the U.S. International Trade Commission (USITC), be allowed to file certifications to claim an offset. Also, many comments included a request that the proposed regulations be clarified to provide for the filing of certifications by successor companies to those companies that appeared on the USITC list.

Customs Response: Under the 19 U.S.C. 1675c(d)(1), and as indicated in § 159.61(b), only a party on the USITC list is potentially eligible to receive an offset as an affected domestic producer. However, Customs agrees that a provision must be made for successor companies, as discussed below.

Specifically, where a company has succeeded to the operations of another company that appeared on the USITC list of affected domestic producers, the successor company may file a certification on behalf of the predecessor company. The USITC list is contained in the notice of intention to distribute the continued dumping and subsidy offset that must be published in the Federal Register in accordance with § 159.62. In its certification, the company must name the predecessor company to which it has succeeded and it must describe in detail the duly authorized succession by which it is entitled to file the certification on behalf of the predecessor.

A new paragraph (b)(1)(i) is added to § 159.61 in the final rule to address the filing of certifications by successor companies. As already noted, paragraph (b)(1) of proposed § 159.61 is redesignated as paragraph (b)(2)(i) in the final rule.

Comment: A number of commenters inquired as to whether an association whose name appeared on the USITC list for an order or finding could file a certification on behalf of its member companies and, if so, what qualifying expenditures could be included in the certification. It was also asked whether a company that was a member of such an association could file a certification, where the member company did not appear on the USITC list.

Customs Response: An association that appears on the USITC list of affected domestic producers in connection with a given order or finding, as set forth in the notice of distribution published in the Federal Register under § 159.62, cannot file a certification on behalf of its member companies. Customs does not believe that an association can properly certify, and thus be held liable for the accuracy of, member companies' qualifying expenditures. In order to certify, one must have direct knowledge of the validity of the expenses being claimed. In Customs view, associations are in no position to do so. The association may, of course, file a certification in its own right to claim an offset for that order or finding, but its qualifying expenditures would naturally be limited to those expenditures that the association itself has incurred in connection with that particular case, after the date of the order or finding.

In addition, an individual member of the association may file a certification to claim an offset for the same order or finding, even though the member company does not appear on the USITC list, provided that the company also meets the other requirements of the statute. It was clearly not the intent of Congress to prevent members of an association that initiated a proceeding at the USITC from filing certifications so that they may qualify for an offset under the statute, since an affected domestic producer is defined as “any manufacturer, producer, farmer, rancher, or worker representative (including associations of such persons)”.

In its certification, the company must name the association appearing on the USITC list, of which it is a member, and the company must specifically establish that it was a member of the association at the time the association filed the petition with the USITC.

To allow for the filing of certifications by an association's member companies that are not included on the USITC list of affected domestic producers, a new paragraph (b)(1)(ii) is added to § 159.61. Paragraph (b)(2) of proposed § 159.61 is redesignated as paragraph (b)(2)(ii) in the final rule.

Comment: A number of commenters suggested that Customs consult with the USITC on any questions that arise concerning the USITC list of affected domestic producers that appears in the Customs notice of intention to distribute the offset.

Customs Response: Customs already consults with the USITC in this matter and will continue to do so.

Comment: Some commenters suggested that Customs remove questionable parties from the list of affected domestic producers that is forwarded to Customs by the USITC, for example companies which do not appear to meet the domestic production criteria for filing a certification.

Customs Response: Customs will not arbitrarily delete parties from the list of companies supplied by the USITC. If a certification is submitted by a company appearing on the USITC list that third parties believe contains false statements regarding eligibility to file a certification and receive an offset, they may notify the Customs Office of Investigations regarding their allegations.

Qualifying Expenditures

Comment: A number of commenters requested clarification of the term “qualifying expenditures”. These commenters basically wanted to know the end of the time period within which qualifying expenditures could be incurred for purposes of claiming an offset. For example, if an order was terminated in January 2000, could qualifying expenditures be claimed if they are incurred up until the date the first certification is filed (October 2001), or are the expenditures incurred limited by the date of the termination?

Customs Response: A qualifying expenditure that may be offset by a distribution of assessed antidumping and countervailing duties encompasses those expenditures that are incurred after the issuance of an order or finding and prior to the termination of the order or finding. Proposed § 159.61(c) is revised in the final rule to reflect this.

Customs expects that claims made for qualifying expenditures will be made in accordance with the statute and that they will be supported by records that would be kept by any prudent person in the ordinary course of business, as required in § 159.63(b) and (c). The record of expenditures being certified should conform to Generally Accepted Accounting Principles in determining when a qualifying expenditure has occurred. To the extent that common problem areas are found during Customs verifications of certifications, Customs will report on such issues in its annual report.

Comment: Several commenters suggested that Customs require companies claiming a distribution of the offset under an order or finding to limit their claims only to those qualifying expenditures that are associated with the product that is the subject of the order or finding.

Customs Response: Customs agrees. The statute (19 U.S.C. 1675c(b)(1)(B)) mandates that an affected domestic producer produce the product that is covered by an order or finding under which the offset is sought. Accordingly, there is a corresponding statutory limitation upon those qualifying expenditures that may lawfully be claimed as an offset under the order or finding. Consequently, qualifying expenditures on which a distribution may be claimed under section 1675c(b)(4) are limited only to those expenditures that can be related to the production of the product that is covered by the scope of the order or finding.

It is Customs position that any other interpretation would only result in absurd consequences. The lack of a like product limitation would discriminate against producers who do not manufacture multiple, disparate products, such as steel and petroleum products. Those producers who make multiple products would be able to claim all their expenditures on facilities and equipment, even if those expenses had little or no connection with the manufacture of the particular product involved in an order or finding. This would potentially reduce funds available for non-diversified producers. There would also be a substantial administrative problem for Customs if there were orders or findings on more than one product in a company's line of merchandise.

In this latter regard, one example would be an affected domestic producer who manufactures five different products, each of which is the subject of a separate antidumping/countervailing duty order or finding, and who incurs $1 million in qualifying expenditures. Of the $1 million in qualifying expenditures, $600,000 is related to the production of just one product, and $100,000 incurred during the production of each of the other four products. In the absence of a same product requirement, the affected domestic producer could simply claim $1 million for each certification. However, Customs would not be able to match the $1 million in claimed expenses with any one of the five special accounts and would therefore have no reasonable basis for apportioning distributions from those accounts.

Proposed §§ 159.61(c) and 159.63(d) are amended in the final rule to reflect this additional limitation upon qualifying expenditures.

Notice of Distribution; Content

Comment: Several commenters proposed that Customs make information available concerning the dollar amounts in the special accounts for an order or finding prior to requiring companies to file certifications.

Customs Response: Customs agrees. In future notices of intention to distribute the offset under § 159.62 for a given fiscal year, Customs will publish the dollar amount in the special account for each order or finding as of June 1 of that fiscal year. Of course, the final amount to be disbursed will differ, but the published amount may serve as an estimate for purposes of determining whether to file a certification for that fiscal year. Proposed § 159.62(b) is changed in the final rule to provide for this.

Content and Sufficiency of Certifications

Comment: Several commenters proposed changing the signing official for the certifications to a lower-level employee, rather than a party legally authorized to bind the affected domestic producer, as required in proposed § 159.63(b).

Customs Response: Customs disagrees. The person signing the certification must be authorized to legally bind the domestic producer. Enforcement actions may be taken against individuals and companies who file false information with Customs.

Comment: One commenter requested that domestic producers be expressly permitted in proposed § 159.63(b)(2) to file claims for partial amounts.

Customs Response: Customs does not believe such a provision needs to be expressly set forth in the regulations. The important point is that any amounts certified by a claimant for distribution must be supported by business records that must be retained for possible Customs verification, as previously noted. If other qualifying expenditures become verified at a later date, those can be included in subsequent certifications to claim a distribution.

Comment: Several commenters requested clarification whether a company that is listed as an affected domestic producer on more than one order or finding may file a separate certification claiming a distribution, respectively, for each order or finding, using the same qualifying expenditures as the basis for distribution in each case. One commenter expressed a concern that Customs might overpay a claimant if a company may file multiple certifications in this way.

Customs Response: When the same product is covered by orders or findings for more than one country, an individual company that is listed for each of those cases must file the same dollar claim for each case, since qualifying expenditures are not associated with a specific country case. Consequently, in order to avoid the possibility of an overpayment in these circumstances, Customs will require each certification to list all other orders or findings where the company is claiming the same qualifying expenditures. This requirement is included in § 159.63(b)(3)(ii) in the final rule. However, as previously observed, those companies that have multiple orders on different products may not claim the same expenditures for all cases. The expenditures claimed must relate to the product covered by the order or finding for which an offset is being claimed.

Comment: Several commenters suggested that the certifications should require an additional statement specifying exactly how a party meets the requirements in the statute for filing a certification.

Customs Response: Customs disagrees. Proposed § 159.63(b)(3) already adequately addresses the requirements concerning those parties that would be entitled to file certifications.

It is also noted that, due to the addition of paragraphs (b)(3)(i) and (b)(3)(ii) to § 159.63 in the final rule, as indicated above, it has been decided, for editorial clarity, to reorganize paragraph (b)(3) of proposed § 159.63 in the final rule as paragraphs (b)(3), and (b)(3)(i)-(b)(3)(iii).

Correction of Certifications

Comment: Many commenters suggested that Customs not reject certifications for minor errors or omissions. They also proposed a correction period for claimants to perfect their certifications.

Customs Response: Customs agrees. Parties listed in notices of intention to distribute must file their certifications within 60 days after publication of the notice, as already provided in proposed § 159.63(a). However, Customs will then have 15 days after the close of the 60-day filing period to return a certification that is found to be materially incorrect or incomplete. Within 10 days of the date that Customs returns a certification as being materially incorrect or incomplete, Customs must receive a corrected certification from the affected domestic producer. Customs will make every effort to assist companies to perfect their certifications and will not return claims for minor errors or omissions. Proposed § 159.63(c) is revised in the final rule to include these additional provisions regarding the processing of incorrect or incomplete certifications. Nevertheless, claimants should be mindful that it remains their responsibility to meet the requirements of the regulations for filing proper certifications.

Furthermore, in an effort to provide greater notice to domestic producers of Customs intent to distribute the offset, and thus enable the earlier filing of certifications, future notices of distribution will be published at least 90 days before the end of a fiscal year, as opposed to 60 days. Proposed § 159.62(a) is amended in the final rule to this effect.

Verification of Certifications

Comment: One commenter suggested, with reference to proposed § 159.63(d), that Customs verify every certification. Another commenter recommended a 5-year retention requirement for records needed to support claims for distribution, rather than the 3-year period contained in proposed § 159.63(d).

Customs Response: A number of certifications may be selected to determine whether, and to what extent, verifications will be conducted.

However, Customs agrees with the recommendation for a 5-year record retention requirement, and proposed § 159.63(d) is changed in the final rule to provide for this. This accords with the general record retention provision of 5 years that is set forth in § 163.4(a), Customs Regulations (19 CFR 163.4(a)).

Disclosure to Public of Certain Information Contained in Certifications

Comment: With respect to the information contained in the certifications described in proposed § 159.63, over 20 comments were received on the question of whether certain information required to be set forth in the certifications should be made public on a company-specific basis. The comments were equally divided over whether the company name and the dollar amounts claimed for an offset should be made public.

Customs Response: As stated in the proposed rule, Customs was especially interested in receiving public comment as to whether it should adopt the position that the name of the certifying producer and the total amount being certified for distribution should be considered information available for disclosure to the public.

Customs has concluded that the name of the claimant, the total dollar amount claimed by that party on the certification, as well as the total dollar amount that Customs actually disburses to that company as an offset, will be available for disclosure to the public. Customs has determined that this information does not qualify as business confidential information. Proposed § 159.63 is changed in the final rule by adding paragraph (e) to state that the submission of a certification by an affected domestic producer will be construed as an understanding on the part of the affected domestic producer that the foregoing information will be disclosed to the public. Alternatively, a statement in a certification that this information is proprietary and exempt from disclosure will result in Customs rejection of the certification.

Accordingly, as part of the annual report on the Continued Dumping and Subsidy Offset Act (CDSOA), Customs will publish the following by case number: the name of the claimant; the total dollar amount claimed by that party on the certification; and the total dollar amount disbursed to that company by Customs. Proposed § 159.64(g), which concerns the issuance of the annual report, is amended in the final rule to provide for this disclosure of information.

Recommended Conditions/Restrictions on Disbursements

Comment: One commenter suggested that Customs prescribe how domestic producers may spend the disbursements that they receive under proposed § 159.64.

Customs Response: Customs disagrees. There is no statutory requirement as to how a disbursement to an affected domestic producer is to be spent, and, absent statutory authority, Customs may not impose such a requirement.

Comment: One commenter suggested that Customs deduct its administrative costs associated with the program from the offset to be distributed prior to making any disbursements.

Customs Response: Customs disagrees. There is no provision in the statute to allow for such a deduction.

Comment: Two commenters recommended that the disbursements to companies in an industry be reduced by the amount of other Government aid provided to that industry via other programs.

Customs Response: Customs disagrees. Again, there is no provision in the statute to allow for such a reduction. Thus, Customs has no authority to reduce the amount of the offset payable to affected domestic producers under the statute, based upon aid provided to such producers through other Government programs.

Refunds to Importers; Recovery of Overpayments to Domestic Producers

Comment: One commenter requested, in connection with proposed § 159.64(b), that a domestic producer furnish Customs with a surety bond in order to guarantee that any overpayment of assessed duties to the producer would be repaid in the event that a subsequent reliquidation results in a lesser amount of duties being assessed.

Customs Response: Customs disagrees. At this time, it does not appear to be practical or necessary to require domestic producers to file a surety bond to cover the amount of an annual distribution.

Comment: Two commenters expressed concern that administration of the CDSOA under proposed § 159.64(b)(2) would delay the processing of refunds to importers in the case of reliquidations and/or court action. The concern was that Customs would hold up action on a refund request until it had received repayment of the overpaid disbursement from the domestic producers.

Customs Response: Customs will not withhold action on refund claims based on the recovery of overpaid disbursements. Customs will establish procedures to compute the overpaid amounts to be recovered from domestic producers, so that recovery of the overpayment can be made, but those recoveries will take place independent of the refund of duties to importers. Customs already has authority under 19 U.S.C. 1520(a) to refund excess duties paid, and the necessary monies to make such refunds are authorized to be appropriated annually from the general fund of the Treasury.

Proposed § 159.64(b)(2) is revised in the final rule to include the assurance that refunds to importers will not be delayed pending the recovery of overpayments to domestic producers.

Comment: One commenter asserted that Customs had no authority to require repayment of an offset in proposed § 159.64(b)(3) when Customs had overpaid the offset due to an error in liquidation of an import entry.

Customs Response: The ability to recover potential overpayments of disbursed duties due to the reliquidation of import entries is a central feature of issuing disbursements. If Customs were unable to collect overpayments of disbursed duties due to import entry reliquidations, Customs would simply have to delay all disbursements until the time for reliquidation of the relevant import entries had passed, thereby precluding the possibility of overpayments due to reliquidations. Under this latter scenario, for example, disbursements for entries liquidated in Fiscal Year 2001 would not take place until November of 2002 if Customs did not have a mechanism in place to recover potential overpayments. With this mechanism in place, Customs anticipates completing distributions by the end of November 2001.

Unclaimed Offset Not Available for Future Distribution

Comment: Many commenters stated that assessed duties remaining unclaimed after an annual distribution has occurred should not be deposited into the General Fund, as required under proposed § 159.64(c)(1), but should be available for future distributions to affected domestic producers.

Customs Response: Customs disagrees. In Customs view, sections 1675c(c) and (d)(3) of the statute clearly require disbursement of liquidated duties in each fiscal year, based on certifications timely filed for that year's assessments. There is no provision for disbursing duties collected in one fiscal year based on claims that may be filed two or three years later simply because there was a previous unclaimed balance. The CDSOA provides that “[s]uch distribution shall be made not later than 60 days after the first day of a fiscal year from duties assessed during the preceding fiscal year.” 19 U.S.C. 1675c(c).

However, the part of proposed § 159.64(c)(1) that dealt with the transfer of balances to different accounts has been deleted from this section in the final rule. Since that information only concerns internal Customs processing, it is not necessary to be included in the regulations.

Proposed § 159.64(c)(1) is changed in the final rule accordingly; and proposed § 159.64(b)(2) and (b)(3) is changed consistent with § 159.64(c)(1).

Requests for Reconsideration of a Disbursement

Comment: In cases where a distribution to an affected domestic producer was not for the entire amount certified, a number of commenters proposed that the time limit within which an affected domestic producer could request a reconsideration of the amount of the distribution be extended beyond the 10 business-day time limit set forth in proposed § 159.64(c)(3).

Customs Response: Customs agrees. Parties will have 30 calendar days, rather than 10 business days, to request reconsideration of a disbursement. Proposed § 159.64(c)(3) is revised in the final rule to include this requirement.

Termination of Orders or Findings

Comment: A number of commenters requested clarification of Customs actions when an order or finding has been terminated by the U.S. Department of Commerce (Commerce).

Customs Response: When an order or finding is terminated by the Department of Commerce, Customs will work with Commerce to determine the extent of unliquidated entries covered by the case. If, for example, there is more than one Commerce review period pending at the time of termination, and Commerce only issues liquidation instructions for one of the pending review periods, Customs will process the entries covered by the instructions as an annual disbursement. The delayed disbursement referred to in § 159.64(d)(2) is limited to the final distribution when the special account established under the order or finding is terminated.

Interest

Comment: Some commenters suggested, with reference to proposed § 159.64(e), that the Clearing Account and the Special Account that Customs establishes under the CDSOA should be interest-bearing accounts.

Customs Response: Customs disagrees. Briefly, as previously explained in the notice of proposed rulemaking, funds in Government accounts are not interest-bearing unless specified by Congress. Because Congress did not make an explicit provision for the accounts established under the CDSOA to be interest-bearing, no interest may accrue on these accounts. Thus, only interest charged on antidumping and countervailing duty funds themselves, pursuant to the express authority in 19 U.S.C. 1677g, will be transferred to the special accounts and be made available for distribution under the CDSOA.

Comment: A number of commenters wanted to know about the interest that Customs pays when antidumping or countervailing duty deposits exceed the final assessed duty amount. These commenters asked if this interest would have any effect on the amount of the offset for an order or finding.

Customs Response: Interest paid by Customs when deposits exceed the amount of the duties assessed will not be taken from either the clearing account or the special account. It is not a part of, and therefore does not reduce, the computation of the continued dumping and subsidy offset for an order or finding that would be distributed to affected domestic producers.

Annual Report; Content; Certain General Information

Comment: A number of commenters suggested that the annual report also contain the following general information for each order or finding: information regarding the number of entries and dollar amounts in the clearing account at the beginning of each fiscal year; the number and amount of Customs reliquidations during the fiscal year; and the dollar amounts remaining uncollected from Customs bills issued during the fiscal year.

Customs Response: Customs agrees that the annual report should include this information as well. Proposed § 159.64(g) is further revised in the final rule to make reference to the inclusion of this additional information in the annual report for public disclosure. Also, in its annual report, Customs will address any initiatives that have been implemented to improve the liquidation and disbursement process under the CDSOA.

Miscellaneous Issues Raised

Comment: Several commenters objected to the CDSOA as violating the World Trade Organization (WTO) agreements on Dumping and Subsidies and the North American Free Trade Agreement (NAFTA).

Customs Response: These comments concern the statute and not the regulations and, accordingly, fall outside the scope of this rulemaking.

Comment: One commenter requested a public hearing. Another commenter requested an extension of the period for filing comments.

Customs Response: Customs finds that the process of informal rulemaking in accordance with the Administrative Procedure Act (5 U.S.C. 553) conducted in this matter was sufficient. The comments received during the proposed rulemaking comment period fairly and adequately addressed the issues that were presented by the proposed rule, and Customs fully considered all views that were contained in the comments in issuing this final rule document. Neither a public hearing nor an extension of the comment period is necessary in this case.

Comment: Several commenters suggested the term “assessment” be defined.

Customs Response: Customs disagrees. As explained in the notice of proposed rulemaking, the assessment of duties on an import entry is accomplished by liquidating the subject entry; and, in pertinent part, the term “liquidation” is already defined in § 159.1, Customs Regulations (19 CFR 159.1), as the final computation or ascertainment of the duties accruing on an entry.

Comment: There were a few comments requesting a clarification of the pro rata allocation of the offset to affected domestic producers that is required under the statute (19 U.S.C. 1675c(d)(3)).

Customs Response: Customs believes that proposed § 159.64(c)(2), which addresses this issue, is clear and that no further clarification is necessary. Specifically, where the certified net claims exceed the offset available in a special account, the offset will be distributed on a pro rata basis based on each affected domestic producer's total certified claim. For example, on an individual case with only two claimants, if only $1 million is available for disbursement, where Company A claims total qualifying expenditures of $80 million, and Company B claims total qualifying expenditures of $20 million, Company A would receive $800,000 and Company B would receive $200,000. For those parties filing multiple certifications when there is more than one country case for a specific product, Customs will establish internal controls to prevent payments to affected domestic producers in excess of the amounts claimed.

Comment: One commenter suggested that the regulations specify that Customs decisions in administering the statute are subject to judicial review by the U.S. Court of International Trade (USCIT).

Customs Response: Customs disagrees. The CDSOA does not specify which particular federal court would have jurisdiction to review disputes regarding Customs decisions in administering the statute, and Customs lacks authority to confer jurisdiction on a particular court through its regulations.

Additional Changes

Paragraph (b) of proposed § 159.63 is revised to include a requirement that the certification include a statement that the domestic producer has records to support the qualifying expenditures being claimed. Also, paragraph (b)(1)(vi) of proposed § 159.63, allowing for the distribution of an offset via Electronic Funds Transfer (EFT), is deleted since Customs has not made any provision for the electronic payment of the offset. Furthermore, proposed § 159.64(e) is revised in the final rule to reflect that statutory interest charged on antidumping and countervailing duties at liquidation will be transferred only to the special account for the related order or finding, when such interest is collected from the importer.

Conclusion

After careful consideration of the comments received and further review of the matter, Customs has concluded that the proposed amendments should be adopted with the modifications discussed above.

Inapplicability of Delayed Effective Date of Final Rule Document

Customs finds that good cause exists under 5 U.S.C. 553(d)(3) for dispensing with a delayed effective date for this final rule. The final rule will instead be effective upon its date of publication in the Federal Register. Customs finds that it would be contrary to the public interest to delay distributions that affected domestic producers are entitled to under the statute. Moreover, dispensing with a delayed effective date is necessary in order to ensure that Customs is able to timely comply with the statutory requirement that assessed duties received in Fiscal Year 2001 be distributed to affected domestic producers by November 30, 2001 as provided in 19 U.S.C. 1675c(c).

Regulatory Flexibility Act and Executive Order 12866

The amendments implement the terms and conditions of the Continued Dumping and Subsidy Offset Act of 2000, which applies to antidumping and countervailing duties assessed on or after October 1, 2000. The amendments are necessary in order to enable and expedite the distribution of the offset to affected domestic producers. For these reasons, pursuant to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 27a et seq.), it is certified that these amendments do not have a significant economic impact on a substantial number of small entities. Nor do the amendments meet the criteria for a “significant regulatory action” as specified in E.O. 12866.

Paperwork Reduction Act

The collection of information in this final rule document was submitted for review and has been approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507) under OMB control number 1515-0229. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

This collection of information is contained in § 159.63. This information is necessary in order to enable, and to expedite, the distribution of the continued dumping and subsidy offset to the affected domestic producers. The likely respondents and/or recordkeepers are domestic business organizations, such as manufacturers, producers, ranchers, farmers and worker representatives (including associations of such persons). The estimated average annual burden associated with this information collection is 40 hours per respondent or recordkeeper.

Comments on the accuracy of this burden estimate and suggestions for reducing this burden should be sent to the Office of Management and Budget, Attention: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503. A copy should also be sent to the Regulations Branch, Office of Regulations and Rulings, U.S. Customs Service, 1300 Pennsylvania Avenue, NW., 3rd Floor, Washington, DC 20229.

Part 178, Customs Regulations (19 CFR part 178), containing the list of approved information collections, is revised to reflect the additional information collection burden imposed under this final rule.

List of Subjects

19 CFR Part 159

• Antidumping (liquidation of duties)
• Countervailing duties (liquidation of duties)
• Customs duties and inspection
• Liquidation of entries for merchandise

19 CFR Part 178

• Administrative practice and procedure
• Collections of information
• Imports
• Paperwork requirements
• Reporting and recordkeeping requirements

Amendments to the Regulations

Parts 159 and 178, Customs Regulations (19 CFR parts 159 and 178), are amended as set forth below.

PART 159—LIQUIDATION OF DUTIES

1. The authority citation for part 159 is amended by adding an authority citation for Subpart F so as to read, in part, as follows:

Authority: 19 U.S.C. 66, 1500, 1504, 1624. Subpart C also issued under 31 U.S.C. 5151. Subpart F also issued under 19 U.S.C. 1675c.

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2. Part 159 is amended by adding a new subpart F to read as follows:

Subpart F—Continued Dumping and Subsidy Offset

159.61 General.

159.62 Notice of distribution.

159.63 Certifications.

159.64 Distribution of offset.

Subpart F—Continued Dumping and Subsidy Offset

§ 159.61

General.

(a) Continued dumping and subsidy offset. Under section 754 of the Tariff Act of 1930, as amended by Public Law 106-387, 114 Stat. 1549 (19 U.S.C. 1675c), known as the Continued Dumping and Subsidy Offset Act of 2000, assessed duties received on or after October 1, 2000 under a countervailing duty order, an antidumping duty order, or a finding under the Antidumping Act of 1921, will be distributed, as provided under this subpart, to affected domestic producers for certain qualifying expenditures that these affected domestic producers incur after the issuance of such an antidumping duty order or finding, or countervailing duty order. This distribution is called the continued dumping and subsidy offset.

(b) Affected domestic producer. (1) General rule. Except as provided in paragraph (b)(2) of this section, an “affected domestic producer” under paragraph (a) of this section means any manufacturer, producer, farmer, rancher or worker representative (including any association of such persons) that remains in operation continuing to produce the product covered by the antidumping duty order or finding or countervailing duty order, and that was a petitioner or an interested party that supported a petition concerning an antidumping duty order, a finding under the Antidumping Act of 1921, or a countervailing duty order that was entered. It is the responsibility of the U.S. International Trade Commission (USITC) to ascertain and timely forward to Customs a list of the domestic producers potentially considered “affected domestic producers” eligible to receive a distribution in connection with each order or finding. In addition to the potential “affected domestic producers” set forth on the USITC list, the following parties also are potential “affected domestic producers”:

(i) Successor company. In the case of a company that has succeeded to the operations of a predecessor company that appeared on the USITC list, the successor company may file a certification to claim an offset as an affected domestic producer on behalf of the predecessor company. In its certification, the company must name the predecessor company to which it has succeeded and it must describe in detail the duly authorized succession by which it is entitled to file the certification.

(ii) A member company of an association. A member company of an association appearing on the USITC list for an order or finding may file a certification to claim an offset as an affected domestic producer, even though the member company does not itself appear on the USITC list, provided that the company also meets the other requirements of the statute. In its certification, the company must name the association of which it is a member and the company must specifically establish that it was a member of the association at the time the association filed the petition with the USITC.

(2) Exceptions. A party who is named on the USITC list is not an “affected domestic producer” under the following circumstances:

(i) Product no longer produced. A company, business or person that has ceased production of the product covered by the antidumping duty order or finding, or countervailing duty order, i.e., did not manufacture that product at all during the fiscal year that is the subject of the disbursement, is not an affected domestic producer under this section.

(ii) Acquisition by related company. (A) Related company defined. A company, business or person is not an affected domestic producer if that company, business, or person has been acquired by another company or business that is related to a company that opposed the antidumping or countervailing duty investigation that led to the order or finding. For purposes of this paragraph, a company, business or person is related to another company, business or person if:

(1) The company, business or person directly or indirectly controls or is controlled by the other company, business or person;

(2) A third party directly or indirectly controls both companies, businesses or persons; or

(3) Both companies, businesses or persons directly or indirectly control a third party and there is reason to believe that the relationship causes the first company, business or person to act differently than a nonrelated party.

(B) Control of one party by another. For purposes of paragraphs (b)(2)(ii)(A)(1) through (b)(2)(ii)(A)(3) of this section, one party would be considered to directly or indirectly control another party if the party was legally or operationally in a position to exercise restraint or direction over the other party.

(c) Qualifying expenditures. Qualifying expenditures which may be offset by a distribution of assessed antidumping and countervailing duties must fall within the categories described in paragraphs (c)(1) through (c)(10) of this section. These expenditures must be incurred after the issuance, and prior to the termination, of the antidumping duty order or finding or countervailing duty order under which the distribution is sought. Further, these expenditures must be related to the production of the same product that is the subject of the related order or finding, with the exception of expenses incurred by associations which must relate to a specific case.

(1) Manufacturing facilities;

(2) Equipment;

(3) Research and development;

(4) Personnel training;

(5) Acquisition of technology;

(6) Health care benefits for employees paid for by the employer;

(7) Pension benefits for employees paid for by the employer;

(8) Environmental equipment, training, or technology;

(9) Acquisition of raw materials and other inputs; and

(10) Working capital or other funds needed to maintain production.

§ 159.62

Notice of distribution.

(a) Publication of notice. At least 90 days before the end of a fiscal year, Customs will publish in the Federal Register a notice of intention to distribute assessed duties received as the continued dumping and subsidy offset for that fiscal year. The notice will include the list of domestic producers, based upon the list supplied by the USITC (see § 159.61(b)(1)), that would be potentially eligible to receive the distribution.

(b) Content of notice. The notice of intention to distribute the offset will also contain the following:

(1) The case name and number of the particular order or finding concerned, together with the dollar amount contained in the special account for that order or finding as of June 1 of the subject fiscal year (see § 159.64(a)(1)); and

(2) The instructions for filing the certification under § 159.63 in order to claim a distribution.

§ 159.63

Certifications.

(a) Requirement and purpose for certification. In order to obtain a distribution of the offset, each affected domestic producer must submit a certification, in triplicate, or electronically as authorized by Customs, to the Assistant Commissioner, Office of Regulations and Rulings, Headquarters, or designee, that must be received within 60 days after the date of publication of the notice in the Federal Register, indicating that the affected domestic producer desires to receive a distribution. The certification must enumerate the qualifying expenditures incurred by the domestic producer since the issuance of an order or finding for which a distribution has not previously been made, and it must demonstrate that the domestic producer is eligible to receive a distribution as an affected domestic producer.

(b) Content of certification. While there is no established format for a certification, the certification must identify the date of the Federal Register notice under which it is submitted, and the case name and the number of the particular order or finding cited in the Federal Register notice. The certification must be executed and dated by a party legally authorized to bind the domestic producer. The certification must also state that the information contained in the certification is true and accurate to the best of the certifier's knowledge and belief under penalty of law, and that the domestic producer has records to support the qualifying expenditures being claimed.

(1) Identifying information for domestic producer. The certification must include the following identifying information related to the domestic producer:

(i) The name of the domestic producer and any name qualifier, if applicable (for example, any other name under which the domestic producer does business or is also known);

(ii) The address of the domestic producer (if a post office box, the secondary street address must also be included);

(iii) The Internal Revenue Service (IRS) number (with suffix) of the domestic producer, employer identification number, or social security number, as applicable;

(iv) The specific business organization of the domestic producer (corporation, partnership, sole proprietorship); and

(v) The name(s) of any individual(s) designated by the domestic producer as the contact person(s) concerning the certification, together with the phone number(s) and/or facsimile transmission number(s) and electronic mail (email) address(es) for the person(s).

(2) Amount of claim. In calculating the amount of the distribution being claimed as an offset, the certification must enumerate the following:

(i) The total amount of qualifying expenditures currently and previously certified by the domestic producer, and the amount certified by category(see § 159.61(c)(1) through (c)(10));

(ii) The total amount of those expenditures which have been the subject of any prior distribution under section 754, Tariff Act of 1930, as amended (19 U.S.C. 1675c); and

(iii) The net amount for new and remaining qualifying expenditures being claimed in the current certification (the total amount currently and previously certified as noted in paragraph (b)(2)(i) of this section minus the total amount the subject of any prior distribution as noted in paragraph (b)(2)(ii) of this section).

(3) Statement of eligibility to receive distribution. The certification must contain a statement that the domestic producer desires to receive a distribution and is eligible to receive the distribution as an affected domestic producer (see § 159.61(b)(1) and (b)(2)).

(i) Amount certified for payment. The affected domestic producer must affirm that the net amount certified for distribution does not encompass any qualifying expenditures for which distribution has previously been made (see paragraphs (b)(2)(ii) and (b)(2)(iii) of this section).

(ii) Same qualifying expenditures included on more than one certification. Where the domestic producer is listed as an affected domestic producer on more than one order or finding covering the same product and files a separate certification for each order or finding using the same qualifying expenditures as the basis for distribution in each case, each certification must list all the other orders or findings where the producer is claiming the same qualifying expenditures.

(iii) Continued production of product covered by order or finding; acquisition by related company. The statement must include information as to whether the domestic producer remains in operation and continues to produce the product covered by the particular order or finding under which the distribution is sought (see § 159.61(b)(2)(i)). In addition, the domestic producer must state whether it has been acquired by a company or business that is related to a company, within the meaning of § 159.61(b)(2)(ii)(A)(1) through (3), that opposed the antidumping or countervailing duty investigation that resulted in the order or finding under which the distribution is sought.

(c) Review and correction of certification. A certification that is submitted in response to a notice of distribution and received within 60 days after the date of publication of the notice in the Federal Register may be reviewed before acceptance to ensure that all informational requirements are complied with and that any amounts set forth in the certification for current and prior qualifying expenditures, including the amount claimed for distribution, appear to be correct (see paragraph (b)(2) of this section). A certification that is found to be materially incorrect or incomplete will be returned to the domestic producer within 15 days after the close of the 60-day filing period. Within 10 days of the date that Customs returns a certification as being materially incorrect or incomplete, Customs must receive a corrected certification from the affected domestic producer. Customs will make every effort to assist companies to perfect their certifications and will not return claims for minor errors or omissions. However, it remains the sole responsibility of the domestic producer to ensure that the certification is correct, complete and satisfactory so as to demonstrate the entitlement of the domestic producer to the distribution requested. Failure to ensure that the certification is correct, complete and satisfactory as provided in this paragraph will result in the domestic producer not receiving a distribution.

(d) Verification of certification; supporting records. Certifications are subject to verification. Parties, therefore, are required to maintain the accounting records used in developing their claims, for a period of five years after the filing of the certification. The records supporting certifications must be those that are normally kept in the ordinary course of business (see § 163.1(a)(1) and (a)(2)(vi) of this chapter). Parties must be able to demonstrate that their records specifically support each qualifying expenditure enumerated in a certification. In addition, the claimant must be able to support how qualifying expenditures are determined to be related to the production of the product covered by the order or finding.

(e) Disclosure of information in certifications; acceptance by producer. The name of the affected domestic producer, the total dollar amount claimed by that party on the certification, as well as the total dollar amount that Customs actually disburses to that company as an offset, will be available for disclosure to the public (see § 159.64(g)(1)). The submission of the certification will be construed as an understanding and acceptance on the part of the domestic producer that this information will be disclosed to the public. Alternatively, a statement in a certification that this information is proprietary and exempt from disclosure will result in Customs rejection of the certification.

§ 159.64

Distribution of offset.

(a) The creation of Special Accounts and Clearing Accounts.

(1) Special Accounts. As directed in the legislation (19 U.S.C. 1675c(e)), Customs will establish Special Accounts for each antidumping duty order or finding or countervailing duty order, into which funds will be transferred as set out in paragraph (b) of this section. All distributions to affected domestic producers will be made from the Special Accounts.

(2) Clearing Accounts. In order to properly manage and account for dumping and subsidy offsets, as well as any requisite refunds to importers, Customs will also establish Clearing Accounts. All estimated antidumping and countervailing duties received pursuant to an antidumping or countervailing order or finding in effect on January 1, 1999, or thereafter, will be deposited into a Clearing Account.

(b) Distribution of assessed duties received from the Special Accounts; refunds resulting from reliquidation or court action; and overpayments to affected domestic producers.

(1) Distribution of assessed duties received from the Special Accounts.

(i) No later than 60 days after the end of a fiscal year, Customs will distribute the assessed duties transferred from the Clearing Accounts and received into the Special Accounts. The amount distributed shall be referred to as the dumping and subsidy offset;

(ii) Transfers from the Clearing Accounts to the Special Accounts will be made by Customs throughout the fiscal year. Transfers will occur between a Clearing Account and a Special Fund Account when an entry upon which antidumping or countervailing duties are owed is properly liquidated pursuant to an order, finding or receipt of liquidation instructions;

(iii) The amount transferred at liquidation to the Special Account will be dependent upon the amount actually collected on the entry and in the Clearing Account. Following liquidation, additional transfers will be made on the liquidated entry to the corresponding Special Account, as additional antidumping or countervailing duties are collected.

(2) Refunds resulting from reliquidation or court action. If any of the underlying entries composing a prior distribution should reliquidate for a refund, such refund will be recovered from the corresponding Special Account. Similarly, refunds to importers resulting from any court action involving those entries will also be recovered from the corresponding Special Account. Refunds to importers will not be delayed pending the recovery of overpayments from domestic producers as set out in paragraph (b)(3) of this section.

(3) Overpayments to affected domestic producers. Overpayments to affected domestic producers resulting from subsequent reliquidations and/or court actions and determined by Customs to be not otherwise recoverable from the corresponding Special Account as set out in paragraph (b)(2) of this section will be collected from the affected domestic producers. The amount of each affected domestic producer's bill will be directly proportional to the total dumping and subsidy offset amounts that the affected domestic producer previously received under the related Special Account. All available collection methods will be used by Customs to collect outstanding bills, including but not limited to, administrative offset. Interest at the same rate set out at § 24.3a(c) of this chapter will begin to accrue on unpaid bills 30 days from the bill date.

(c) Payment of certified claims.

(1) If the total amount of the certified net claims filed by affected domestic producers does not exceed the amount of the offset available for distribution in the corresponding Special Account, the certified net claim for each affected domestic producer will be paid in full.

(2) If the certified net claims exceed the dumping and subsidy offset amount available in the corresponding Special Account, such offset will be made on a pro rata basis based on each affected domestic producer's total certified claim.

(3) In any case where the distribution is not for the entire certified qualifying expenditure submitted by an affected domestic producer, and if the affected domestic producer believes that the reduction was the result of clerical error or mistake by Customs, it must file a request for reconsideration within 30 calendar days to the address given in the notification. After considering the matter, the Customs Service will notify the party requesting reconsideration of its decision. However, any adjustments will be made only from funds remaining in the account for that case in the current or future fiscal years, and will be paid prior to any future distributions.

(d) Final distribution and termination of the Special Account.

(1) A Special Account will be terminated and a final distribution will occur when:

(i) The order or finding with respect to which the account was established has terminated; and

(ii) All entries relating to the order or finding are liquidated, all outstanding amounts collected or properly accounted for by Customs, all related protests, petitions, and court actions fully concluded, and all refunds due to importers on the underlying entries are paid in full.

(2) Once the requirements set out in paragraph (d)(1) of this section have been met, notice of a final distribution will be issued pursuant to § 159.62.

(3) Amounts not timely claimed under the notice of final distribution will be permanently deposited into the General Fund of the Treasury.

(e) Interest on Special Accounts and Clearing Accounts. In accordance with Federal appropriations law, and Treasury guidelines on Special Accounts, funds in such accounts are not interest-bearing unless specified by Congress. Likewise, funds being held in Clearing Accounts are not interest-bearing unless specified by Congress. Therefore, no interest will accrue in these accounts. However, statutory interest charged on antidumping and countervailing duties at liquidation will be transferred to the Special Account, when collected from the importer.

(f) Distribution final and conclusive. Except as provided in paragraphs (b)(3) and (c)(3) of this section, any distribution made to an affected domestic producer under this section shall be final and conclusive on the affected domestic producer.

(g) Annual report; disclosure of information. Although it is not mandated in the law (19 U.S.C. 1675c), Customs will issue an annual report on the disbursements. This report will be available to the public via the Customs website. The annual report will address any initiatives that have been implemented to improve the liquidation and disbursement process. In addition, the annual report will include the information described in paragraphs (g)(1) and (g)(2) of this section.

(1) Company-specific information. The annual report will include the following information concerning those parties that have submitted certifications for a distribution of the offset with respect to each order or finding as identified by its case number:

(i) The name of the claimant;

(ii) The total dollar amount claimed by that party on its certification; and

(iii) The total dollar amount disbursed to that company by Customs.

(2) General information. The annual report will include the following general information for each order or finding as identified by its case number:

(i) The number of entries and dollar amounts in the clearing account at the beginning of each fiscal year;

(ii) The number and amount of Customs re-liquidations during the fiscal year; and

(iii) The dollar amounts remaining uncollected from Customs bills issued during the fiscal year.

PART 178—APPROVAL OF INFORMATION COLLECTION REQUIREMENTS

1. The authority citation for part 178 continues to read as follows:

Authority: 5 U.S.C. 301; 19 U.S.C. 1624; 44 U.S.C. 3501 et seq.

2. Section 178.2 is amended by adding a new listing in the table in appropriate numerical order to read as follows:

§ 178.2

Listing of OMB control numbers.

19 CFR section	Description	OMB control No.
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§ 159.63	Distribution of continued dumping and subsidy offset to affected domestic producers	1515-0229
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Approved: September 17, 2001.

Charles W. Winwood,

Acting Commissioner of Customs.

Timothy E. Skud,

Acting Deputy Assistant Secretary of the Treasury.