2012-24633. Rules of General Application, Adjudication, and Enforcement

AGENCY:

International Trade Commission.

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The United States International Trade Commission (“Commission”) proposes to amend its Rules of Practice and Procedure concerning adjudication and enforcement. The amendments are necessary to address concerns that have arisen about the scope of discovery in Commission proceedings under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) (“section 337”). The intended effect of the proposed amendments is to reduce expensive, inefficient, unjustified, or unnecessary discovery practices in agency proceedings while preserving the opportunity for fair and efficient discovery for all parties.

DATES:

To be assured of consideration, written comments must be received by 5:15 p.m. on December 4, 2012.

ADDRESSES:

You may submit comments, identified by docket number MISC-041, by any of the following methods:

—Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

—Agency Web Site: http://www.usitc.gov. Follow the instructions for submitting comments on the Web site at http://www.usitc.gov/​secretary/​edis.htm.

—Mail: For paper submission. U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436.

—Hand Delivery/Courier: U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436, from the hours of 8:45 a.m. to 5:15 p.m.

Instructions: All submissions received must include the agency name and docket number (MISC-041), along with a cover letter stating the nature of the commenter's interest in the proposed rulemaking. All comments received will be posted without change to http://www.usitc.gov,, including any personal information provided. For paper copies, a signed original and 8 copies of each set of comments should be submitted to Lisa R. Barton, Acting Secretary, U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436.

Docket: For access to the docket to read background documents or comments received, go to http://www.usitc.gov and/or the U.S. International Trade Commission, 500 E Street SW., Room 112, Washington, DC 20436.

FOR FURTHER INFORMATION CONTACT:

Clark S. Cheney, telephone [phone], Office of the General Counsel, United States International Trade Commission. Hearing-impaired individuals are advised that information on this matter can be obtained by contacting the Commission's TDD terminal at 202-205-1810. General information concerning the Commission may also be obtained by accessing its Internet server at http://www.usitc.gov.

SUPPLEMENTARY INFORMATION:

The preamble below is designed to assist readers in understanding these proposed amendments to the Commission Rules. This preamble provides background information, a regulatory analysis of the proposed amendments, an explanation of the proposed amendments to Part 210, and a description of the proposed amendments to the rules. The Commission encourages members of the public to comment on whether the language of the proposed amendments is sufficiently clear for users to understand, in addition to any other comments they wish to make on the proposed amendments.

If the Commission decides to proceed with this rulemaking after reviewing the comments filed in response to this notice, the proposed rule revisions will be promulgated in accordance with provisions found in section 553 of the Administrative Procedure Act (“APA”) (5 U.S.C. 553), although not all provisions of section 553 apply to this rulemaking. The revisions will be codified in 19 CFR Part 210.

Background

Section 335 of the Tariff Act of 1930 (19 U.S.C. 1335) authorizes the Commission to adopt such reasonable procedures, rules, and regulations as it deems necessary to carry out its functions and duties. This rulemaking seeks to improve provisions of the Commission's existing Rules of Practice and Procedure.

This rulemaking was undertaken to address concerns that have arisen about the scope of discovery in Commission proceedings under section 337 of the Tariff Act of 1930 (19 U.S.C. 1337) (“section 337”). The Commission proposes amendments to its rules governing investigations under section 337 in order to increase the efficiency of its section 337 investigations.

Over the past year, the Commission has been considering proposals to improve procedures relating to discovery in Commission proceedings under section 337 generally and to improve procedures relating to the discovery of electronically stored information (“e-discovery”) specifically. On July 19, 2011, The George Washington University Law School hosted a forum on the discovery of electronically stored information in section 337 investigations. Presenters at the forum stated that parties to section 337 investigations often search and produce large volumes of information stored in electronic format to satisfy discovery obligations in section 337 proceedings but that only a small fraction of that information is admitted into the investigation record. Presenters questioned whether the potential benefit of discovered materials outweighs the costs associated with current discovery obligations. Presenters also compared e-discovery procedures in various district courts with discovery procedures at the Commission and made various proposals for improving the Commission's procedures.

The Commission has considered, inter alia, e-discovery proposals from the International Trade Commission Trial Lawyers Association; a draft proposal on e-discovery from the International Trade Commission Committee of the American Bar Association Intellectual Property section; a model e-discovery order prepared by the Federal Circuit Advisory Council; e-discovery provisions in a pilot program underway in the U.S. District Court for the Southern District of New York; e-discovery standards promulgated by the U.S. District Court for the District of Delaware; a model order regarding e-discovery in patent cases issued by the U.S. District Court for the Eastern District of Texas; ground rules promulgated by administrative law judges at the Commission; and analogous portions of the Federal Rules of Civil Procedure that concern limitations on discovery and that concern the discovery of electronically stored information.

Some of the materials considered by the Commission describe a risk of inadvertent disclosure of privileged information or attorney work product during the production of electronically stored information. Accordingly, the Commission has also considered provisions in the Federal Rules of Civil Procedure and the Federal Rules of Evidence concerning the discovery of privileged or protected information.

After reviewing the foregoing materials and other information, the Commission is considering adopting certain rules relating to discovery generally, to e-discovery specifically, and to the discovery of privileged information and attorney work product. Some of the provisions under consideration could result in limitations on discovery in section 337 investigations. Other provisions would implement, in section 337 investigations, some of the standards provided in the Federal Rules of Civil Procedure and the Federal Rules of Evidence concerning the discovery of electronically stored information and concerning the discovery of privileged or protected information.

The current notice of proposed rulemaking is consistent with the Commission's plan to ensure that the Commission's rules are effective, as detailed in the Commission's Plan for Retrospective Analysis of Existing Rules, published February 14, 2012, and found at 77 FR 8114. This plan was issued in response to Executive Order 13579 of July 11, 2011, and established a process under which the Commission will periodically review its significant regulations to determine whether any such regulations should be modified, streamlined, expanded, or repealed so as to make the agency's regulatory program more effective or less burdensome in achieving regulatory objectives. During the two years following the publication of the plan, the Commission expects to review a number of aspects of its rules. This includes a general review of existing regulations in 19 CFR Parts 201, 207, and 210. It should be noted that some of the amendments proposed in this notice have been under consideration since before the plan was established.

The Commission invites the public to comment on all of these proposed rules amendments. In any comments, please consider addressing whether the language of the proposed amendments is sufficiently clear for users to understand. Please also consider addressing how the proposed rules amendments could be improved and offering specific constructive alternatives where appropriate. Because some of the provisions in the proposed amendments are similar to certain provisions in the Federal Rules of Civil Procedure, the Commission is interested in comments concerning the relevance of any variances between the proposals and similar provisions in the Federal Rules of Civil Procedure.

Consistent with its ordinary practice, the Commission is issuing these proposed amendments in accordance with certain requirements found in section 553 of the APA, although not all provisions of section 553 apply to this rulemaking. This procedure entails the following steps: (1) Publication of a notice of proposed rulemaking; (2) solicitation of public comments on the proposed amendments; (3) Commission review of public comments on the proposed amendments; and (4) publication of final amendments at least thirty days prior to their effective date.

Regulatory Analysis of Proposed Amendments to the Commission's Rules

The Commission has determined that the proposed rules do not meet the criteria described in section 3(f) of Executive Order 12866 (58 FR 51735, Oct. 4, 1993) and thus do not constitute a significant regulatory action for purposes of the Executive Order.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) is inapplicable to this rulemaking because it is not one for which a notice of final rulemaking is required under 5 U.S.C. 553(b) or any other statute. Although the Commission has chosen to publish a notice of proposed rulemaking, these proposed regulations are “agency rules of procedure and practice,” and thus are exempt from the notice requirement imposed by 5 U.S.C. 553(b).

These proposed rules do not contain federalism implications warranting the preparation of a federalism summary impact statement pursuant to Executive Order 13132 (64 FR 43255, Aug. 4, 1999).

No actions are necessary under the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1501 et seq.) because the proposed rules will not result in expenditure in the aggregate by State, local, and tribal governments, or by the private sector, of $100,000,000 or more in any one year, and will not significantly or uniquely affect small governments, as defined in 5 U.S.C. 601(5).

The proposed rules are not major rules as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.). Moreover, they are exempt from the reporting requirements of the Contract With America Advancement Act of 1996 (Pub. L. 104-121) because they concern rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties.

The amendments are not subject to section 3504(h) of the Paperwork Reduction Act (44 U.S.C. 3504(h)).

Part 210

Subpart E—Discovery and Compulsory Process

Section 210.27

Section 210.27(b) is similar to Federal Rule of Civil Procedure 26(b)(1) and provides that the scope of discovery in section 337 investigations includes any matter, not privileged, that is relevant to a claim or defense of any party. The rule also currently provides that a person may not object to a discovery request as seeking inadmissible evidence if the request appears reasonably calculated to lead to the discovery of admissible evidence. Unlike Federal Rule of Civil Procedure 26(b), however, § 210.27(b) contains no limitations on the discovery of electronically stored information and provides little guidance on when it would be appropriate for an administrative law judge to limit discovery generally. The Commission proposes to amend § 210.27(b) to state that the scope of discovery in a Commission investigation may be limited in certain ways, as discussed further in the proposed amendments.

The Commission proposes to add to § 210.27 new subsections (c), (d), and (e), which address certain concerns associated with discovery generally, electronically stored information, privileged communications, or attorney work product. The Commission proposes to renumber current subsections (c) and (d) as subsections (f) and (g). Some of the proposed amendments use the word “person.” The Commission intends the word “person” to be construed in accordance with the definition found in section 201.2(j) of the Commission's Rules of General Application, 19 CFR § 201.2(j).

Proposed subsection (c) would provide specific limitations on electronically stored information. As discussed in the Committee Notes on the 2006 Amendments to Federal Rule of Civil Procedure 26(b)(2), electronic storage systems often make it easier to locate and retrieve information. These advantages are properly taken into account in determining the reasonable scope of discovery in a particular case. But some sources of electronically stored information can be accessed only with substantial burden and cost. In a particular case, these burdens and costs may make the information on such sources not reasonably accessible. It is not possible to define in a rule the different types of technological features that may affect the burdens and costs of accessing electronically stored information. The Commission therefore proposes to add certain discovery provisions to Part 210 that may be utilized by parties and administrative law judges in a variety of circumstances.

Similar to Federal Rule of Civil Procedure 26(b)(2)(B), proposed subsection (c) would state that a person need not provide discovery of electronically stored information from sources that the person identifies as not reasonably accessible because of undue burden or cost. Nevertheless, if electronically stored information is withheld from discovery because it is not reasonably accessible, the party seeking the information may file a motion to compel discovery of the electronically stored information. Proposed subsection (c) would provide that a person from whom discovery is sought must show, in response to a motion to compel discovery or in response to a motion for a protective order, that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the proposal would allow the administrative law judge to order discovery from such sources if the requesting party shows good cause, considering certain limitations found in proposed subsection (d). Proposed subsection (c) would also allow the administrative law judge to specify conditions for discovery of electronically stored information.

The Commission contemplates that under this paragraph the administrative law judge may, by order, impose conditions for discovery required by the specific circumstances of a given investigation. For example, as stated the Committee Notes on the 2006 Amendments to Federal Rule of Civil Procedure 26(b)(2), the administrative law judge may, in appropriate circumstances, condition discovery upon payment by the requesting party of part or all of the reasonable costs of obtaining information from sources that are not reasonably accessible. The Commission contemplates that the case law developed under Federal Rule of Civil Procedure 26(b)(2)(B) would provide guidance for application of proposed subsection (c).

Proposed subsection (d) requires the administrative law judge to limit discovery otherwise allowed under the Commission's rules in certain circumstances. Similar to Federal Rule of Civil Procedure 26(b)(2)(C), proposed subsection (d) requires limitations on discovery if the administrative law judge determines that the discovery sought is duplicative or can be obtained from a less burdensome source; the party seeking discovery has had ample opportunity to obtain the information; or the burden of the proposed discovery outweighs its likely benefit.

Proposed subsection (d) differs from Federal Rule of Civil Procedure 26(b)(2)(C) in two respects. First, proposed subsection (d) would require the administrative law judge to limit discovery when the person from whom discovery is sought has waived the legal position that justified the discovery or has stipulated to the facts pertaining to the issue to which the discovery is directed. Second, proposed subsection (d) does not include the language in Federal Rule of Civil Procedure 26(b)(2)(C) that requires analysis of the importance of the issues at stake in the action. Rather, the proposed subsection requires the administrative law judge to consider the importance of the discovery in resolving the issues to be decided by the Commission.

Proposed subsection (e) would add new provisions concerning privileged information and attorney work product. As explained in the Advisory Committee Notes concerning Federal Rule of Evidence 502, litigation costs necessary to protect against waiver of attorney-client privilege or attorney work product have become prohibitive due to the concern that any disclosure (however innocent or minimal) will operate as a subject matter waiver of all protected communications or information. This concern is especially troubling in cases involving electronic discovery.

Adding to this uncertainty, no Commission rule requires the production of a privilege log when a person withholds materials from discovery based on an assertion of privilege or work product protection. Privilege log provisions are currently ordered by the administrative law judges in their respective ground rules.

Proposed subsection (e) would mitigate these concerns by providing uniform set of procedures under which persons can make claims of privilege or work product production using a privilege log. Proposed subsection (e) would also include a predictable procedure for determining the consequences of a disclosure of a communication or information covered by the attorney-client privilege or work-product protection, similar to the procedure found in Federal Rule of Civil Procedure 26(b)(5). Proposed subsection (e) goes beyond Federal Rule of Civil Procedure 26(b)(5) by providing prompt deadlines for resolving privilege disputes, in accordance with the expeditious nature of investigations under section 337.

Proposed subsection (e) makes no attempt to alter federal or state law on whether a communication or information is protected under the attorney-client privilege or work-product immunity as an initial matter.

Some proposals considered by the Commission contained a so-called “claw-back” rule that would categorically preclude a finding of a waiver of privilege or work product protection when otherwise protected materials are inadvertently produced in discovery. The “claw-back” proposals considered by the Commission left some question as to whether, in order to avoid a finding of waiver, the holder of the privilege or protection must take reasonable steps to prevent disclosure, as is required by Federal Rule of Evidence 502.

Proposed subsection (e) is not a categorical “claw-back” rule. Proposed subsection (e) would not supplant any applicable waiver doctrine. If proposed subsection (e) were adopted, the Commission would expect administrative law judges to apply federal and common law when determining the consequences of any allegedly inadvertent disclosure. That law would include consideration of whether the holder of the privilege or protection took reasonable steps to prevent disclosure of the information and other considerations found in Federal Rule of Evidence 502.

List of Subjects in 19 CFR Part 210

• Administration practice and procedure
• Business and industry
• Customs duties and inspection
• Imports
• Investigations

For the reasons stated in the preamble, the United States International Trade Commission proposes to amend 19 CFR part 210 as follows:

PART 210—ADJUDICATION AND ENFORCEMENT

1. The authority citation for Part 210 continues to read as follows:

Authority: 19 U.S.C. 1333, 1335, and 1337.

Subpart E—Discovery and Compulsory Process

2. Amend § 210.27 by:

a. Adding one sentence at the end of paragraph (b);

b. Renumbering paragraphs (c) and (d) to be paragraphs (f) and (g); and

c. Adding new paragraphs (c), (d), and (e).

The additions and revisions read as follows:

§ 210.27

General provisions governing discovery.

* * * * *

(b) * * * All discovery is subject to the limitations of § 210.27(d).

(c) Specific Limitations on Electronically Stored Information. A person need not provide discovery of electronically stored information from sources that the person identifies as not reasonably accessible because of undue burden or cost. The party seeking the discovery may file a motion to compel discovery pursuant to § 210.33(a) of this subpart. In response to the motion to compel discovery, or in a motion for a protective order filed pursuant to § 210.34 of this subpart, the person from whom discovery is sought must show that the information is not reasonably accessible because of undue burden or cost. If that showing is made, the administrative law judge may order discovery from such sources if the requesting party shows good cause, considering the limitations found in section (d) of this paragraph. The administrative law judge may specify conditions for the discovery.

(d) General Limitations on Discovery. In response to a motion made under this paragraph or sua sponte, the administrative law judge must limit by order the frequency or extent of discovery otherwise allowed in this subpart if the administrative law judge determines that:

(1) the discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive;

(2) the party seeking discovery has had ample opportunity to obtain the information by discovery in the investigation;

(3) the responding person has waived the legal position that justified the discovery or has stipulated to the facts pertaining to the issue to which the discovery is directed; or

(4) the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the investigation, the importance of the discovery in resolving the issues to be decided by the Commission, and the public interest.

(e) Claiming Privilege or Work Product Protection. (1) When, in response to a discovery request made under this subsection, a person withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as attorney work product, the person must:

(i) expressly make the claim when responding to a relevant question or request; and

(ii) within 10 days of making the claim produce to the requester a privilege log that describes the nature of the information not produced or disclosed, in a manner that will enable the requester to assess the claim without revealing the information at issue. The privilege log must separately identify each withheld document, communication, or thing, and to the extent possible must specify the following for each entry: (A) The date the information was created or communicated; (B) the author(s) or speaker(s); (C) all recipients; (D) the employer and position for each author, speaker, or recipient, including whether that person is an attorney or patent agent; (E) the general subject matter of the information; and (F) the type of privilege or protection claimed.

(2) If information produced in discovery is subject to a claim of privilege or of protection as attorney work product, the person making the claim may notify any person that received the information of the claim and the basis for it. The notice shall identify the information subject to the claim using a privilege log as defined under section (1) of this paragraph. After being notified, a person that received the information (i) must within 5 days return, sequester, or destroy the specified information and any copies it has; (ii) must not use or disclose the information until the claim is resolved; and (iii) must within five 5 days take reasonable steps to retrieve the information if the person disclosed it to others before being notified. Within five 5 days after the notice, the claimant and the parties shall meet and confer in good faith to resolve the claim of privilege or protection. Within five 5 days after the conference, a party may file a motion to compel the production of the information and may, in the motion to compel, use a description of the information from a privilege log produced under this paragraph. The person that produced the information must preserve the information until the claim of privilege or protection is resolved.

(3) Parties may enter into a written agreement to waive compliance with section (1) of this paragraph for documents, communications, and things created or communicated within a time period specified in the agreement. The administrative law judge may deny any motion to compel information claimed to be subject to the agreement. If information claimed to be subject to the agreement is produced in discovery then the administrative law judge may determine that the produced information is not entitled to privilege or protection.

(4) For good cause, the administrative law judge may order a different period of time for compliance with any requirement of this paragraph.

(f) * * *

(g) * * *

By Order of the Commission.

Issued: October 2, 2012.

William R. Bishop,

Hearings and Meetings Coordinator.