[Federal Register Volume 60, Number 117 (Monday, June 19, 1995)]
[Notices]
[Pages 31974-31981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14938]
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DEPARTMENT OF COMMERCE
[A-428-820]
Notice of Final Determination of Sales at Less Than Fair Value:
Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line
and Pressure Pipe From Germany
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: June 19, 1995.
FOR FURTHER INFORMATION CONTACT: Irene Darzenta or Fabian Rivelis,
Office of Antidumping Investigations, Import Administration, U.S.
Department of Commerce, 14th Street and Constitution Avenue NW.,
Washington, DC 20230; telephone (202) 482-6320 or (202) 482-3853,
respectively.
FINAL DETERMINATION: The Department of Commerce (the Department)
determines that small diameter circular seamless carbon and alloy
steel, standard, line and pressure pipe (seamless pipe) from Germany is
being, or is likely to be, sold in the United States at less than fair
value, as provided in section 735 of the Tariff Act of 1930, as amended
(the Act). The estimated margins are shown in the ``Suspension of
Liquidation'' section of this notice.
Case History
Since the notice of the preliminary determination published on
January 27, 1995, (60 FR 5355), the following events have occurred.
On February 8, 1995, petitioner alleged that the Department made a
ministerial error in its preliminary margin calculations. The
Department determined on February 17, 1995, that the allegation raised
by petitioners was methodological in nature and improperly raised under
Section 751(f) of the Act.
In our notice of preliminary determination we stated that we would
solicit further information on various scope-related issues, including
class or kind of merchandise.
On February 10, 1995, we issued a questionnaire to interested
parties to request further information on whether the scope of the
investigation constitutes more than one class or kind of merchandise.
Responses to this questionnaire were submitted on March 27, 1995.
On February 10, 1995, we issued a supplemental questionnaire to
Mannesmannrohren-Werke AG (MRW). MRW submitted its supplemental
responses and revised home market and U.S. sales listings on February
28, 1995, and March 6, 1995, respectively.
Pursuant to requests by petitioner and respondent, on February 16,
1995, a notice was published in the Federal Register (60 FR 9012)
announcing the postponement of the final determination until June 12,
1995.
In March and April 1995, we conducted verification of MRW's
questionnaire responses. Our verification reports were issued in May
1995.
On April 27, 1995, Koppel Steel Corporation, a U.S. producer of
subject merchandise which appeared as an interested party from the
outset of this investigation, requested co-petitioner status.
Respondent and petitioner submitted case briefs on May 16, 1995,
and rebuttal briefs on May 23, 1995. No public hearing was requested.
On May 23, 1995, we returned portions of MRW's case brief because we
determined that it contained new factual information submitted after
the deadline specified in 19 CFR 353.31 (a)(i)) for the submission of
factual information. On May 24, 1995, MRW refiled its case brief with
the new information deleted.
Scope of Investigation
The following scope language reflects certain modifications made
for purposes of the final determination, where appropriate, as
discussed in the ``Scope Issues'' section below.
The scope of this investigation includes seamless pipes produced to
the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and
meeting the physical parameters described below, regardless of
application. The scope of this investigation also includes all products
used in standard, line, or pressure pipe [[Page 31975]] applications
and meeting the physical parameters below, regardless of specification.
For purposes of this investigation, seamless pipes are seamless
carbon and alloy (other than stainless) steel pipes, of circular cross-
section, not more than 114.3 mm (4.5 inches) in outside diameter,
regardless of wall thickness, manufacturing process (hot-finished or
cold-drawn), end finish (plain end, bevelled end, upset end, threaded,
or threaded and coupled), or surface finish. These pipes are commonly
known as standard pipe, line pipe or pressure pipe, depending upon the
application. They may also be used in structural applications. Pipes
produced in non-standard wall thicknesses are commonly referred to as
tubes.
The seamless pipes subject to these investigations are currently
classifiable under subheadings 7304.10.10.20, 7304.10.50.20,
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24,
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60,
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and
7304.59.80.25 of the Harmonized Tariff Schedule of the United States
(HTSUS).
The following information further defines the scope of this
investigation, which covers pipes meeting the physical parameters
described above:
Specifications, Characteristics and Uses: Seamless pressure pipes
are intended for the conveyance of water, steam, petrochemicals,
chemicals, oil products, natural gas and other liquids and gasses in
industrial piping systems. They may carry these substances at elevated
pressures and temperatures and may be subject to the application of
external heat. Seamless carbon steel pressure pipe meeting the American
Society for Testing and Materials (ASTM) standard A-106 may be used in
temperatures of up to 1000 degrees fahrenheit, at various American
Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes
made to ASTM standard A-335 must be used if temperatures and stress
levels exceed those allowed for A-106 and the ASME codes. Seamless
pressure pipes sold in the United States are commonly produced to the
ASTM A-106 standard.
Seamless standard pipes are most commonly produced to the ASTM A-53
specification and generally are not intended for high temperature
service. They are intended for the low temperature and pressure
conveyance of water, steam, natural gas, air and other liquids and
gasses in plumbing and heating systems, air conditioning units,
automatic sprinkler systems, and other related uses. Standard pipes
(depending on type and code) may carry liquids at elevated temperatures
but must not exceed relevant ASME code requirements.
Seamless line pipes are intended for the conveyance of oil and
natural gas or other fluids in pipe lines. Seamless line pipes are
produced to the API 5L specification.
Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53 and API 5L specifications. Such triple certification of
pipes is common because all pipes meeting the stringent A-106
specification necessarily meet the API 5L and ASTM A-53 specifications.
Pipes meeting the API 5L specification necessarily meet the ASTM A-53
specification. However, pipes meeting the A-53 or API 5L specifications
do not necessarily meet the A-106 specification. To avoid maintaining
separate production runs and separate inventories, manufacturers triple
certify the pipes. Since distributors sell the vast majority of this
product, they can thereby maintain a single inventory to service all
customers.
The primary application of ASTM A-106 pressure pipes and triple
certified pipes is in pressure piping systems by refineries,
petrochemical plants and chemical plants. Other applications are in
power generation plants (electrical-fossil fuel or nuclear), and in
some oil field uses (on shore and off shore) such as for separator
lines, gathering lines and metering runs. A minor application of this
product is for use as oil and gas distribution lines for commercial
applications. These applications constitute the majority of the market
for the subject seamless pipes. However, A-106 pipes may be used in
some boiler applications.
The scope of this investigation includes all seamless pipe meeting
the physical parameters described above and produced to one of the
specifications listed above, regardless of application, and whether or
not also certified to a non-covered specification. Standard, line and
pressure applications and the above-listed specifications are defining
characteristics of the scope of this investigation. Therefore, seamless
pipes meeting the physical description above, but not produced to the
A-335, A-106, A-53, or API 5L standards shall be covered if used in a
standard, line or pressure application.
For example, there are certain other ASTM specifications of pipe
which, because of overlapping characteristics, could potentially be
used in A-106 applications. These specifications generally include A-
162, A-192, A-210, A-333, and A-524. When such pipes are used in a
standard, line or pressure pipe application, such products are covered
by the scope of this investigation.
Specifically excluded from this investigation are boiler tubing and
mechanical tubing, if such products are not produced to A-335, A-106,
A-53 or API 5l specifications and are not used in standard, line or
pressure applications. In addition, finished and unfinished OCTG are
excluded from the scope of this investigation, if covered by the scope
of another antidumping duty order from the same country. If not covered
by such an OCTG order, finished and unfinished OCTG are included in
this scope when used in standard, line or pressure applications.
Finally, also excluded from this investigation are redraw hollows for
cold-drawing when used in the production of cold-drawn pipe or tube.
Although the HTSUS subheadings are provided for convenience and
customs purposes, our written description of the scope of this
investigation is dispositive.
Scope Issues
Interested parties in these investigations have raised several
issues related to the scope. We considered these issues in our
preliminary determination and invited additional comments from the
parties. These issues, which are discussed below, are: (A) Whether to
continue to include end use as a factor in defining the scope of these
investigations; (B) whether the seamless pipe subject to these
investigations constitutes more than one class or kind of merchandise;
and (C) miscellaneous scope clarification issues and scope exclusion
requests.
A. End Use
We stated in our preliminary determination that we agreed with
petitioner that pipe products identified as potential substitutes used
in the same applications as the four standard, line, and pressure pipe
specifications listed in the scope would fall within the class or kind
of subject merchandise and, therefore, within the scope of any orders
issued in these investigations. However, we acknowledged the
difficulties involved with requiring end-use certifications,
particularly the burdens placed on the Department, the U.S. Customs
Service, and the parties, and stated that we would strive to simplify
any procedures in this regard.
For purposes of these final determinations, we have considered
carefully additional comments submitted by the parties and have
determined that it is appropriate to [[Page 31976]] continue to employ
end use to define the scope of these cases with respect to non-listed
specifications. We find that the generally accepted definition of
standard, line and pressure seamless pipes is based largely on end use,
and that end use is implicit in the description of the subject
merchandise. Thus, end use must be considered a significant defining
characteristic of the subject merchandise. Given our past experience
with substitution after the imposition of antidumping orders on steel
pipe products 1, we agree with petitioner that if products
produced to a non-listed specification (e.g., seamless pipe produced to
A-162, a non-listed specification in the scope) were actually used as
standard, line, or pressure pipe, then such product would fall within
the same class or kind of merchandise subject to these investigations.
\1\ See Preliminary Affirmative Determination of Scope Inquiry
on Antidumping Duty Orders on Certain Welded Non-Alloy Steel Pipes
from Brazil, the Republic of Korea, Mexico and Venezuela, 59 FR
1929, January 13, 1994.
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Furthermore, we disagree with respondents' general contention that
using end use for the scope of an antidumping case is beyond the
purview of the U.S. antidumping law. The Department has interpreted
scope language in other cases as including an end-use specification.
See Ipsco Inc. v. United States, 715 F.Supp. 1104 (CIT 1989)(Ipsco). In
Ipsco, the Department had clarified the scope of certain orders, in
particular the phrase, ``intended for use in drilling for oil and
gas,'' as covering not only API specification OCTG pipe but, `` `all
other pipe with [certain specified] characteristics used in OCTG
applications * * *' '' Ipsco at 1105. In reaching this determination,
the Department also provided an additional description of the covered
merchandise, and initiated an end-use certification procedure.
Regarding implementation of the end use provision of the scope of
these investigations, and any orders which may be issued in these
investigations, we are well aware of the difficulty and burden
associated with such certifications. Therefore, in order to maintain
the effectiveness of any order that may be issued in light of actual
substitution in the future (which the end-use criterion is meant to
achieve), yet administer certification procedures in the least
problematic manner, we have developed an approach which simplifies
these procedures to the greatest extent possible.
First, we will not require end-use certification until such time as
petitioner or other interested parties provide a reasonable basis to
believe or suspect that substitution is occurring.2 Second, we
will require end-use certification only for the product(s) (or
specification(s)) for which evidence is provided that substitution is
occurring. For example, if, based on evidence provided by petitioner,
the Department finds a reasonable basis to believe or suspect that
seamless pipe produced to A-162 specification is being used as pressure
pipe, we will require end- use certifications for imports of A-162
specification. Third, normally we will require only the importer of
record to certify to the end use of the imported merchandise. If it
later proves necessary for adequate implementation, we may also require
producers who export such products to the United States to provide such
certification on invoices accompanying shipments to the United States.
For a complete discussion of interested party comments and the
Department's analysis on this topic, see June 12, 1995, End Use
Decision Memorandum from Deputy Assistant Secretary Barbara Stafford
(DAS) to Assistant Secretary Susan Esserman (AS).
\2\ This approach is consistent with petitioner's request.
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B. Class or Kind
In the course of these investigations, certain respondents have
argued that the scope of the investigations should be divided into two
classes or kinds. Siderca S.A.I.C., the Argentine respondent, has
argued that the scope should be divided according to size: seamless
pipe with an outside diameter of 2 inches or less and pipe with an
outside diameter of greater than 2 inches constitute two classes or
kinds. Mannesmann S.A., the Brazilian respondent, and Mannesmannrohren-
Werke AG, the German respondent, argued that the scope should be
divided based upon material composition: carbon and alloy steel
seamless pipe constitute two classes or kinds.
In our preliminary determinations, we found insufficient evidence
on the record that the merchandise subject to these investigations
constitutes more than one class or kind. We also indicated that there
were a number of areas where clarification and additional comment were
needed. For purposes of the final determination, we considered a
significant amount of additional information submitted by the parties
on this issue, as well as information from other sources. This
information strongly supports a finding of one class or kind of
merchandise. As detailed in the June 12, 1995, Class or Kind Decision
Memorandum from DAS to AS, we analyzed this issue based on the criteria
set forth by the Court of International Trade in Diversified Products
v. United States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria
are as follows: (1) The general physical characteristics of the
merchandise; (2) expectations of the ultimate purchaser; (3) the
ultimate use of the merchandise; (4) the channels of trade in which the
merchandise moves; and (5) the cost of that merchandise.
In the past, the Department has divided a single class or kind in a
petition into multiple classes or kinds where analysis of the
Diversified Products criteria indicates that the subject merchandise
constitutes more than one class or kind. See, for example, Final
Determination of Sales at Less than Fair Value; Anti-Friction Bearings
(Apart from Tapered Roller Bearings) from Germany, 54 FR 18992, 18998
(May 3, 1989) (``AFBs from Germany''); Pure and Alloy Magnesium from
Canada: Final Affirmative Determination; Rescission of Investigation
and Partial Dismissal of Petition, 57 FR 30939 (July 13, 1992).
1. Physical Characteristics
We find little meaningful difference in physical characteristics
between seamless pipe above and below two inches. Both are covered by
the same technical specifications, which contains detailed
requirements.3 While we recognize that carbon and alloy pipe do
have some important physical differences (primarily the enhanced heat
and pressure tolerances associated with alloy grade steels), it is
difficult to say where carbon steel ends and alloy steel begins. As we
have discussed in our Class or Kind Decision Memorandum of June 12,
1995, carbon steel products themselves contain alloys, and there is a
range of percentages of alloy content present in merchandise made of
carbon steel. We find that alloy grade steels, and pipes made
therefrom, represent the upper end of a single continuum of steel
grades and associated attributes.4
\3\ The relevant ASTM specifications, as well as product
definitions from other independent sources (e.g., American Iron and
Steel Institute (AISI)), describe the sizes for standard, line, and
pressure pipe, as ranging from 1/2 inch to 60 inches (depending on
application). None of these descriptions suggest a break point at
two inches.
\4\ The Department has had numerous cases where steel products
including carbon and alloy grades were considered to be within the
same class or kind. See, e.g., Preliminary Determination of Sales at
Less than Fair Value: Oil Country Tubular Goods from Austria, et
al., 60 FR 6512 (February 2, 1995); Final Determination of Sales at
Less than Fair Value: Certain Alloy and Carbon Hot-Rolled Bars,
Rods, and Semi-Finished Products of Special Bar Quality Engineered
Steel from Brazil, 58 FR 31496 (June 3, 1993); Final Determination
of Sales at Less than Fair Value: Forged Steel Crankshafts from the
United Kingdom, 60 FR 22045 (May 9, 1995). [[Page 31977]]
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In those prior determinations where the Department divided a single
class or kind, the Department emphasized that differences in physical
characteristics also affected the capabilities of the merchandise
(either the mechanical capabilities, as in AFBs from Germany, 54 FR at
18999, 19002-03, or the chemical capabilities, as in Pure and Alloy
Magnesium from Canada, 57 FR at 30939), which in turn established the
boundaries of the ultimate use and customer expectations of the
products involved.
As the Department said in AFBs from Germany,
[t]he real question is whether the physical differences are so
material as to alter the essential nature of the product, and,
therefore, rise to the level of class or kind distinctions. We
believe that the physical differences between the five classes or
kinds of the subject merchandise are fundamental and are more than
simply minor variations on a theme.
54 Fed. Reg. at 19002. In the present cases, there is insufficient
evidence to conclude that the differences between pipe over 2 inches in
outside diameter and 2 inches or less in outside diameter, rise to the
level of a class or kind distinction.
Furthermore, with regard to Siderca's allegation that a two-inch
breakpoint is widely recognized in the U.S. market for seamless pipe,
the Department has found only one technical source of U.S. market data
for seamless pipe, the Preston Pipe Report. The Preston Pipe Report,
which routinely collects and publishes U.S. market data for this
merchandise, publishes shipment data for the size ranges \1/2\ to 4\1/
2\ inches: It does not recognize a break point at 2 inches.
Accordingly, the Department does not agree with Siderca that ``the U.S.
market'' recognizes 2 inches as a physical boundary line for the
subject merchandise.
In these present cases, therefore, the Department finds that there
is insufficient evidence that any physical differences between pipe
over 2 inches in outside diameter and 2 inches or less in outside
diameter, or between carbon and alloy steel, rise to the level of class
or kind distinctions.
2. Ultimate Use and Purchaser Expectations
We find no evidence that pipe above and below two inches is used
exclusively in any specific applications. Rather, the record indicates
that there are overlapping applications. For example, pipe above and
below two inches may both be used as line and pressure pipe. The
technical definitions for line and pressure pipe provided by ASTM,
AISI, and a variety of other sources do not recognize a distinction
between pipe over and under two inches.
Likewise, despite the fact that alloy grade steels are associated
with enhanced heat and pressure tolerances, there is no evidence that
the carbon or alloy content of the subject merchandise can be
differentiated in the ultimate use or expectations of the ultimate
purchaser of seamless pipe.
3. Channels of Trade
Based on information supplied by the parties, we determine that the
vast majority of the subject merchandise is sold through the same
channel of distribution in the United States and is triple-stenciled in
order to meet the greatest number of applications.
Accordingly, the channels of trade offer no basis for dividing the
subject merchandise into multiple classes or kinds based on either the
size of the outside diameter or on pipe having a carbon or alloy
content.
4. Cost
Based on the evidence on the record, we find that cost differences
between the various products do exist. However, the parties varied
considerably in the factors which they characterized as most
significant in terms of affecting cost. There is no evidence that the
size ranges above and below two inches, and the difference between
carbon and alloy grade steels, form a break point in cost which would
support a finding of separate classes or kinds.
In conclusion, while we recognize that certain differences do exist
between the products in the proposed class or kind of merchandise, we
find that the similarities significantly outweigh any differences.
Therefore, for purposes of the final determination, we will continue to
consider the scope as constituting one class or kind of merchandise.
C. Miscellaneous Scope Clarification Issues and Exclusion Requests
The miscellaneous scope issues include: (1) Whether OCTG and
unfinished OCTG are excluded from the scope of these investigations;
(2) whether pipes produced to non-standard wall thicknesses (commonly
referred to as ``tubes'') are covered by the scope; (3) whether certain
merchandise (e.g., boiler tubing, mechanical tubing) produced to a
specification listed in the scope but used in an application excluded
from the scope is covered by the scope; and (4) whether redraw hollows
used for cold drawing are excluded from the scope. For a complete
discussion of interested party comments and the Department's analysis
on these topics, see June 12, 1995, Additional Scope Clarifications
Decision Memorandum from DAS to AS.
Regarding OCTG, petitioner requested that OCTG and unfinished OCTG
be included within the scope of these investigations if used in a
standard, line or pressure pipe application. However, OCTG and
unfinished OCTG, even when used in a standard, line or pressure pipe
application, may come within the scope of certain separate, concurrent
investigations. We intend that merchandise from a particular country
not be classified simultaneously as subject to both an OCTG order and a
seamless pipe order. Thus, to eliminate any confusion, we have revised
the scope language above to exclude finished and unfinished OCTG, if
covered by the scope of another antidumping duty order from the same
country. If not covered by such an OCTG order, finished and unfinished
OCTG are included in this scope when used in a standard, line or
pressure pipe application, and, as with other non-listed
specifications, may be subject to end-use certification if there is
evidence of substitution.
Regarding pipe produced in non-standard wall thicknesses, we
determine that these products are clearly within the parameters of the
scope of these investigations. For clarification purposes, we note that
the physical parameters of the scope include all seamless carbon and
alloy steel pipes, of circular cross-section, not more than 4.5 inches
in outside diameter, regardless of wall thickness. Therefore, the fact
that such products may be referred to as tubes by some parties, and may
be multiple-stenciled, does not render them outside the scope.
Regarding pipe produced to a covered specification but used in a
non-covered application, we determine that these products are within
the scope. We agree with the petitioner that the scope of this
investigation includes all merchandise produced to the covered
specifications and meeting the physical parameters of the scope,
regardless of application. The end-use criteria included in the scope
is only applicable to products which can be substituted in the
applications to which the covered specifications are put i.e. standard,
line, and pressure applications.
It is apparent that at least one party in this case interpreted the
scope incorrectly. Therefore, we have clarified the scope to make it
more explicit that all products made to ASTM A-335, [[Page 31978]] ASTM
A-106, ASTM A-53 and API 5L are covered, regardless of end use.
With respect to redraw hollows for cold drawing, the scope language
excludes such products specifically when used in the production of
cold-drawn pipe or tube. We understand that petitioner included this
exclusion language expressly and intentionally to ensure that hollows
imported into the United States are sold as intermediate products, not
as merchandise to be used in a covered application.
Standing
The Argentine, Brazilian, and German respondents have challenged
the standing of Gulf States Tube to file the petition with respect to
pipe and tube between 2.0 and 4.5 inches in outside diameter, arguing
that Gulf States Tube does not produce these products.
Pursuant to section 732(b)(1) of the Act, an interested party as
defined in section 771(9)(C) of the Act has standing to file a
petition. (See also 19 CFR 353.12(a).) Section 771(9)(C) of the Act
defines ``interested party,'' inter alia, as a producer of the like
product. For the reasons outlined in the ``Scope Issues'' section
above, we have determined that the subject merchandise constitutes a
single class or kind of merchandise. The International Trade Commission
(ITC) has also preliminarily determined that there is a single like
product consisting of circular seamless carbon and alloy steel
standard, line, and pressure pipe, and tubes not more than 4.5 inches
in outside diameter, and including redraw hollows. (See USITC
Publication 2734, August 1994 at 18). For purposes of determining
standing, the Department has determined to accept the ITC's definition
of like product, for the reasons set forth in the ITC's preliminary
determination. Because Gulf States is a producer of the like product,
it has standing to file a petition with respect to the class or kind of
merchandise under investigation. Further, as noted in the ``Case
History'' section of this notice, on April 27, 1995, Koppel, a U.S.
producer of the product size range at issue, filed a request for co-
petitioner status, which the Department granted. As a producer of the
like product, Koppel also has standing.
The Argentine respondent argues that Koppel's request was filed too
late to confer legality on the initiation of these proceedings with
regard to the products at issue. Gulf States Tube maintains that the
Department has discretion to permit the amendment of a petition for
purposes of adding co-petitioners who produce the domestic like
product, at such time and upon such circumstances as deemed appropriate
by the Department.
The Court of International Trade (CIT) has upheld in very broad
terms the Department's ability to allow amendments to petitions. For
example, in Citrosuco Paulista, S.A. v. United States, 704 F. Supp.
1075 (Ct. Int'l Trade 1988), the Court sustained the Department's
granting of requests for co-petitioner status filed by six domestic
producers on five different dates during an investigation. The Court
held that the addition of the co-petitioners cured any defect in the
petition, and that allowing the petition to be amended was within
Commerce's discretion:
[S]ince Commerce has statutory discretion to allow amendment of
a dumping petition at any time, and since Commerce may self-initiate
a dumping petition, any defect in a petition filed by [a domestic
party is] cured when domestic producers of the like product [are]
added as co-petitioners and Commerce [is] not required to start a
new investigation.
Citrosuco, 704 F. Supp. at 1079 (emphasis added). The Court reasoned
that if Commerce were to have dismissed the petition for lack of
standing, and to have required the co-petitioners to refile at a later
date, it ``would have elevated form over substance and fruitlessly
delayed the antidumping investigation . . . when Congress clearly
intended these cases to proceed expeditiously.'' Id. at 1083-84.
Koppel has been an interested party and a participant in these
investigations from the outset. The timing of Koppel's request for co-
petitioner status and the fact that it made its request in response to
Siderca's challenge to Gulf States's Tube's standing does not render
its request invalid. See Final Affirmative Countervailing Duty
Determination; Live Swine and Fresh, Chilled, and Frozen Pork Products
from Canada, 50 FR 25097 (June 17, 1985). The Department has rejected a
request to add a co-petitioner based on the untimeliness of the request
only where the Department determined that there was not adequate time
for opposing parties to submit comments and for the Department to
consider the relevant arguments. See Final Affirmative Countervailing
Duty Determination: Certain Stainless Steel Hollow Products from
Sweden, 52 FR 5794, 5795, 5803 (February 26, 1987). In this
investigation, the respondents have had an opportunity to comment on
Koppel's request for co-petitioner status, and the Argentine respondent
has done so in its case brief. Therefore, we have determined that,
because respondents would not be prejudiced or unduly burdened,
amendment of the petition to add Koppel as co-petitioner is
appropriate.
Period of Investigation
The period of investigation (POI) is January 1, through June 30,
1994.
Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute and to the
Department's regulations are in reference to the provisions as they
existed on December 31, 1994.
Such or Similar Comparisons
We have determined that all the products covered by this
investigation constitute a single category of such or similar
merchandise.
Best Information Available (BIA)
We have determined that the questionnaire responses submitted by
MRW are unusable because we were unable to verify their accuracy. Most
importantly, we found at verification that MRW failed to include the
costs incurred by one of its two manufacturing facilities which
produced subject merchandise during the POI among the costs reported
for differences-in-merchandise (difmer) adjustment purposes, despite
the fact that the response had indicated, and MRW claimed up until the
final hours of verification, that its reported costs reflected a
weighted-average of the two plants. Accurate difmer information is
crucial to the Department's analysis in this case because there are
very few, if any, comparisons of identical merchandise. In general,
seamless pipe in Germany is produced and sold to DIN specifications
while seamless pipe exported to the United States is produced to ASTM
specifications.
Other significant problems were discovered at verification. Company
officials could not explain or provide adequate support documentation
to explain numerous discrepancies and omissions. MRW was unable to tie
the reported difmer data to its financial statements. MRW also failed
to adequately demonstrate that the sales data reported to the
Department took into account changes in price, quantity and date of
sale. Finally, numerous other errors were found ranging in magnitude
from significant discrepancies to minor clerical errors, for the
majority of the items we attempted to verify. Collectively, these
discrepancies and omissions demonstrate that MRW's questionnaire
response is unreliable and unusable for purposes of the final
determination.
Section 776(b) of the Act provides that if the Department is unable
to verify, within the time specified, the accuracy and completeness of
the factual information submitted, it shall [[Page 31979]] use BIA as
the basis for its determination. Consequently, we have based this
determination on BIA. (See decision memorandum from The Team to Barbara
R. Stafford dated June 12, 1995, for a detailed discussion of our
verification findings and BIA recommendation.)
In determining what rate to use as BIA, the Department follows a
two-tiered BIA methodology, whereby the Department may impose the most
adverse rate upon those respondents who refuse to cooperate or
otherwise significantly impede the proceeding, or assign a lower rate
for those respondents who have cooperated in an investigation. When a
company is deemed uncooperative, it has been the Department's practice
to apply as BIA the higher of the highest margin alleged in the
petition or the highest rate calculated for any respondent. The
Department's practice for applying BIA to cooperative respondents is to
use the higher of the average of the margins alleged in the petition or
the highest calculated margin for another firm for the same class or
kind of merchandise from the same country. See Final Determination of
Sales at Less Than Fair Value: Antifriction Bearings (Other Than
Tapered Roller Bearings) and Parts Thereof From the Federal Republic of
Germany, 54 FR 18992, 19033 (May 3, 1989). The Department's two-tier
methodology for assigning BIA based on the degree of respondents'
cooperation has been upheld by the U.S. Court of Appeals for the
Federal Circuit. (See Allied-Signal Aerospace Co. v. the United States,
996 F2d 1185 (Fed Cir. 1993); see also Krupp Stahl AG. et al v. the
United States, 822 F. Supp. 789 (CIT 1993).)
We have determined that MRW was uncooperative during this
proceeding and have assigned a margin based on uncooperative BIA.
Because there are no other respondents in this investigation we are
assigning, as BIA, the highest margin among the margins alleged in the
petition. MRW significantly impeded our administration of the case by
misrepresenting the methodology it used in the response regarding the
costs of the unreported plant.
MRW did not alert the Department at any time to any difficulties in
providing the information requested in the questionnaire concerning the
unreported manufacturing facility, and had indicated that the plant's
costs had been included in a weighted-average calculation. In addition,
much of the documentation we requested at verification was received
late in the verification process, was incomplete, or, in some cases,
not received at all. MRW was unable to demonstrate: (1) How many of the
figures reported on the sales listing were calculated; (2) how they
tied to source documentation; and (3) a tie to financial statements.
Therefore, we are assigning MRW the highest margin alleged in the
petition as uncooperative BIA.
Fair Value Comparisons
To determine whether sales of subject merchandise from Germany to
the United States were made at less than fair value, we compared United
States price (USP) to foreign market value (FMV) as reported in the
petition. See Initiation of Antidumping Duty Investigation of Small
Diameter Circular Seamless Carbon and Alloy Steel Standard, Line, and
Pressure Pipe From Argentina, Brazil, Germany and Italy (59 FR 37025,
July 20, 1994).
Interested Party Comments
General Issues
Comment 1. MRW argues that petitioner lacks standing to seek the
imposition of antidumping duties on products that it does not produce.
According to MRW, petitioner has admitted that it is incapable of
manufacturing seamless pipe and tube in dimensions above two inches in
outside diameter. Therefore, respondent maintains that petitioner is
not an ``interested party'' with respect to this merchandise.
Accordingly, the Department should amend the scope of the investigation
to limit it only to those dimensions and pipe types that petitioner has
a proven ability to manufacture.
Gulf States Tube contends that the antidumping statute neither
requires nor permits the Department to limit the scope of the
investigation to products that the petitioner itself produces. Gulf
States Tube also maintains that respondent's standing claim is untimely
and may not be considered by the Department at this stage of the
proceeding. Nevertheless, Gulf States Tube asserts that the issue is
rendered moot by the request of Koppel Steel Corporation, a domestic
producer of subject merchandise in sizes larger two inches in outside
diameter, for co-petitioner status.
DOC Position. We agree with petitioner for the reasons outlined in
the ``Standing'' section of this notice.
Comment 2. MRW contends that including an end-use certification
requirement in the scope would be both illegal and unworkable.
Respondent maintains that petitioner is effectively seeking to
circumvent the established legal procedure by arguing for an open-ended
scope definition that encompasses products that it does not manufacture
and that petitioner has conceded are not causing present injury. In
addition, respondent states that it is clear that any end-use
certification procedure designed to implement such a scope definition
is wholly unworkable because of the manner in which the subject
products are sold. That is, in almost all cases the importer of record
never knows the ultimate use of the pipe products it sells, and in many
instances, neither do its customers. According to MRW, as a practical
matter, the effect of an end-use certification requirement would be to
ask the impossible of importers. Furthermore, respondent states that
the anticircumvention procedures of the antidumping law provide ample
remedy to petitioner in cases of circumvention via product
substitution. MRW emphasizes that absent the detailed inquiry required
by anti-circumvention legal provisions, the Department cannot include
within the scope of this investigation other merchandise simply because
such other products might in theory be utilized for the same purposes
as pipe meeting the listed specifications. According to respondent, to
do otherwise is contrary to the antidumping law and deprives
respondents of their right to a full and fair hearing on any
circumvention allegations that might be advanced by petitioner at some
later date.
Petitioner argues that there is no factual or legal basis for
eliminating end-use as a defining element of the scope of the
investigation. Furthermore, not only is the feasibility of specific
enforcement mechanisms irrelevant to the scope determination, but it is
also untrue that any end-use certification procedure would be
unworkable. According to petitioner, there is no evidence on the record
of this investigation that an end-use certification program must
require the submission of an end-use certificate by the importer at the
time of importation. Rather, petitioner envisions a program whereby the
end-use certificate travels with the pipe to the ultimate end-user, who
may then send it back up the line of distribution. When final duties
are assessed, the Department may assume that any pipe for which no
certificates can be produced was used in subject applications. Contrary
to MRW's arguments, petitioner maintains that the Department and the
U.S. Customs Service are perfectly capable of administering an order
that includes end use in its scope definition. In the event that
products meeting the [[Page 31980]] physical description of subject
merchandise, but which are not certified to one or more of the covered
specifications are being substituted into one of the listed
applications, the burden would be on the petitioner, other domestic
producers or interested parties, to notify Customs and the Department
with some objective evidence supporting a reasonable belief that
substitution is occurring. However, it is both unnecessary and
inappropriate at this point to engage in debate about the feasibility
and desirability of specific end-use certification procedures.
According to petitioner, the facts and policy considerations relevant
to such a debate are not available on this record, and the selection of
a specific enforcement mechanism is beyond the Department's
responsibilities in this proceeding.
DOC Position. We disagree with respondent's assertion that
including end-use in the scope of the investigation would be unlawful.
The Department has interpreted scope language in other cases as
including an end-use specification. See Ipsco Inc. v. United States,
715 F. Supp. 1104 (CIT 1989). See the ``Scope Issues'' section of this
notice for further discussion on end-use.
Comment 3. MRW contends that the carbon and alloy pipe products
subject to investigation are distinct classes or kinds of merchandise.
MRW asserts that the criteria set out in Diversified Products support a
division between carbon and alloy products. Specifically, MRW argues
that carbon and alloy pipes differ in terms of physical
characteristics, uses, customer expectations and cost. With respect to
physical characteristics, alloy seamless pipes contain higher grade
steel than carbon seamless pipe, and because of their different
chemistries, these products have different performance characteristics.
With respect to end use which, according to respondent, is inherently
tied to physical characteristics, carbon pipe is not as versatile as
alloy steel pipe and is not suited for the more sophisticated
applications, such as operations in high temperature environments.
Respondent asserts that the Department has consistently emphasized the
relationship between physical characteristics and end use in past cases
(e.g., Torrington Co. v. United States, 745 F.Supp. at 726 (CIT 1990)).
In addition, respondent states that customer expectations vary
depending upon the ability of specific merchandise to perform a given
task. With regard to alloy and carbon steel pipe, the ultimate
purchaser does not expect these two types of pipe to be
interchangeable, and is willing to pay more for alloy steel pipe
because it must perform under more adverse conditions than those for
which carbon pipe is suited. With respect to cost, respondent states
that the cost of alloy pipe is higher than that of carbon pipe because
of the more expensive raw materials and production costs incurred in
producing alloy pipe. Finally, with respect to channels of trade,
respondent states that carbon and alloy pipe move in similar channels;
however, this factor is not determinative as to class or kind of
merchandise.
Petitioner maintains that the subject merchandise constitutes a
single class or kind. With respect to MRW's proposal for a split in
class or kind on the basis of material composition, petitioner asserts
that the factual evidence does not support such a division.
Petitioner's state that the application of the criteria employed by the
Department in Diversified Products compels the conclusion that there is
a single class or kind of merchandise. According to petitioner, the
physical characteristics of carbon and alloy pipe represent a single
continuum of product produced with varying chemical compositions to
meet a range of heat, pressure and tensile requirements. According to
petitioner, there is simply no bright dividing line between the
physical characteristics of the products. Petitioner states that the
customer's expectations and use of the product are dictated by the
engineering specification required by the intended application. Because
the majority of all subject seamless pipe is triple-certified, the pipe
may be put to any of the uses that apply to each of the individual
specifications to which it is certified. Petitioner points out that the
vast majority of seamless pipe is sold through the same channel of
trade--distributors. Finally, petitioner adds that because the majority
of seamless pipe is triple-certified, it has identical costs regardless
of the customer to whom it is sold.
DOC Position. We agree with petitioner that the subject merchandise
constitutes a single class or kind for the reasons outlined in the
``Scope Issues'' section of this notice.
Company-Specific Issues
For a number of reasons articulated in its briefs, with which we
concur, petitioner argues that the final determination should be based
on BIA, and that MRW should be found to be uncooperative.
MRW disagrees and argues that the Department's verification report
does not offer a balanced assessment of the verification. MRW states
that the Department verified the accuracy of its reported sales
information and that the discrepancies found at verification were
minor. Furthermore, respondent argues that the minor discrepancies
detailed in the verification report should be evaluated in the context
of the vast majority of data that tied exactly to source documentation.
Respondent states that the minor discrepancies found at verification do
not affect the Department's ability to perform its antidumping
analysis.
Respondent states that the delays in providing information
requested by the Department at verification were a result of the manner
in which its records are kept in the ordinary course of business. MRW
cites to Nippon Pillow Block Sales Co. v. United States, 820 F. Supp.
1444, 1449 (CIT 1993), and Fresh Cut Roses from Colombia (Final) 60 FR
6980, 7009 (February 6, 1995) as examples of Department policy that
respondents cannot be penalized because of the way their records are
kept.
Regarding its failure to include the costs of one of its plants in
its reported difmer costs, MRW states the manner in which it reported
difmer costs is reasonable given that this plant is a newly acquired
facility located in the former German Democratic Republic, which was a
non-market economy until recently. Furthermore, MRW states that it is
extraordinarily difficult to calculate actual, verifiable costs for a
plant that has operated under a planned economy and that it is
appropriate to use the surrogate costs of a plant in the Federal
Republic of Germany to perform antidumping calculations.
DOC Position. We agree with petitioner that the magnitude and
nature of the problems found at verification require that we base MRW's
margin on BIA. (See Best Information Available (BIA) section of this
notice).
We disagree with respondent's assertion that it is being penalized
for the way its records are kept. We must hold all respondents to a
basic standard of accuracy and completeness at verification while
taking into account the limitations existing with respect to the
respondent's sales and cost accounting systems. We require all
respondents, regardless of record keeping systems, to prepare for
verification in such a manner that the Department's questions can be
answered within a specified period of time. To this end, we supply all
respondents with an outline which specifies the type of documentation
that needs to be available at verification. MRW did not have the
necessary documentation readily available, which prevented us from
verifying its response. Most [[Page 31981]] significantly, respondents
are expected to be forthcoming in their responses to the Department's
requests for information. In this case, respondent failed to report
fundamental information--cost data relating to one of its plants
producing subject merchandise. In other words, respondent withheld
information critical to verification and thus BIA is required.
Other Comments
Petitioner and respondent made additional comments on various
charges and adjustments contained in MRW's home market and U.S. sales
listings. However, since we are basing our final determination on BIA,
we consider these comments to be moot.
Continuation of Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, 19 USC
1673b(d)(1), we directed the Customs Service to suspend liquidation of
all entries of seamless pipe from Germany, as defined in the ``Scope of
Investigation'' section of this notice, that are entered, or withdrawn
from warehouse, for consumption on or after January 27, 1995.
Pursuant to the results of this final determination, we will
instruct the Customs Service to require a cash deposit or posting of a
bond equal to the estimated final dumping margin, as shown below for
entries of seamless pipe from Germany that are entered, or withdrawn
from warehouse, for consumption on or after the date of publication of
this notice in the Federal Register. The suspension of liquidation will
remain in effect until further notice.
------------------------------------------------------------------------
Margin
Manufacturer/producer/exporter percent
------------------------------------------------------------------------
Mannesmannrohren-Werke AG..................................... 58.23
All Others.................................................... 58.23
------------------------------------------------------------------------
ITC Notification
In accordance with section 735(d) of the Act, we have notified the
ITC of our determination. The ITC will make its determination whether
these imports materially injure, or threaten injury to, a U.S. industry
within 45 days of the publication of this notice. If the ITC determines
that material injury or threat of material injury does not exist, the
proceeding will be terminated and all securities posted as a result of
the suspension of liquidation will be refunded or canceled. However, if
the ITC determines that material injury or threat of material injury
does exist, the Department will issue an antidumping duty order.
Notification to Interested Parties
This notice serves as the only reminder to parties subject to
administrative protective order (APO) in these investigations of their
responsibility covering the return or destruction of proprietary
information disclosed under APO in accordance with 19 CFR 353.34(d).
Failure to comply is a violation of the APO.
This determination is published pursuant to section 735(d) of the
Act (19 USC 1673(d)) and 19 CFR 353.20.
Dated: June 12, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-14938 Filed 6-16-95; 8:45 am]
BILLING CODE 3510-DS-P
