[Federal Register Volume 64, Number 157 (Monday, August 16, 1999)]
[Notices]
[Pages 44480-44482]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21197]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-505-801, A-201-825, A-517-802, A-307-817, C-505-802, C-201-826, C-
517-803, C-307-818]
Dismissal of Antidumping and Countervailing Duty Petitions:
Certain Crude Petroleum Oil Products From Iraq, Mexico, Saudi Arabia,
and Venezuela
AGENCY: Import Administration, International Trade Administration,
Department of Commerce.
EFFECTIVE DATE: August 16, 1999.
FOR FURTHER INFORMATION CONTACT: Mark Ross or Thomas Schauer
(Antidumping) or Roy Malmrose (Countervailing Duty), Import
Administration, International Trade Administration, U.S. Department of
Commerce, 14th Street and Constitution Avenue, N.W., Washington, DC
20230; telephone: (202) 482-4794, (202) 482-0410, or (202) 482-5414,
respectively.
SUPPLEMENTARY INFORMATION:
The Applicable Statute and Regulations
Unless otherwise indicated, all citations to the statute are
references to the provisions effective January 1, 1995, the effective
date of the amendments made to the Tariff Act of 1930 (the Act) by the
Uruguay Round Agreements Act (URAA). In addition, unless otherwise
indicated, all citations to the Department of Commerce's (the
Department's) regulations are to the provisions codified at 19 CFR Part
351 (1998) and to the substantive countervailing duty regulations
published in the Federal Register on November 25, 1998 (63 FR 65348).
The Petitions
On June 29, 1999, the Department received petitions filed in proper
form by Save Domestic Oil, Inc. (hereinafter referred to as the
petitioner), an organization composed of producers of crude oil. The
Department received supplemental submissions during June, July, and
August 1999.
In accordance with section 732(b) of the Act, the petitioner
alleges that imports of crude oil from Iraq, Mexico, Saudi Arabia, and
Venezuela are being, or are likely to be, sold in the United States at
less than fair value within the meaning of section 731 of the Act and
that such imports are materially injuring, or threatening material
injury to, a regional 1 industry in the United States. In
addition, in accordance with section 702(b)(1) of the Act, the
petitioner alleges that producers or exporters of crude oil from Iraq,
Mexico, Saudi Arabia, and Venezuela received countervailable subsidies
within the meaning of section 701 of the Act.
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\1\ The region identified by the petitioner consists of the 48
contiguous states, excluding Arizona, California, Nevada, Oregon,
and Washington.
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The Department finds that the petitioner is an interested party as
defined in section 771(9)(E) of the Act. However, as discussed below,
the petitioner has not demonstrated that it filed the petitions on
behalf of the domestic industry. Because the petitioner has failed to
demonstrate sufficient industry support, as required by sections
702(c)(4) and 732(c)(4) of the Act, the Department has no basis to
initiate the requested investigations (see the ``Determination of
Industry Support for the Petitions'' section, below).
Scope of the Petitions
For purposes of these petitions, the product covered is all crude
petroleum oils and oils obtained from bituminous minerals testing at,
above, or below 25 degrees A.P.I. The merchandise covered by these
petitions is classifiable under subheadings 2709.00.10 and 2709.00.20
of the Harmonized Tariff Schedule of the United States.
Consultations
Pursuant to section 702(b)(4)(A)(ii) of the Act, the Department
invited representatives of the Governments of Mexico, Saudi Arabia, and
Venezuela for consultations with respect to the countervailing duty
petitions filed. On August 2, 1999, consultations were held with
representatives of the Government of Venezuela. On August 5, 1999,
consultations were held with representatives of the Governments of
Mexico and Saudi Arabia. See the August 3, 1999, August 5, 1999, and
August 6, 1999, memoranda to the file regarding these consultations.
Determination of Industry Support for the Petitions
a. The Regional Industry
The petitioner alleges that there is a regional industry for the
domestic like product. In support of its allegation, the petitioner
provided sufficient information, reasonably available to the
petitioner, regarding the criteria set out in section 771(4)(C) of the
Act: (1) the producers within such market sell all or almost all of
their production of the domestic like product in question in that
market; (2) the demand in that market is not supplied, to any
substantial degree, by producers of the product in question located
elsewhere in the United States; and (3) appropriate
[[Page 44481]]
circumstances exist to divide the United States into the two markets
alleged.
In accordance with sections 702(c)(4)(C) and 732(c)(4)(C) of the
Act, if the petitioner alleges that the industry is a regional
industry, the Department shall determine whether the petition has been
filed by or on behalf of the industry by applying the requirements set
forth in sections 702(c)(4)(A) and 732(c)(4)(A) of the Act on the basis
of the production in the region. The Department has reviewed the
adequacy and accuracy of the information supplied by the petitioner
with respect to its regional-industry claim. Based upon this review and
in accordance with the statutory criteria stated above, the petitioner
has made an adequate regional-industry claim for initiation purposes.
For a further discussion regarding the regional-industry claim, see
Memorandum from Laurie Parkhill to Richard W. Moreland, dated August 8,
1999.
b. Scope of the Industry Examined for Support
Section 771(4)(A) of the Act defines the ``industry'' as the
producers of a domestic like product. Thus, to determine whether the
petition has the requisite industry support, the statute directs the
Department to look to producers and workers who account for production
of the domestic like product. The International Trade Commission (ITC),
which is responsible for determining whether the domestic industry has
been injured, must also determine what constitutes a domestic like
product in order to define the industry. While both the Department and
the ITC must apply the same statutory provision regarding the domestic
like product (section 771(10) of the Act), they do so for different
purposes and pursuant to separate and distinct authority. In addition,
the Department's determination is subject to limitations of time and
information. Although this may result in different definitions of the
domestic like product, such differences do not render the decision of
either agency contrary to the law.2
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\2\ See Algoma Steel Corp., Ltd. v. United States, 688 F. Supp.
639, 642-44 (CIT 1988), and High Information Content Flat Panel
Displays and Display Glass Therefor from Japan; Final Determination;
Rescission of Investigation and Partial Dismissal of Petition, 56 FR
32376, 32380-81 (July 16, 1991).
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Section 771(10) of the Act defines the domestic like product as ``a
product which is like, or in the absence of like, most similar in
characteristics and uses with, the article subject to an investigation
under this title.'' Thus, the reference point from which the
Department's analysis of the domestic like product begins is ``the
article subject to an investigation,'' i.e., the class or kind of
merchandise to be investigated, which normally will be the scope as
defined in the petition.
The ``Scope of the Petitions'' section above sets forth the
domestic like product identified in the petitions. In addition to the
products included in the petitioner's definition of domestic like
product, parties have argued that two other products, refined products
and ``lease condensates,'' should be included within the domestic like
product.
With respect to refined products, we determine that there is a
clear dividing line between the characteristics and uses of crude oil
and refined products. Crude oil, which is the input product used to
produce a refined product, must undergo a distinct and significant
process to become a refined product such as gasoline and other fuel
oils. While both crude oil and refined products consist of hydrocarbon
compounds, the refining process changes the physical structure and
characteristics of the compounds found originally in the crude oil such
that generally there remains no significant similarities between the
two products in terms of physical characteristics and uses. Because of
the differences in characteristics and uses, we determine that refined
products are not within the domestic like product for purposes of
determining industry support for the petitions. See Memorandum from the
Team to Richard W. Moreland, regarding ``Domestic Like Product,'' dated
August 9, 1999, for additional analysis.
The issue of whether ``lease condensates'' are included properly
within the domestic like product is more complicated. Lease condensates
consist essentially of a mixture of certain hydrocarbon compounds that,
in terms of weight and complexity, fall between natural gas and crude
oil. They are liquids formed from natural gas as a result of
temperature or pressure changes. Often lease condensates are mixed with
crude oil and the resulting mixture is sold to a refinery as crude oil.
The petitioner argues that the Department should not include lease
condensates in the domestic like product because the mixture of
hydrocarbon compounds in lease condensates is different from the
mixture of hydrocarbon compounds in crude oils. Consequently, it
asserts, lease condensates can only be refined into a limited range of
products. Opposing the petitioner's position, other parties have argued
that lease condensates are very similar in physical characteristics and
uses to light crude oil and that, when mixed, they simply become an
indistinguishable part of the crude-oil stream which is sent to the
refinery.
In addition to the extremely complex technical nature of the issue,
ascertaining the precise nature of available production and
distribution data as well as attempting to establish the appropriate
analytical framework for a very diverse industry has been problematic
for the Department. However, it is not necessary to decide this issue
because, as discussed below, we have determined that the petitioner
does not have the requisite industry support, regardless of how the
issue of lease condensates is resolved.
c. Calculation of Industry Support Within the Region
Sections 702(b)(1) and 732(b)(1) of the Act require that a petition
be filed on behalf of the domestic industry. In particular, sections
702(c)(4)(A) and 732(c)(4)(A) of the Act provide that a petition meets
this requirement if the domestic producers or workers in the region who
support the petition account for: (1) at least 25 percent of the total
production of the domestic like product in the region; and (2) more
than 50 percent of the production of the domestic like product produced
in the region by that portion of the industry expressing support for,
or opposition to, the petition.
The petitioner alleges that, based on the support of individual
producers and support by a number of industry associations, the
petitions have the required support of the industry. As of July 27,
1999, the Department had received letters from 20 domestic producers
opposing the petitions. In the aggregate, these producers accounted for
approximately 50 percent of total production within the region. Because
there was a question as to whether the petitioner met the statutory
requirements concerning industry support cited above, we exercised our
statutory discretion under sections 702(c)(1)(B) and 732(c)(1)(B) of
the Act to extend the deadline for determining whether to initiate
investigations to a maximum of 40 days from the date of filing in order
to resolve this issue. See Memorandum from the Industry Support Team to
Richard W. Moreland, regarding ``Determination of Industry Support,''
dated July 30, 1999.
In order to determine the level of industry support for the
petitions, the Department surveyed (1) each of the 410 largest
producers in the region, which
[[Page 44482]]
accounted for over 86 percent of regional production, and (2) a 401-
company sample of the remaining producers in the region. The purpose of
the survey was to ascertain the companies' positions with regard to the
petitions. We received responses from 41 percent of the 410 companies
and 18 percent of the sampled 401 companies.
As mentioned above, we received letters of opposition from a number
of companies who accounted for approximately 50 percent of total
regional production. Based on the surveys, additional companies
indicated that they opposed the petitions.
The petitioner submitted comments alleging that certain companies
opposed to the petitions are related to producers in the subject
countries and that a number of those companies are importers of subject
merchandise. The petitioner argues that, consistent with sections
702(c)(4)(B) and 732(c)(4)(B) of the Act, the positions of these
companies should be disregarded.
Sections 702(c)(4)(B) and 732(c)(4)(B) of the Act provide that the
position of certain domestic producers may be disregarded for purposes
of determining industry support. Specifically, subsection (B)(i)
provides that the position of domestic producers who oppose the
petition shall be disregarded ``if such producers are related to
foreign producers * * * unless such domestic producers demonstrate
that their interests as domestic producers would be adversely affected
by the imposition of an antidumping [or countervailing] duty order.''
Additionally, subsection (B)(ii) provides that the position of domestic
producers of a domestic like product who are importers of the subject
merchandise may be disregarded.
Our analysis of whether to disregard any positions focused on
whether the opposing companies have demonstrated that their interests
as domestic producers would be affected adversely by the imposition of
an antidumping or countervailing duty order. Because we are able to
resolve the issue on this basis, we need not determine whether these
companies are related to foreign producers. We note, however, that we
have serious questions about the sufficiency of the petitioner's
allegations. For example, we question whether the petitioner has
provided sufficient evidence of any relationship, as defined in section
771(4)(B) of the Act, and, in the case of alleged relationships as
defined in section 771(4)(B)(ii)(IV) of the Act, that these
relationships would cause the domestic producer to act differently than
a non-related producer. We have not resolved these questions; rather,
we looked first at the question of whether the opposing domestic
producers had established that their interests as domestic producers
would be adversely affected by the imposition of an antidumping or
countervailing duty order, in which case the issue of whether they are
related parties becomes moot. In this regard, we focused our analysis
on the API Ad Hoc Free Trade Committee (the Committee) because it is
composed of the largest U.S. producers in opposition to the petitions
and because its treatment is dispositive of the industry support issue.
The Committee argues that its opposition is not based on foreign
interests or imports, but rather on the based on the fact that the
Committee members' interests as domestic producers would be adversely
affected by the imposition of antidumping or countervailing duties. The
Committee also argues that the petitioner has not alleged that each
U.S. producer about which allegations were made is related to a foreign
producer in each of the subject countries. Moreover, the petitioner has
provided no basis for assuming that a relationship in one country would
cause a producer to oppose a case against another country with
potentially competing suppliers.
Even assuming there are relationships, the Committee argues,
because the interest of domestic producers opposing the petition would
be adversely affected by the imposition of an order, the Department
must consider their views. The arguments and information presented by
the Committee to demonstrate the adverse affects it believes would
ensue are described in its August 2, 1999, and August 4, 1999,
submissions. Finally, with respect to imports, the Committee argues
that importing is a standard practice in the U.S. oil industry and that
the large producers account for only a small portion of total imports.
Moreover, the Committee argues, domestic producers which oppose the
petition are not bound to imports from the subject countries.
Therefore, the Committee argues, the Department should not disregard
its opposition.
After reviewing comments submitted by all parties, we believe that
the Committee and other opposing companies have demonstrated that their
interests as domestic producers would be adversely affected by the
imposition of an antidumping or countervailing duty order. Accordingly,
we have not disregarded the opposition of the Committee members alleged
to be related to foreign producers. In addition, we have determined
that the Committee members who import should not be excluded because
those domestic producers have demonstrated that their opposition to the
petitions is based on their concern that the imposition of an
antidumping or countervailing duty order would adversely affect their
interests as domestic producers. For a further discussion, see
Memorandum from the Industry Support Team to Richard W. Moreland,
regarding ``Consideration of Opposition from Domestic Producers Alleged
to Be Related to Foreign Producers and/or Importing Subject
Merchandise,'' dated August 9, 1999.
Based on the opposition we received from companies we have
determined not to disregard, we find that the petitions do not have
support from more than 50 percent of the production in the region of
the domestic like product produced by that portion of the industry
expressing support for, or opposition to, the petitions. The opposition
of the Committee and companies not challenged by the petitioner ranges
from 65 to 68 percent across the various cases. See Memorandum from the
Industry Support Team to Richard W. Moreland, regarding ``Calculation
of Industry-Support Percentages,'' dated August 9, 1999. Accordingly,
we determine that the petitions are not filed on behalf of the domestic
industry within the meaning of sections 702(b)(1) and 732(b)(1) of the
Act.
There are a number of complex issues regarding the 25-percent test
which we are not addressing because the 50-percent test has not been
met.
Because the petitions did not have the required industry support,
all other issues are moot. Notice is hereby given that the petitions
are dismissed and the proceedings terminated.
International Trade Commission Notification
We have notified the ITC of our determination, as required by
sections 702(d) and 732(d) of the Act.
This notice is published pursuant to section 777(i) of the Act.
Dated: August 9, 1999.
Robert S. LaRussa,
Assistant Secretary for Import Administration.
[FR Doc. 99-21197 Filed 8-13-99; 8:45 am]
BILLING CODE 3510-DS-P
