71 FR 16757, April 4, 2006

DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-904]

 
Initiation of Antidumping Duty Investigation: Certain Activated 
Carbon From the People's Republic of China

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE: April 4, 2006.

FOR FURTHER INFORMATION CONTACT: Catherine Bertrand or Carrie Blozy, 
AD/CVD Operations, Office 9, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
3207 or (202) 482-5403, respectively.

SUPPLEMENTARY INFORMATION:

INITIATION OF INVESTIGATION

The Petition

    On March 8, 2006, the Department of Commerce (``Department'') 
received a petition on imports of certain activated carbon from the 
People's Republic of China (``PRC'') filed in proper form by Calgon 
Carbon Corporation and Norit Americas Inc. (``Petitioners''). The 
period of investigation (``POI'') is July 1, 2005, through December 31, 
2005.
    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (``the Act''), Petitioners alleged that imports of certain 
activated carbon from the PRC 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 and 
threaten to injure an industry in the United States. The Department 
issued supplemental questions to Petitioners on March 10, 2006, and 
Petitioners filed their response on March 15, 2006.

Scope of Investigation

    The merchandise subject to this investigation is certain activated 
carbon. Certain activated carbon is a powdered, granular or pelletized 
carbon product obtained by ``activating'' with heat and steam various 
materials containing carbon, including but not limited to coal 
(including bituminous, lignite and anthracite), wood, coconut shells, 
olive stones, and peat. The thermal and steam treatments remove organic 
materials and create an internal pore structure in the carbon material. 
The producer can also use carbon dioxide gas (CO[bdi2]) in place of 
steam in this process. The vast majority of the internal porosity 
developed during the high temperature steam (or CO[bdi2] gas) activated 
process is a direct result of oxidation of a portion of the solid 
carbon atoms in the raw material, converting them into a gaseous form 
of carbon.
    The scope of this investigation covers all forms of activated 
carbon that are activated by steam or CO[bdi2], regardless of the raw 
material, grade, mixture, additives, further washing or post-activation 
chemical treatment (chemical or water washing, chemical impregnation or 
other treatment), or product form. Unless specifically excluded, the 
scope of this investigation covers all physical forms of certain 
activated carbon, including powdered activated carbon (``PAC''), 
granular activated carbon (``GAC''), and pelletized activated carbon.
    Excluded from the scope of the investigation are chemically-
activated carbons. The carbon-based raw material used in the chemical 
activation process is treated with a strong chemical agent, including 
but not limited to phosphoric acid, zinc chloride sulfuric acid or 
potassium hydroxide, that dehydrates molecules in the raw material, and 
results in the formation of water that is removed from the raw material 
by moderate heat treatment. The activated carbon created by chemical 
activation has internal porosity developed primarily due to the action 
of the chemical dehydration agent. Chemically activated carbons are 
typically used to activate raw materials with a lignocellulosic 
component such as cellulose, including wood, sawdust, paper mill waste 
and peat.
    To the extent that an imported activated carbon product is a blend 
of steam and chemically activated carbons, products containing 50 
percent or more steam (or CO[bdi2] gas) activated carbons are within 
this scope, and those containing more than 50 percent chemically 
activated carbons are outside this scope.
    Also excluded from the scope are reactivated carbons. Reactivated 
carbons are previously used activated carbons that have had adsorbed 
materials removed from their pore structure after use through the 
application of heat, steam and/or chemicals.
    Also excluded from the scope is activated carbon cloth. Activated 
carbon cloth is a woven textile fabric made of or containing activated 
carbon fibers. It is used in masks and filters and clothing of various 
types where a woven format is required.
    Any activated carbon meeting the physical description of subject 
merchandise provided above that is not expressly excluded from the 
scope is included within this scope. The

[[Page 16758]]

products under investigation are currently classifiable under the 
Harmonized Tariff Schedule of the United States (``HTSUS'') subheading 
3802.10.00. Although HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the scope of this 
investigation is dispositive.

Comments on Scope of Investigation

    During our review of the petition, we discussed the scope with 
Petitioners to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Petitioners had previously 
filed a petition on activated carbon from the People's Republic of 
China on January 26, 2006. On March 8, 2006, Petitioners filed a 
petition on certain activated carbon from the People's Republic of 
China. This petition changed the scope and domestic like product 
definition from the January 26, 2006 petition, which was subsequently 
withdrawn, to exclude chemically activated carbons. In the March 8, 
2006, petition on certain activated carbon, Petitioners addressed their 
determination to limit the scope to only steam activated carbons and 
submitted information to support their assertion that chemical and 
steam activated carbons should not be considered within the scope or 
the domestic like product.
    Moreover, as discussed in the preamble to the Department's 
regulations, we are setting aside a period for interested parties to 
raise issues regarding product coverage. See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997). 
The Department encourages all interested parties to submit such 
comments within 20 calendar days of publication of this initiation 
notice. Comments should be addressed to Import Administration's Central 
Records Unit in Room 1870, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230 - Attention: Catherine 
Bertrand and Carrie Blozy, Room 4003. The period of scope consultations 
is intended to provide the Department with ample opportunity to 
consider all comments and consult with interested parties prior to the 
issuance of the preliminary determination.
    Determination of Industry Support for the Petition
    Section 732(b)(1) of the Act requires that a petition be filed by 
or on behalf of the domestic industry. In order to determine whether a 
petition has been filed by or on behalf of the industry, the 
Department, pursuant to section 732(c)(4)(A) of the Act, determines 
whether
    a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (i) At least 25 
percent of the total production of the domestic like product; and (ii) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (i) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(ii) determine industry support using a statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce 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 definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to a 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 
like product, such differences do not render the decision of either 
agency contrary to law. See USEC, Inc. v. United States, 132 F. Supp. 
2d 1, 8 (CIT 2001), citing Algoma Steel Corp. Ltd. v. United States, 
688 F. Supp. 639, 644 (1988), aff'd 865 F.2d 240 (Fed. Cir. 1989), 
cert. denied 492 U.S. 919 (1989).
    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 domestic 
like product analysis 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).
    With regard to the domestic like product, Petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigation. Based on our analysis of the information submitted on 
the record, we have determined that certain activated carbon 
constitutes a single domestic like product and we have analyzed 
industry support in terms of that domestic like product. For a 
discussion of the domestic like product analysis in this case, see the 
Initiation Checklist, at Attachment I (Industry Support).
    On March 15, 2006, we received an industry support challenge from 
importers of activated carbon.\1\ We also received a letter of 
opposition to the petition from California Carbon, a U.S. producer of 
activated carbon, on March 24, 2006. See Initiation Checklist at 
Attachment I (Industry Support). Our review of the data provided in the 
petition, supplemental submissions, and other information readily 
available to the Department indicates that Petitioners have established 
industry support representing at least 25 percent of the total 
production of the domestic like product; and more than 50 percent of 
the production of the domestic like product produced by that portion of 
the industry expressing support for or opposition to the petition, 
requiring no further action by the Department pursuant to section 
732(c)(4)(D) of the Act. Therefore, the domestic producers (or workers) 
who support the petition account for at least 25 percent of the total 
production of the domestic like product, and the requirements of 
section 732(c)(4)(A)(i) of the Act are met. Furthermore, the domestic 
producers who support the petition account for more than 50 percent of 
the production of the domestic like product produced by that portion of 
the industry expressing support for, or opposition to, the petition. 
Thus, the requirements of section 732(c)(4)(A)(ii) of the Act also are 
met. Accordingly, the Department determines that the petition was filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act. See Initiation Checklist at Attachment I 
(Industry Support).
---------------------------------------------------------------------------

    \1\ We received additional submissions from the importers on 
March 21, 22, and 24, 2006. Petitioners responded to these 
submissions on March 22 and March 28, 2006.
---------------------------------------------------------------------------

    The Department finds that Petitioners filed the petition on behalf 
of the domestic industry because they are an interested party as 
defined in sections 771(9)(E) and (F) of the Act and they

[[Page 16759]]

have demonstrated sufficient industry support with respect to the 
antidumping investigation that they are requesting the Department 
initiate. See Initiation Checklist at Attachment I (Industry Support).

Export Price

    Petitioners relied on three U.S. prices for certain activated 
carbon manufactured in the PRC and offered for sale in the United 
States. Two prices were for POI sales of PAC and the other was for a 
sale of GAC. In each case, the U.S. price was the winning bid listed on 
a publically available bid sheet from a U.S. municipal water authority 
buying activated carbon. Each bid sheet identifies the price, terms of 
sale, and supplier of the winning bid. Because each of the bid prices 
were for delivery to the applicable municipal water authority, 
Petitioners deducted from the price, the costs associated with 
exporting and delivering the product, including U.S. inland freight, 
the U.S. importer/distributor profit margin, ocean freight and 
insurance charges, U.S. duty, port and wharfage fees, foreign inland 
freight costs, and foreign brokerage and handling. The Department 
recalculated one export price to adjust the U.S. inland freight figure 
used by Petitioners. See Initiation Checklist.

Normal Value

    Petitioners stated that the PRC is a non-market economy (``NME'') 
and no determination to the contrary has yet been made by the 
Department. In previous investigations, the Department has determined 
that the PRC is a NME. See Notice of Final Determination of Sales at 
Less Than Fair Value: Magnesium Metal from the People's Republic of 
China, 70 FR 9037 (February 24, 2005), Notice of Final Determination of 
Sales at Less Than Fair Value: Certain Tissue Paper Products from the 
People's Republic of China, 70 FR 7475 (February 14, 2005), and Notice 
of Final Determination of Sales at Less Than Fair Value: Certain Frozen 
and Canned Warmwater Shrimp from the People's Republic of China, 69 FR 
70997 (December 8, 2004). In accordance with section 771(18)(C)(i) of 
the Act, the presumption of NME status remains in effect until revoked 
by the Department. The presumption of NME status for the PRC has not 
been revoked by the Department and remains in effect for purposes of 
the initiation of this investigation. Accordingly, the normal value 
(``NV'') of the product is appropriately based on factors of production 
valued in a surrogate market economy country in accordance with section 
773(c) of the Act. In the course of this investigation, all parties 
will have the opportunity to provide relevant information related to 
the issues of the PRC's NME status and the granting of separate rates 
to individual exporters.
    Petitioners selected India as the surrogate country. Petitioners 
argued that, pursuant to section 773(c)(4) of the Act, India is an 
appropriate surrogate because it is a market-economy country that is at 
a comparable level of economic development to the PRC and is a 
significant producer and exporter of activated carbon. Based on the 
information provided by Petitioners, we believe that its use of India 
as a surrogate country is appropriate for purposes of initiating this 
investigation. After the initiation of the investigation, we will 
solicit comments regarding surrogate country selection. Also, pursuant 
to 19 CFR 351.301(c)(3)(i), interested parties will be provided an 
opportunity to submit publicly available information to value factors 
of production within 40 days after the date of publication of the 
preliminary determination.
    Petitioners provided three dumping margin calculations using the 
Department's NME methodology as required by 19 CFR 351.202(b)(7)(i)(C). 
Petitioners calculated normal values based on consumption rates for 
producing activated carbon experienced by U.S. producers. In accordance 
with section 773(c)(4) of the Act, Petitioners valued factors of 
production, where possible, on reasonably available, public surrogate 
country data. To value certain factors of production, Petitioners used 
official Indian government import statistics, excluding those values 
from countries previously determined by the Department to be NME 
countries and excluding imports into India from Indonesia, Republic of 
Korea and Thailand, because the Department has previously excluded 
prices from these countries because they maintain broadly-available, 
non-industry specific export subsidies. See Automotive Replacement 
Glass Windshields From the People's Republic of China: Final Results of 
Administrative Review, 69 FR 61790 (October 21, 2004), and accompanying 
Issues and Decision Memorandum at Comment 5.
    For the surrogate value for coal, Petitioners only used coking coal 
imports into India from New Zealand. We have recalculated the normal 
values to use a surrogate value for coking coal that is based on Indian 
imports of coking coal from all sources, except those specifically 
excluded above due to NME status or availability of export subsidies. 
See Initiation Checklist for details of the recalculation.
    For inputs valued in Indian rupees and not contemporaneous with the 
POI, Petitioners used information from the wholesale price indices 
(``WPI'') in India as published by the International Monetary Fund in 
the International Financial Statistics to determine the appropriate 
adjustments for inflation. In addition, Petitioners made currency 
conversions, where necessary, based on the average rupee/U.S. dollar 
exchange rate for the POI, as reported on the Department's Web site.
    For the normal value calculations, Petitioners derived the figures 
for factory overhead, selling, general and administrative expenses 
(``SG&A''), and profit from the financial ratios of an Indian activated 
carbon producer, Indo German Carbons Ltd. See Petition at page 63 and 
Initiation Checklist.

Fair Value Comparisons

    Based on the data provided by Petitioners, there is reason to 
believe that imports of certain activated carbon from the PRC are 
being, or are likely to be, sold in the United States at less than fair 
value. Based upon comparisons of export price to the NV, calculated in 
accordance with section 773(c) of the Act, the estimated recalculated 
dumping margins for certain activated carbon from the PRC range from 
114.33 percent to 333.66 percent.
    Allegations and Evidence of Material Injury and Causation
    Petitioners allege that the U.S. industry producing the domestic 
like product is being materially injured, or is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. Petitioners contend that 
the industry's injured condition is illustrated by the decline in 
customer base, market share, domestic shipments, prices and financial 
performance. We have assessed the allegations and supporting evidence 
regarding material injury and causation, and we have determined that 
these allegations are properly supported by adequate evidence and meet 
the statutory requirements for initiation. See Initiation Checklist at 
Attachment II (Injury).

Separate Rates and Quantity and Value Questionnaire

    The Department recently modified the process by which exporters and 
producers may obtain separate-rate status in NME investigations. See 
Policy Bulletin 05.1: Separate-Rates Practice and Application of 
Combination Rates in Antidumping Investigations

[[Page 16760]]

involving Non-Market Economy Countries (Separate Rates and Combination 
Rates Bulletin), (April 5, 2005), available on the Department's Web 
site at http://ia.ita.doc.gov. The process now requires the submission 

of a separate-rate status application. Based on our experience in 
processing the separate rates applications in the antidumping duty 
investigations of Certain Artist Canvas from the People's Republic of 
China, Diamond Sawblades and Parts Thereof from the People's Republic 
of China and the Republic of Korea and Ceratin Lined Paper Products 
from India, Indonesia, and the People's Republic of China, we have 
modified the application for this investigation to make it more 
administrable and easier for applicants to complete. See Initiation of 
Antidumping Duty Investigation: Certain Artist Canvas From the People's 
Republic of China, 70 FR 21996, 21999 (April 28, 2005), Initiation of 
Antidumping Duty Investigations: Diamond Sawblades and Parts Thereof 
from the People's Republic of China and the Republic of Korea, 70 FR 
35625, 35629 (June 21, 2005), and Initiation of Antidumping Duty 
Investigations: Certain Lined Paper Products from India, Indonesia, and 
the People's Republic of China, 70 FR 58374, 58379 (October 6, 2005). 
The specific requirements for submitting the separate-rates application 
in this investigation are outlined in detail in the application itself, 
which will be available on the Department's Website at http://ia.ita.doc.gov
 on the date of publication of this initiation notice in 

the Federal Register. Please refer to this application for all 
instructions.

NME Respondent Selection and Quantity and Value Questionnaire

    For NME investigations, it is the Department's practice to request 
quantity and value information from all known exporters identified in 
the petition. In addition, the Department typically requests the 
assistance of the NME government in transmitting the Department's 
quantity and value questionnaire to all companies who manufacture and 
export subject merchandise to the United States, as well as to 
manufacturers who produce the subject merchandise for companies who 
were engaged in exporting subject merchandise to the United States 
during the period of investigation. The quantity and value data 
received from NME exporters is used as the basis to select the 
mandatory respondents. Although many NME exporters respond to the 
quantity and value information request, at times some exporters may not 
have received the quantity and value questionnaire or may not have 
received it in time to respond by the specified deadline.
    The Department is now publicizing its requirement that quantity and 
value responses must be submitted for both the quantity and value 
questionnaire and the separate-rates application by the respective 
deadlines in order to receive consideration for separate-rate status. 
This new procedure will be applied to all future investigations. 
Appendix I of this notice contains the quantity and value questionnaire 
that must be submitted by all NME exporters. In addition, the 
Department will post the quantity and value questionnaire along with 
the filing instructions on the IA Website (http://ia.ita.doc.gov). This 

quantity and value questionnaire is due no later than 15 calendar days 
from the date of publication of this notice. Consistent with Department 
practice, if a deadline falls on a weekend, federal holiday, or any 
other day when the Department is closed, the Department will accept the 
response on the next business day. See Notice of Clarification: 
Application of ``Next Business Day'' rule for Administrative 
Determination Deadlines Pursuant to the Tariff Act of 1930, as amended, 
70 FR 24533 (May 10, 2005). The Department will continue to send the 
quantity and value questionnaire to those exporters identified in the 
petition and the NME government.

Use of Combination Rates in an NME Investigation

    The Department will calculate combination rates for certain 
respondents that are eligible for a separate rate in this 
investigation. The Separate Rates and Combination Rates Bulletin, 
states:
    {w{time} hile continuing the practice of assigning separate rates 
only to exporters, all separate rates that the Department will now 
assign in its NME investigations will be specific to those producers 
that supplied the exporter during the period of investigation. Note, 
however, that one rate is calculated for the exporter and all of the 
producers which supplied subject merchandise to it during the period of 
investigation. This practice applies both to mandatory respondents 
receiving an individually calculated separate rate as well as the pool 
of non-investigated firms receiving the weighted-average of the 
individually calculated rates. This practice is referred to as the 
application of ``combination rates'' because such rates apply to 
specific combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation.
    Separate Rates and Combination Rates Bulletin, at page 6.

Initiation of Antidumping Investigation

    Based upon our examination of the petition on certain activated 
carbon from the PRC, we find that this petition meets the requirements 
of section 732 of the Act. Therefore, we are initiating an antidumping 
duty investigation to determine whether imports of certain activated 
carbon from the PRC are being, or are likely to be, sold in the United 
States at less than fair value. Unless postponed, we will make our 
preliminary determinations no later than 140 days after the date of 
these initiations.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the government of 
the PRC.

International Trade Commission Notification

    We have notified the ITC of our initiation, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of this initiation, whether there is a 
reasonable indication that imports of certain activated carbon from the 
PRC are causing material injury, or threatening to cause material 
injury, to a U.S. industry. See section 733(a)(2) of the Act. A 
negative ITC determination will result in the investigation being 
terminated; otherwise, this investigation will proceed according to 
statutory and regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: March 28, 2006.
David M. Spooner.
Assistant Secretaryfor Import Administration.

APPENDIX I

Where it is not practicable to examine all known producers/exporters of 
subject merchandise, section 777A(c)(2) of the Tariff Act of 1930 (as 
amended) permits us to investigate 1) a sample of exporters, producers, 
or types of products that is statistically valid based on the 
information available at the time

[[Page 16761]]

of selection, or 2) exporters and producers accounting for the largest 
volume and value of the subject merchandise that can reasonably be 
examined.
In the chart provided below, please provide the total quantity and 
total value of all your sales of merchandise covered by the scope of 
this investigation (see scope section of this notice), produced in the 
PRC, and exported/shipped to the United States during the period July 
1, 2005, through December 31, 2005.

----------------------------------------------------------------------------------------------------------------
                       Market                           Total Quantity       Terms of Sale        Total Value
----------------------------------------------------------------------------------------------------------------
United States
1. Export Price Sales
2.
     a. Exporter name
     b. Address
     c. Contact
     d. Phone No.
     e. Fax No.
3. Constructed Export Price Sales
4. Further Manufactured
Total Sales
----------------------------------------------------------------------------------------------------------------

Total Quantity

     Please report quantity on a kilogram basis. If any 
conversions were used, please provide the conversion formula and 
source.

Terms of Sales

     Please report all sales on the same terms (e.g., free on 
board).

Total Value

     All sales values should be reported in U.S. dollars. 
Please indicate any exchange rates used and their respective dates and 
sources.

Export Price Sales

     Generally, a U.S. sale is classified as an export price 
sale when the first sale to an unaffiliated person occurs before 
importation into the United States.
     Please include any sales exported by your company directly 
to the United States.
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that the 
merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were subsequently 
exported by an affiliated exporter to the United States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.

Constructed Export Price Sales

     Generally, a U.S. sale is classified as a constructed 
export price sale when the first sale to an unaffiliated person occurs 
after importation. However, if the first sale to the unaffiliated 
person is made by a person in the United States affiliated with the 
foreign exporter, constructed export price applies even if the sale 
occurs prior to importation.
     Please include any sales exported by your company directly 
to the United States.
     Please include any sales exported by your company to a 
third-country market economy reseller where you had knowledge that the 
merchandise was destined to be resold to the United States.
     If you are a producer of subject merchandise, please 
include any sales manufactured by your company that were subsequently 
exported by an affiliated exporter to the United States.
     Please do not include any sales of merchandise 
manufactured in Hong Kong in your figures.

Further Manufactured

     Further manufacture or assembly costs include amounts 
incurred for direct materials, labor and overhead, plus amounts for 
general and administrative expense, interest expense, and additional 
packing expense incurred in the country of further manufacture, as well 
as all costs involved in moving the product from the U.S. port of entry 
to the further manufacturer.
[FR Doc. E6-4864 Filed 4-3-06; 8:45 am]

BILLING CODE 3510-DS-S