Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41945

reconsideration of that determination,

we continue to find this GOV debt

restructuring program, under which this

1990 loan was received, not

countervailable.

III. Programs Preliminarily Determined

To Be Not Used

A. Government Guarantees of SIDOR’s

Private Debt in 1987 and 1988

In 1987 and 1988, the GOV

guaranteed loans provided to SIDOR by

Credito Italiano and Kreditanstalt Fuer

Wiederaufbau (KfW), respectively. Both

of these loans were Deutschmark (DM)

denominated loans linked to the

London Interbank Offering Rate

(LIBOR).

According to SIDOR’s and the GOV

responses, the 1987 and 1988 loans

were specifically applied for and

authorized as part of a program to

finance the expansion of SIDOR’s pipe

mill. The approval documents specify

that the loans were for the expansion of

SIDOR’s pipe mill, in particular for

purchasing equipment. These were

authorized under the December 10,

1987, ‘‘Law for the Contracting and

Financing of the First Stage of the

Project to Expand and Modernize

SIDOR’s Pipe Mill.’’ Because the

information submitted in the company

and government responses states that

the KfW and Credito Italiano loans were

tied to financing the expansion of

SIDOR’s pipe mill, we preliminarily

determine that the loans and the

government guarantees of the loans are

tied to non-subject merchandise and,

thus, do not provide a benefit to wire

rod. Therefore, we preliminarily

determine that the GOV loan guarantees

did not confer countervailable benefits

on the production and/or exportation of

subject merchandise, and that this

program was not used during the POI.

B. Preferential Tax Incentives Under

Decree 1477

Petitioners alleged that Decree 1477

provides partial or total income tax

exemptions and other tax credits to

companies in disadvantaged regions,

including Bolivar, where SIDOR is

located. According to petitioners,

companies that relocated or commenced

an expansion after March 23, 1976,

qualify for tax incentives. In its response

to our questionnaire, SIDOR stated that

the company never applied for or

received benefits under this program.

Therefore, we preliminarily determine

that this program was not used by

SIDOR during the POI.

Verification

In accordance with section 782(i) of

the Act, we will verify the information

submitted by respondents prior to

making a final determination.

Suspension of Liquidation

In accordance with section

703(d)(1)(A)(i) of the Act, we have

calculated a subsidy rate for SIDOR, the

one company under investigation. We

also are applying SIDOR’s rate to any

companies not investigated or any new

companies exporting the subject

merchandise.

In accordance with section 703(d) of

the Act, we are directing the U.S.

Customs Service to suspend liquidation

of all entries of steel wire rod from

Venezuela which are entered, or

withdrawn from warehouse, for

consumption on or after the date of the

publication of this notice in the Federal

Register, and to require a cash deposit

or bond for such entries of the

merchandise in the amounts indicated

below. This suspension will remain in

effect until further notice.

Company Ad valorem rate

SIDOR ........................................... 13.06

All Others ...................................... 13.06

ITC Notification

In accordance with section 703(f) of

the Act, we will notify the ITC of our

determination. In addition, we are

making available to the ITC all

nonprivileged and nonproprietary

information relating to this

investigation. We will allow the ITC

access to all privileged and business

proprietary information in our files,

provided the ITC confirms that it will

not disclose such information, either

publicly or under an administrative

protective order, without the written

consent of the Assistant Secretary for

Import Administration.

If our final determination is

affirmative, the ITC will make its final

determination within 45 days after the

Department makes its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we

will hold a public hearing, if requested,

to afford interested parties an

opportunity to comment on this

preliminary determination. The hearing

will be held on September 22, 1997, at

the U.S. Department of Commerce,

Room 3708, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230. Individuals

who wish to request a hearing must

submit a written request within 30 days

of the publication of this notice in the

Federal Register to the Assistant

Secretary for Import Administration,

U.S. Department of Commerce, Room

1874, 14th Street and Constitution

Avenue, N.W., Washington, DC 20230.

Parties should confirm by telephone the

time, date, and place of the hearing, 48

hours before the scheduled time.

Requests for a public hearing should

contain: (1) The party’s name, address,

and telephone number; (2) the number

of participants; (3) the reason for

attending; and (4) a list of the issues to

be discussed. In addition, eight copies

of the business proprietary version and

three copies of the nonproprietary

version of the case briefs must be

submitted to the Assistant Secretary no

later than September 8, 1997. Eight

copies of the business proprietary

version and three copies of the

nonproprietary version of the rebuttal

briefs must be submitted to the

Assistant Secretary no later than

September 15, 1997. An interested party

may make an affirmative presentation

only on arguments included in that

party’s case or rebuttal briefs. Written

arguments should be submitted in

accordance with 19 CFR 355.38 and will

be considered if received within the

time limits specified above. Parties who

submit argument in this proceeding are

requested to submit with the argument

(1) a statement of the issue and (2) a

brief summary of the argument. If this

investigation proceeds normally, we

will make our final determination by

October 14, 1997.

This determination is published

pursuant to sections 703(f) and 777(i) of

the Act.

Dated: July 28, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–20491 Filed 8–1–97; 8:45 am]

BILLING CODE 3510–DS–P

DEPARTMENT OF COMMERCE

International Trade Administration

[C–428–823]

Preliminary Affirmative Countervailing

Duty Determination: Steel Wire Rod

From Germany

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

EFFECTIVE DATE: August 4, 1997.

FOR FURTHER INFORMATION CONTACT:

Cindy Thirumalai or Daniel Lessard,

Office of Antidumping/Countervailing
41946 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

Duty Enforcement, Group 1, Import

Administration, U.S. Department of

Commerce, Room 1874, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone

(202) 482–4087 or 482–1778

respectively.

PRELIMINARY DETERMINATION: The

Department preliminarily determines

that countervailable subsidies are being

provided to Saarstahl AG (Saarstahl)

and Ispat Hamburger Stahlwerke GmbH

(IHSW), producers and exporters of steel

wire rod from Germany. We have also

preliminarily determined that

Walzdraht Hochfeld GmbH (WHG)

received de minimis subsidies and that

we have insufficient information at this

time to make a determination with

respect to Brandenburger

Elektrostahlwerke GmbH (BES). For

information on the estimated

countervailing duty rates, please see the

Suspension of Liquidation section of

this notice.

Case History

Since the publication of the notice of

initiation in the Federal Register (62 FR

13866; March 24, 1997), the following

events have occurred.

On April 2, 1997, we issued

countervailing duty questionnaires to

the Government of the Federal Republic

of Germany (GOG), the Government of

the Free and Hanseatic City of Hamburg

(GOH), the Government of Saarland

(GOS), Saarstahl, BES, IHSW, and WHG.

We received responses to our

questionnaires on May 27, 1997. We

issued supplemental questionnaires to

parties in June and July for which

responses were receive in the same

months. On May 2, 1997, we postponed

the preliminary determination in this

investigation until July 28, 1997 (62 FR

25172; May 8, 1997).

Scope of Investigation

The products covered by this

investigation are certain hot-rolled

carbon steel and alloy steel products, in

coils, of approximately round cross

section, between 5.00 mm (0.20 inch)

and 19.0 mm (0.75 inch), inclusive, in

solid cross-sectional diameter.

Specifically excluded are steel products

possessing the above noted physical

characteristics and meeting the

Harmonized Tariff Schedule of the

United States (HTSUS) definitions for

(a) stainless steel; (b) tool steel; (c) high

nickel steel; (d) ball bearing steel; (e)

free machining steel that contains by

weight 0.03 percent or more of lead,

0.05 percent or more of bismuth, 0.08

percent or more of sulfur, more than 0.4

percent of phosphorus, more than 0.05

percent of selenium, and/or more than

0.01 percent of tellurium; or (f) concrete

reinforcing bars and rods.

The following products are also

excluded from the scope of this

investigation:

Coiled products 5.50 mm or less in

true diameter with an average partial

decarburization per coil of no more than

70 microns in depth, no inclusions

greater than 20 microns, containing by

weight the following: carbon greater

than or equal to 0.68 percent; aluminum

less than or equal to 0.005 percent;

phosphorous plus sulfur less than or

equal to 0.040 percent; maximum

combined copper, nickel and chromium

content of 0.13 percent; and nitrogen

less than or equal to 0.006 percent. This

product is commonly referred to as

‘‘Tire Cord Wire Rod.’’

Coiled products 7.9 to 18 mm in

diameter, with a partial decarburization

of 75 microns or less in depth and

seams no more than 75 microns in

depth; containing 0.48 to 0.73 percent

carbon by weight. This product is

commonly referred to as ‘‘Valve Spring

Quality Wire Rod.’’

The products under investigation are

currently classifiable under subheadings

7213.91.3000, 7213.91.4500,

7213.91.6000, 7213.99.0030,

7213.99.0090, 7227.20.0000, and

7227.90.6050 of the HTSUS. Although

the HTSUS subheadings are provided

for convenience and customs purposes,

our written description of the scope of

this investigation is dispositive.

The Applicable Statute

Unless otherwise indicated, all

citations to the statute are references to

the provisions of the Tariff Act of 1930,

as amended by the Uruguay Round

Agreements Act effective January 1,

1995 (the ‘‘Act’’).

Injury Test

Because Germany is a ‘‘Subsidies

Agreement Country’’ within the

meaning of section 701(b) of the Act, the

ITC is required to determine whether

imports of steel wire rod from Germany

materially injure, or threaten material

injury to, a U.S. industry. On April 30,

1997, the ITC published its preliminary

determination finding that there is a

reasonable indication that an industry

in the United States is being materially

injured or threatened with material

injury by reason of imports from

Germany of the subject merchandise (62

FR 23485).

Petitioners

The petition in this investigation was

filed by Connecticut Steel Corp., CoSteel Raritan, GS Industries, Inc.,

Keystone Steel & Wire Co., North Star

Steel Texas, Inc. and Northwestern Steel

and Wire (the petitioners), six U.S.

producers of wire rod.

Subsidies Valuation Information

Period of Investigation

The period for which we are

measuring subsidies (the ‘‘POI’’) is

calendar year 1996.

Allocation Period

In the past, the Department has relied

upon information from the U.S. Internal

Revenue Service on the industryspecific average useful life of assets to

determine the allocation period for

nonrecurring subsidies. See General

Issues Appendix appended to Final

Affirmative Countervailing Duty

Determination; Certain Steel Products

from Austria (58 FR 37217, 37226; July

9, 1993) (General Issues Appendix).

However, in British Steel plc. v. United

States, 879 F. Supp. 1254 (CIT 1995)

(British Steel), the U.S. Court of

International Trade (the Court) ruled

against this allocation methodology. In

accordance with the Court’s remand

order, the Department calculated a

company-specific allocation period for

nonrecurring subsidies based on the

average useful life (AUL) of nonrenewable physical assets. This remand

determination was affirmed by the Court

on June 4, 1996. British Steel, 929 F.

Supp. 426, 439 (CIT 1996).

In this investigation, the Department

has followed the Court’s decision in

British Steel. Therefore, for the purposes

of this preliminary determination, the

Department has calculated companyspecific AULs.

Based on information provided by

Saarstahl and IHSW regarding the

companies’ depreciable assets, the

Department has preliminarily

determined that the appropriate

allocation period for Saarstahl and

IHSW is 10 years. The calculation of

allocation periods for WHG and BES

was unnecessary.

Creditworthiness

When the Department examines

whether a company is creditworthy, it is

essentially attempting to determine if

the company in question could obtain

commercial financing at commonly

available interest rates. If a company

receives comparable long-term financing

from commercial sources, that company

will normally be considered

creditworthy. In the absence of

comparable commercial borrowings, the

Department examines the following

factors, among others, to determine

whether or not a firm is creditworthy:
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41947

1. Current and past indicators of a firm’s

financial health calculated from that firm’s

financial statements and accounts.

2. The firm’s recent past and present ability

to meet its costs and fixed financial

obligations with its cash flow.

3. Future financial prospects of the firm

including market studies, economic forecasts,

and projects or loan appraisals.

For a more detailed discussion of the

Department’s creditworthiness

methodology, see, e.g., Final Affirmative

Countervailing Duty Determination:

Certain Steel Products from France, 58

FR 37304 (July 9, 1993) or Final

Affirmative Countervailing Duty

Determination: Certain Steel Products

from the United Kingdom, 58 FR 37393

(July 9, 1993).

Petitioners have alleged that Saarstahl

was uncreditworthy in 1989 and

between 1993 and 1996. They further

allege that Hamburger Stahlwerke

GmbH (HSW) was uncreditworthy in

1984 and 1994. Because neither

company received long-term financing

in the relevant years, we examined other

factors to determine the firms’

creditworthiness. In making our

determinations, we examined

Saarstahl’s and HSW’s current, quick,

and interest/debt coverage ratios in

addition to their net profit/loss for the

three preceding years. Both Saarstahl

and HSW experienced operating losses

in those years (except 1988 for

Saarstahl), and the financial ratios

demonstrate that both companies were

in poor financial health. The current

ratio (current assets divided by current

liabilities) measures the margin of safety

available to cover any drop in the value

of current assets, while the quick ratio

(current assets excluding inventory and

prepaids divided by current liabilities)

shows the company’s ability to pay its

short-term liabilities. For both

companies, the ratios were very small,

demonstrating their difficulty in

meeting their short-term liabilities and

interest expenses. Furthermore, the

interest/debt coverage ratios (net income

plus interest expense plus taxes divided

by interest expense), highlighted the

firms’ inability to meet existing interest

payments. We preliminarily determine

that Saarstahl was uncreditworthy in

1989 and HSW was uncreditworthy in

1994.

Because Saarstahl did not receive any

countervailable benefits from the GOS

or the GOG following its 1993

bankruptcy, we do not reach the

question of Saarstahl’s creditworthiness

for this period. Moreover, because

IHSW’s allocation period is ten years,

we are not examining subsidies received

prior to 1987. Therefore, we do not need

to analyze HSW’s creditworthiness for

that period.

Discount Rates

Saarstahl reported that German banks

set interest rates for long-term, fixed rate

commercial loans in reference to the

yield earned on public bonds. The

company explained that in establishing

the interest rate for the commercial

loans the banks normally add a margin

of zero percent to two percent to the

yield on public offerings depending

upon the borrower’s creditworthiness.

Because neither Saarstahl nor IHSW

provided a company-specific discount

rate, we used German public bond rate

plus a spread of two percent as the

discount rate for Saarstahl in 1989 and

IHSW in 1994. This rate represents the

highest long-term interest rate which we

could locate. For Saarstahl in 1989 and

IHSW in 1994, we added a risk

premium to establish the

uncreditworthy discount rate.

Privatization

In the General Issues Appendix, we

applied a new methodology with

respect to the treatment of subsidies

received prior to the sale of a company

(privatization) or the spinning-off of a

productive unit.

Under this methodology, we estimate

the portion of the purchase price

attributable to prior subsidies. We

compute this by first dividing the

privatized company’s subsidies by the

company’s net worth for each year

during the period beginning with the

earliest point at which non-recurring

subsidies would be attributable to the

POI (i.e., in this case 1987 for Saarstahl

and IHSW) and ending one year prior to

the privatization. We then take the

simple average of the ratios. The simple

average of these ratios of subsidies to

net worth serves as a reasonable

surrogate for the percent that subsidies

constitute of the overall value of the

company. Next, we multiply the average

ratio by the purchase price to derive the

portion of the purchase price

attributable to repayment of prior

subsidies. Finally, we reduce the benefit

streams of the prior subsidies by the

ratio of the repayment amount to the net

present value of all remaining benefits

at the time of privatization.

With respect to spin-offs, consistent

with the Department’s position

regarding privatization, we analyze the

spin-off of productive units to assess

what portion of the sale price of the

productive unit can be attributable to

the repayment of prior subsidies. To

perform this calculation, we first

determine the amount of seller’s

subsidies that the spun-off productive

unit could potentially take with it. To

calculate this amount, we divide the

value of the assets of the spun-off unit

by the value of the assets of the

company selling the unit. We then

apply this ratio to the net present value

of the seller’s remaining subsidies. We

next estimate the portion of the

purchase price going towards repayment

of prior subsidies in accordance with

the privatization methodology outlined

above.

In the current investigation, we are

analyzing the privatization of Saarstahl

in 1989 and subsequent spin-off in

1994. Additionally, we are investigating

the privatization of IHSW in 1994.

Based upon our analysis of the

petition and the responses to our

questionnaires, we preliminarily

determine the following:

I. Programs Preliminarily Determined

To Be Countervailable

A. Saarstahl

1. Forgiveness of Saarstahl’s Debt in

1989

During the period 1978 to 1989,

Saarstahl and its predecessor companies

received massive amounts of assistance

from the GOS and GOG. Repayment of

these funds was contingent upon

Saarstahl returning to profitability and

earning a profit above and beyond the

losses accumulated after 1978. This

contingent repayment obligation was

known as a Ru ̈ ckzahlungsverpflichtung

or ‘‘RZV.’’

In 1989, the GOS reached an

agreement with Usinor-Sacilor to

combine Saarstahl with AD der

Dillinger Huttenwerke (Dillinger) under

a holding company, DHS-Dillinger

Hutte Saarstahl AG (DHS). Pursuant to

the combination agreement and as a

condition for sale, in 1989 the GOG and

GOS entered into a debt forgiveness

contract (Entschuldungsvertrag, or

‘‘EV’’) which effectively forgave all the

outstanding repayment obligations

owed by Saarstahl to the Governments

(i.e., a total of DM 3.945 billion in debt

was forgiven). The EV specified,

however, that if Saarstahl went

bankrupt, the GOG and GOS claims

could be revived, but their claims would

be subordinated to those of all other

creditors.

After several years of unprofitable

operation, Saarstahl filed for bankruptcy

in 1993 under the German Bankruptcy

Regulations (Konkursordnung). In 1994,

the GOS bought Saarstahl back from

Usinor Sacilor for DM 1. At the time of

its bankruptcy, Saarstahl’s liabilities

exceeded its assets by a factor of four,

not including its liabilities to the GOG

and GOS. Both Governments filed
41948 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

claims against the Saarstahl bankruptcy

estate based on the RZV debt that was

conditionally forgiven in 1989. These

EV-related claims were rejected by the

bankruptcy trustee as invalid in 1995.

The GOG and GOS chose not to appeal

the rejection of their bankruptcy claims,

on the grounds that the subordination of

their claims made the likelihood of

recovery very small, and not worth the

high cost of litigating the matter.

In the Final Affirmative

Countervailing Duty Determination:

Certain Hot Rolled Lead and Bismuth

Carbon Steel Products from Germany,

58 FR 6233, 6234 (January 27, 1993)

(Lead and Bismuth), we found that

Saarstahl’s RZV and related government

debt were effectively forgiven by the

1989 EV, thus conferring a

countervailable benefit on Saarstahl as

of 1989. Respondents have argued that

the attempt to revive the RZVs by the

GOG and the GOS disqualifies the

signing of the 1989 EV as the

countervailable event. However, as

noted above, the EV-related bankruptcy

claims of the GOS and GOG were

rejected as invalid by the bankruptcy

trustee. Thus, the 1993 bankruptcy

proceeding left completely undisturbed

the provisions of the 1989 EV

agreement. Respondents further argue

that the RZVs were worthless at the time

of the EV. However, this argument was

rejected in Lead and Bismuth (58 FR

6233, 6237) and the Final Affirmative

Countervailing Duty Determination:

Certain Steel Products from Germany,

58 FR 37315, 37323 (July 9, 1993)

(Certain Steel) and the attendant

litigation. See Saarstahl AG v. United

States, 1997 CIT LEXIS 62, slip op. 97–

67 (CIT 1997) and British Steel plc v.

United States, 936 F. Supp. 1053, 1069–

70 (CIT 1996).

Therefore, we preliminarily determine

that the debt forgiveness constitutes a

financial contribution in 1989 within

the meaning of section 771(5) of the Act.

It is a direct transfer of funds from the

GOG and GOS providing a benefit in the

amount of the debt forgiveness, DM

3.945 billion. Because it was a one time

event, we consider it to be a nonrecurring grant. Additionally, we

analyzed whether the debt forgiveness

provided to Saarstahl was specific ‘‘in

law or in fact,’’ within the meaning of

section 771(5A) of the Act. Consistent

with Lead and Bismuth (58 FR 6233)

and Certain Steel (58 FR 37315), we find

that the debt forgiveness provided to

Saarstahl was limited to a specific

enterprise or industry because it was

provided to one company.

To calculate the countervailable

subsidy, we used our standard declining

balance grant methodology. The amount

of subsidy allocated to the POI was

adjusted in accordance with our

privatization methodology (described

above) to reflect the privatization of

Saarstahl in 1989 and the spin-off of

Saarstahl from DHS 1994. We then

divided the portion of the benefit

attributable to the POI by the total sales

of Saarstahl during the same period. On

this basis, we determine the

countervailable subsidy for this program

to be 16.92 percent ad valorem for

Saarstahl.

2. Assurance of Liquidity Provided to

Private Banks by the GOS

Toward the end of 1985, the GOS

presented a long-term restructuring plan

for Saarstahl to Saarstahl’s creditors and

requested that they forgive loans in the

amount of DM 350 million. In a

February 20, 1986 letter from the banks

to the GOS, the banks agreed to forgive

DM 217.33 million of debt owed to them

by Saarstahl (DM 216.82 of which was

forgiven in 1989), if the GOG and GOS

fulfilled certain prerequisites. Two of

the prerequisites were that the

Governments forgive all debt owed to

them by Saarstahl and that the GOS

secure the future liquidity of Saarstahl.

In an April 4, 1986 letter from the

Governor of Saarland responding to the

banks, the GOS agreed to forgive all

debts owed to it by Saarstahl and to

secure the liquidity of Saarstahl as it

had in the past.

We preliminarily determine that in

assuring the future liquidity of Saarstahl

the GOS provided a financial

contribution to Saarstahl. Specifically,

this assurance granted a ‘‘potential

direct transfer of funds’’ within the

meaning of section 771(5). By assuring

the future liquidity of Saarstahl, the

GOS effectively guaranteed that

Saarstahl would have the funds to

satisfy its future obligations, which

included the outstanding debt owed to

the banks. This assurance was

consistent with the GOS’s long history

of supporting Saarstahl. We also

preliminarily determine that the

assurance was provided to a specific

enterprise or industry, Saarstahl.

While the GOS’s assurance of future

liquidity resembled a loan guarantee, it

differed in certain important aspects

from loan guarantees typically

examined by the Department. First, the

GOS did not promise to take

responsibility for payment of the debt

owed to the banks if Saarstahl failed to

perform. Rather, the GOS reached an

agreement with the private banks

whereby the GOS would maintain

Saarstahl’s liquidity (i.e., Saarstahl’s

ability to service its outstanding debts).

Additionally, other characteristics of a

typical loan guarantee which potentially

confer a benefit were not manifested in

the liquidity assurance. For example,

the assurance did not necessarily affect

the amount that Saarstahl paid on the

outstanding loans in the form of fees

and interest costs—the typical

indicators of the benefit from a loan

guarantee. Rather, the consequence of

the assurance was that Saarstahl

received partial debt forgiveness from

the banks. Because of this, we are

calculating the benefit conferred by the

liquidity assurance as the amount of

debt forgiven.

To calculate the countervailable

subsidy, we followed the methodology

described in the Forgiveness of

Saarstahl’s Debt in 1989 section, above.

We then divided the portion of the

benefit attributable to the POI by the

total sales of Saarstahl during the same

period. On this basis, we determine the

countervailable subsidy for this program

to be 0.93 percent ad valorem for

Saarstahl.

B. IHSW

994 IHSW Debt Forgiveness

In 1984, Hamburgische Landesbank

Girozentrale (HLB), a bank wholly

owned by the GOH, provided HSW with

a line of credit in the amount of DM 130

million. The line of credit was granted

for a period of one year and was

renewed every year until 1994. Pursuant

to a Kreditauftrag between the GOH and

HLB, in the event that HSW failed to

service this debt, the GOH was obligated

to compensate the HLB for 60 percent of

the credit line (i.e., DM 78 million). In

1992 and 1993, HSW suffered

significant losses, and the HLB refused

to extend the credit line. At that point,

the GOH instructed the HLB to extend

HSW’s line of credit, and the GOH and

HLB entered into an agreement

extending the Kreditauftrag so that the

GOH assumed responsibility for the

total amount loaned to HSW under the

line of credit. At the beginning of 1994,

the line of credit totaled approximately

DM 174 million. While the Department

will not consider a loan provided by a

government-owned bank to be a loan

provided by the government, per se, the

actions taken by the GOH in 1984, 1992,

and 1993 pursuant to the Kreditauftrag

clearly demonstrate that the HLB (a

bank wholly-owned by the GOH) was

acting on behalf of the GOH in this

instance.

In 1994, HSW was sold to Venuda

Investments B.V. (Venuda), IHSW’s

parent company. At the time of

privatization, the line of credit totaled

DM 167.5. Under the terms of the sale,

Venuda paid DM 10 million for HSW.
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41949

With respect to the line of credit, DM

154 million of the total was sold to

Venuda for approximately DM 60

million according to a formula based on

the net current asset value of HSW in

1994 (i.e., the difference between

current assets and liabilities (less the

debt owed to HLB)). Although the sale

of HSW was structured to have two

components, the sale of shares and the

sale of debt, we have treated this as a

single transaction and we consider the

payments made by Venuda (i.e., DM 10

million and DM 60 million) to represent

the price paid for HSW. The remainder

of the credit line, DM 13.4 million

representing ‘‘non-cash’’ deposits (e.g.,

LCs, drafts, etc.), was repaid to HLB by

HSW in early 1995.

Based on our view of the sale of HSW,

i.e., that the proceeds from both the

share and debt purchase comprise the

sale price, we preliminarily determine

that in the year that HSW was sold the

DM 154 million owed by HSW under

the line of credit was forgiven. This debt

forgiveness constitutes a financial

contribution in the form of a direct

transfer of funds from the GOH

providing a benefit in the amount of DM

154 million in 1994. Moreover, we

analyzed whether the program is

specific ‘‘in law or in fact,’’ within the

meaning of section 771(5)(A) of the Act.

Since the debt forgiveness was only

provided to one company, we

preliminarily determine that it is

limited to a specific enterprise.

To calculate the countervailable

subsidy, we used our standard grant

methodology. Although HSW was sold

in 1994, the company received no

nonrecurring subsidies prior to the year

of privatization and within its allocation

period (i.e., during the period 1987

through 1993). Consequently, under our

privatization methodology none of the

purchase price paid to the GOH

constitutes repayment of prior

subsidies. Thus, we allocated the

subsidy according to our grant

methodology and divided the benefit

attributable to the POI by the total sales

of IHSW during the same period. On

this basis, we determine the

countervailable subsidy for this program

to be 5.54 percent ad valorem for IHSW.

II. Programs Preliminarily Determined

To Be Not Countervailable

A. Saarstahl

Worker Assistance Under Article

56(2)(b)

Under Article 56(2)(b) of the ECSC

Treaty, persons employed in the iron,

steel and coal industries who lose their

jobs may receive assistance for social

adjustment. This assistance is provided

to workers affected by restructuring

measures, particularly workers

withdrawing from the labor market into

early retirement and workers forced into

unemployment. The ECSC disburses

assistance under this program on the

condition that the affected country

makes an equivalent contribution. In

1993 through 1995, a supplementary

assistance program was available to help

displaced steel workers affected by

massive restructuring in the industry.

The supplementary program provided

additional payments for early retirement

(max. ECU 5,000/worker), redeployment

measures (max. ECU 4,000/worker), and

unemployment measures (max. 2,000

ECU/worker).

During the POI, Saarstahl received

payments for its workers under Article

56(2)(b). These payments reimbursed

Saarstahl for payments it had made to

its workers.

When analyzing programs which

provide assistance to the workers of a

company, the Department examines

whether the program in question

relieves the company of an obligation it

normally would otherwise incur. As we

noted in Certain Steel (58 FR 37315,

37320), German companies have no

legal obligations to compensate severed

employees, except to the extent that

they assume obligations under a social

plan. Because Saarstahl had no social

plan in effect during the POI, the ECSC

assistance did not relieve Saarstahl of an

obligation it otherwise would have had.

Thus, we preliminarily determine that

the ECSC benefits provided to Saarstahl

are not countervailable.

B. IHSW

Provision of Land Lease

Pursuant to a 1986 lease agreement

between HSW and the GOH, IHSW

leases land located in the port of

Hamburg from the GOH. The GOH owns

approximately one third of the

commercial and industrial land in the

port area and leases that land under

approximately 500 different lease

agreements. The GOH lease rates in the

port area are established by the Office of

the Appraisal Committee for Property

Values (Appraisal Committee), an

autonomous body which records and

analyzes agreements relating to the

purchase and sale of land in Hamburg.

According to the GOH questionnaire

response, the lease rates are set

according to such factors as: (1) Market

value of property, (2) potential for use

and facilities available in specific areas,

(3) rentals for comparable areas being

used, and (4) terms and conditions

being paid in other Northern ports.

The GOH uses a standard lease for all

enterprises in the port area. The lease

has four rate categories which are based

on the size and location of the property

(e.g., land-locked vs. direct water

access). Thus, IHSW’s lease contains the

same terms as all other lease agreements

signed with enterprises in the port area.

Because IHSW pays a standard rate

charged by the GOH to all enterprises

leasing land similar to IHSW’s and

because these prices appear to be set in

reference to market conditions, we

preliminarily determine that IHSW’s

lease rate provides adequate

remuneration to the GOH and, thus, is

not countervailable. Prior to our final

determination, we will attempt to obtain

further information with respect to the

number and diversity of industries to

which the GOH leases land in the port

of Hamburg and private lease rates for

land comparable to that of IHSW in the

port area.

III. Programs for Which Additional

Information Is Required

BES has claimed that each of the

programs under which it received

government assistance is a

noncountervailable subsidy to a

disadvantaged region in accordance

with section 771(5B)(C) of the Act. For

purposes of the final determination, we

will be seeking more information and

giving further consideration to whether

noncountervailable subsidies are being

provided to BES under the following

programs:

1. Improvement of the Regional

Economies Act Investment Grants.

2. Investment Allowance Act Grants.

3. Special Depreciation Pursuant to

Section Four of the Regional

Development Law.

We are also seeking additional

information as to any subsidies which

BES may have received during the

period 1990 through 1992 and the

circumstances surrounding the sale of

the plant which effectively became BES.

IV. Programs Preliminarily Determined

To Be Not Used

A. Saarstahl

Post-Bankruptcy Subsidies to Saarstahl

B. IHSW

In 1984, HSW emerged from

bankruptcy proceedings and was taken

over by a limited partnership called

Protei Produktionsbeteiligungen GmbH

& Co. KG (Protei). Because Protei was

financially unable to provide New HSW

with equity, the HLB ‘‘loaned’’ DM 20

million to Protei. The DM 20 million

financing was provided to HLB by the

GOH. HSW used this capital to purchase
41950 Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices

the assets and business of Old HSW

from its receiver.

According to the terms of the contract

which provided these funds, repayment

became due from the profits of Protei

which, in turn, were derived from

HSW’s profits. The contract also

provided that Protei could not liquidate

HSW without the approval of HLB and

HLB reserved rights regarding the

appointment of management and

members of the supervisory committee.

Between 1987 and 1988, DM 2.8 million

in ‘‘principal’’ payments and DM 2.7

million in ‘‘interest’’ were paid by HSW

leaving an unpaid balance of DM 17.2

million.

We have preliminarily determined

that the DM 20 million ‘‘loan’’ to Protei

should be treated as equity received in

1984 in light of the terms of the

financing. Although the money was

given in the form of a loan to Protei, the

circumstances of the loan indicate that

the funds were more in the nature of

equity. First, as noted above, payments

on the loan were contingent on HSW

being profitable: So, if the company

never became profitable, there was no

obligation for the loan to be repaid.

Second, under the terms of the loan,

Protei relinquished pro rata its share of

profits from HSW based on the ratio

between the DM 20 million loan and the

total share capital of HSW. Hence,

HLB’s share of any future profits

generated by HSW would be calculated

as if the loan were paid-in capital.

Third, although the loan was made to

Protei, neither of the partners in the

limited partnership was liable for the

loan, suggesting that the Protei served as

a mechanism for the GOH to invest in

HSW. Fourth, as noted above, the

lender, HLB, imposed numerous

conditions on Protei which served to

insert HLB into important management

decisions affecting HSW. Finally, when

this loan was examined by the

Commission of the European

Communities (the Commission) to

determine whether it constituted state

aid, the Commission determined that

the loan should be considered as risk

capital. Among the data developed by

the Commission was a statement by the

German government that the GOH ‘‘was

exposed to financial risk fully

comparable to the risk a shareholder

injecting risk capital has to bear without

becoming owner of the company.’’ (The

Commission’s decision is printed in the

Official Journal of the European

Communities, No L 78, Vol 39, March

28, 1996, at pp. 31 ff.) While the

Commission’s characterization of this

loan as equity is not dispositive, their

reasoning in this instance is consistent

with our preliminary analysis.

Given our preliminary determination

that the DM 20 million loan in 1984

should be treated as equity and, in light

of HSW’s AUL of 10 years, this 1984

equity infusion would not give rise to

benefits in the POI even if the infusion

were a countervailable subsidy.

Therefore, we are treating this equity as

well as two other programs as ‘‘not

used’:

1. 1984 Equity Infusion Through

Protei.

2. 1984 Steel Investment Allowance

Grant.

3. 1984 Federal Ministry for Research

and Technology (BMFT) Grant.

Other programs that were not used by

IHSW:

4. 1984 Structural Improvement

Assistance Grant.

5. 1984 Loan Guarantee to HSW.

Verification

In accordance with section 782(i) of

the Act, we will verify the information

submitted by respondents prior to

making a final determination.

Suspension of Liquidation

In accordance with section

703(d)(1)(A)(i) of the Act, we have

calculated individual rates for each of

the companies under investigation.

WHG reported that the only subsidy it

received was research and development

assistance pursuant to the Industrial

Technology Program of the State of

North-Rhine/Westphalia. Even

assuming this assistance constituted a

countervailable subsidy, the benefit

would be de minimis. Therefore, we

preliminarily determine that WHG

would be excluded from any potential

countervailing duty order with respect

to merchandise produced and exported

by WHG.

To calculate the all others rate, we

weight-averaged the individual

company rates by each company’s

exports of the subject merchandise to

the United States. We did not include in

the weighted-average rate the companies

with zero or de minimis subsidy rates.

In accordance with section 703(d) of

the Act, we are directing the U.S.

Customs Service to suspend liquidation

of all entries of steel wire rod from

Germany, except those of BES and

WHG, which are entered, or withdrawn

from warehouse, for consumption on or

after the date of the publication of this

notice in the Federal Register, and to

require a cash deposit or bond for such

entries of the merchandise in the

amounts indicated below. This

suspension will remain in effect until

further notice.

Ad Valorem Rate

Saarstahl 17.85 percent

IHSW 5.54 percent

All Others 11.13 percent

ITC Notification

In accordance with section 703(f) of

the Act, we will notify the ITC of our

determination. In addition, we are

making available to the ITC all nonprivileged and nonproprietary

information relating to this

investigation. We will allow the ITC

access to all privileged and business

proprietary information in our files,

provided the ITC confirms that it will

not disclose such information, either

publicly or under an administrative

protective order, without the written

consent of the Assistant Secretary for

Import Administration.

If our final determination is

affirmative, the ITC will make its final

determination within 45 days after the

Department makes its final

determination.

Public Comment

In accordance with 19 CFR 355.38, we

will hold a public hearing, if requested,

to afford interested parties an

opportunity to comment on this

preliminary determination. The hearing

is tentatively scheduled for September

22, 1997, at the U.S. Department of

Commerce, Room 3708, 14th Street and

Constitution Avenue, N.W.,

Washington, D.C. 20230. Individuals

who wish to request a hearing must

submit a written request within 30 days

of the publication of this notice in the

Federal Register to the Assistant

Secretary for Import Administration,

U.S. Department of Commerce, Room

1874, 14th Street and Constitution

Avenue, N.W., Washington, DC 20230.

Parties should confirm by telephone the

time, date, and place of the hearing 48

hours before the scheduled time.

Requests for a public hearing should

contain: (1) The party’s name, address,

and telephone number; (2) the number

of participants; (3) the reason for

attending; and (4) a list of the issues to

be discussed. In addition, eight copies

of the business proprietary version and

three copies of the nonproprietary

version of the case briefs must be

submitted to the Assistant Secretary no

later than September 8, 1997. Eight

copies of the business proprietary

version and three copies of the

nonproprietary version of the rebuttal

briefs must be submitted to the

Assistant Secretary no later than

September 15, 1997. An interested party

may make an affirmative presentation

only on arguments included in that
Federal Register / Vol. 62, No. 149 / Monday, August 4, 1997 / Notices 41951

party’s case or rebuttal briefs. Written

arguments should be submitted in

accordance with 19 CFR 355.38 and will

be considered if received within the

time limits specified above. Parties who

submit argument in this proceeding are

requested to submit with the argument

(1) a statement of the issue and (2) a

brief summary of the argument. If this

investigation proceeds normally, we

will make our final determination on

October 14, 1997.

This determination is published

pursuant to sections 703(f) and 771(i) of

the Act.

Dated: July 28, 1997.

Jeffrey P. Bialos,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–20492 Filed 8–1–97; 8:45 am]

BILLING CODE 3510–DS–U

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

[I.D. 071497C]

Endangered and Threatened Wildlife:

Draft Recovery Plan for Shortnose

Sturgeon

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Notice of Availability of a Draft

Recovery Plan; request for comments.

SUMMARY: NMFS is announcing the

availability of the draft recovery plan for

shortnose sturgeon (Acipenser

brevirostrum). NMFS is soliciting

review and comment from the public on

the draft plan, and will consider these

comments in the approval of a final

recovery plan.

DATES: Comments on the draft recovery

plan must be received on or before

September 3, 1997.

ADDRESSES: Request a copy of the draft

recovery plan from Mary Colligan,

Habitat and Protected Resources

Division, NMFS, One Blackburn Drive,

Gloucester, MA 01930. Written

comments and materials regarding the

plan should also be directed to Mary

Colligan at the above address.

FOR FURTHER INFORMATION CONTACT:

Mary Colligan at 508–281–9116.

SUPPLEMENTARY INFORMATION:

Background

The shortnose sturgeon, Acipenser

brevirostrum, is an endangered fish

species that occurs in large coastal

rivers of eastern North America. It

inhabits 18 rivers ranging from the Saint

John River in New Brunswick, Canada

to the St. Johns River, Fl. The

Endangered Species Act (ESA) requires

NMFS to develop and implement

recovery plans for most species that are

listed under the ESA as threatened or

endangered and that are under the

jurisdiction of NMFS. In May 1997, the

Shortnose Sturgeon Recovery Team

submitted its final draft of the recovery

plan to NMFS.

The draft recovery plan includes a

synopsis of the biology and distribution

of shortnose sturgeon, a description of

factors affecting species recovery, an

outline of actions needed to recover the

species and an implmentation schedule

for completing specific recovery tasks.

Public Comments Solicited

NMFS intends that the final recovery

plan will take advantage of information

and recommendations from all

interested parties. Therefore, comments

and suggestions are solicited from the

public, other concerned governmental

agencies, the scientific community,

industry, and any other person

concerned with the draft recovery plan.

Dated: July 30, 1997.

Patricia A. Montanio,

Deputy Director, Office of Protected

Resources, National Marine Fisheries Service.

[FR Doc. 97–20484 Filed 8-1-97; 8:45 am]

BILLING CODE 3510–22–F

DEPARTMENT OF COMMERCE

National Oceanic and Atmospheric

Administration

[I.D. 072897C]

Marine Mammals

AGENCY: National Marine Fisheries

Service (NMFS), National Oceanic and

Atmospheric Administration (NOAA),

Commerce.

ACTION: Issuance of Letters of

Confirmation to conduct scientific

research under the General

Authorization.

SUMMARY: Pursuant to provisions of the

Marine Mammal Protection Act, as

amended, (16 U.S.C. 1361 et seq.,

specifically, 104(c)(3)(C)) and the

Regulations Governing the Taking and

Importing of Marine Mammals (50 CFR

part 216.45) letters of confirmation

(LOC) to conduct level B harassment of

marine mammals in the wild under

authority of the General Authorization

for Scientific Research have been

issued. Level B harassment, as defined

in section 216.3, means any act of

pursuit, torment, or annoyance which

has the potential to disturb a marine

mammal or marine mammal stock in the

wild by causing disruption of behavioral

patterns, including, but not limited to

migration, breathing, nursing, breeding,

feeding, or sheltering but which does

not have the potential to injure a marine

mammal or marine mammal stock in the

wild. The following letters of

confirmation were issued to individuals

or organizations from January 1, 1996,

through June 30, 1997:

Dr. Paul H. Forestell, Pacific Whale

Foundation, Associate Professor and

Director, Psychobiology Program, Social

Science Division, Montauk 222, Long

Island University, Southampton, Long

Island, NY 11968 (LOC No. 21);

Dr. Robert F. Young, Assistant

Professor, Marine Science Department,

Coastal Carolina University, P.O. Box

1954,

Conway, SC 29526 (LOC No. 22);

Dr. Andrew J. Read, Assistant

Professor, Duke University Marine

Laboratory, 135 Duke Marine Lab Road,

Beaufort, NC 28516 (LOC No. 23);

Howard W. Braham, Ph.D., Director,

National Marine Mammal Laboratory,

Alaska Fisheries Science Center, 7600

Sand Point Way, NE, BIN C15700, Bldg.

4, Room 2149, Seattle, WA 98115–0070

(LOC Nos. 782–1306, 782–1360, and

782–1352);

Mr. John J. Burns, Living Resources,

Inc., P.O. Box 83570, Fairbanks, AK

99708–3570 (LOC No. 25);

Dr. Andrew J. Read, Assistant

Professor, Duke University Marine

Laboratory, c/o Clearwater Marine

Aquarium, 249 Windward Passage,

Clearwater, FL 34630 (LOC No. 26);

Mr. Kenneth C. Balcomb, III, Center

for Whale Research, Inc., 1359

Smuggler’s Cove Road, Friday Harbor,

WA 98250 (LOC No. 27);

Mr. T. David Schofield, Senior

Mammalogist/Marine Animal Rescue

Coordinator, National Aquarium in

Baltimore, Pier 3, 501 East Pratt Street,

Baltimore, MD 21202–3194 (LOC No.

28);

Mr. Shane Guan, Grice Marine

Biological Laboratory, University of

Charleston, 205 Fort Johnson,

Charleston, SC 29412 (LOC No. 29);

Dr. Harold N. Cones, Professor and

Chairman, Department of Biology,

Chemistry and Environmental Sciences,

Christopher Newport University, 30

Shoe Lane, Newport News, VA 23606–

2998 (LOC No. 30);

Dr. Bernd Wursig, Director, Marine

Mammal Research Program, Texas A&M

University, 4700 Avenue U/Building

303, Galveston, TX 77551 (LOC No. 31);

Ms. Marilyn Mazzoil, 17630 NW 67th

Avenue #1211, Miami, FL 33015 (LOC

No. 32);