[Federal Register Volume 65, Number 211 (Tuesday, October 31, 2000)]
[Notices]
[Pages 64926-64932]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27949]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-823]


Preliminary Determination of Circumvention of Antidumping Order: 
Cut-to-Length Carbon Steel Plate From Canada

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

ACTION: Notice of Preliminary Determination of Circumvention of 
Antidumping Order: Cut-to-Length Carbon Steel Plate from Canada.

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SUMMARY: We preliminarily determine that imports of certain cut-to-
length carbon plate products, known as grader blade and draft key 
steel, falling within the physical dimensions outlined in the scope of 
the order, and containing a minimum of both 0.0008 percent boron

[[Page 64927]]

by weight and 0.55 percent carbon by weight, and produced by Co-Steel 
Lasco, Inc. and Gerdau MRM Steel are circumventing the antidumping duty 
order on cut-to-length carbon steel plate from Canada (58 FR 44162, 
August 19, 1993).

EFFECTIVE DATE: October 31, 2000.

FOR FURTHER INFORMATION CONTACT: Michael Panfeld or Rick Johnson, 
Import Administration, International Trade Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue, NW, 
Washington, DC, 20230; telephone: (202) 482-0172 (Panfeld); (202) 482-
3818 (Johnson).

Applicable Statute

    Unless otherwise stated, 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 
stated, all citations to the Department's regulations are references to 
the regulations as codified at 62 FR 27296 (May 19, 1997).

SUPPLEMENTARY INFORMATION:

Background

    On March 14, 1997, at the request of petitioner, Kentucky Electric 
Steel (``KES''), the Department of Commerce (``the Department'') 
initiated a scope inquiry to determine whether certain cut-to-length 
carbon steel plate used to make grader blades and draft keys (``grader 
blade'' and ``draft key'' steel) that contain small amounts of boron 
fall within the scope of the order on certain cut-to-length carbon 
steel plate from Canada.
    On January 16, 1998, the Department issued a ruling, based on 19 
CFR section 353.29(i), that boron-added grader blade and draft key 
steel falls outside the literal scope of the order. The scope of the 
original antidumping investigation relied on the HTSUS definition of 
carbon steel, which distinguishes other-alloy steel (i.e. including 
steel containing more that 0.0008 percent boron). Because the petition 
equated the term ``carbon steel'' with the HTSUS term ``non-alloy 
steel'', variants of grader blade and draft key steel which contain at 
least 0.0008 percent boron by weight fell outside the literal scope of 
the order.
    On January 30, 1998, KES requested that the Department conduct an 
anticircumvention inquiry pursuant to section 781(c) of the Act to 
determine whether imports of certain cut-to-length steel plate used to 
make grader blades and draft keys that contain small amounts of boron 
and fall within the physical dimensions outlined in the scope of the 
order, are circumventing the antidumping duty order on certain cut-to-
length carbon steel plate from Canada. KES alleged that, since 
publication of the antidumping duty order, exporters of certain cut-to-
length carbon steel plate from Canada have been circumventing the order 
by exporting carbon steel plate with small amounts of boron added so as 
to avoid coverage under the order. According to KES, the ``inclusion of 
0.0016 percent boron by weight to high carbon grader blade and draft 
key steel constitutes a minor alteration'' and is, therefore, within 
the meaning of the provisions detailed in section 781(c) of the Act. 
See Anticircumvention Application, January 30, 1998 at 4.
    On May 20, 1998, the Department initiated an anticircumvention 
inquiry on the antidumping order on Cut-to-Length Carbon Steel Plate 
from Canada. See Notice of Initiation of Anticircumvention Inquiry: 
Cut-to-Length Carbon Steel Plate from Canada, 63 FR 29179 (May 28, 
1998). On June 5, 1998, the Department requested information from 
Canadian producers which were listed as producers of either grader 
blade or draft key steel in Iron and Steel Works of the World, 12th 
edition. On June 26, 1998 and July 17, 1998, Gerdau MRM Steel (``MRM'') 
and Co-Steel Lasco (``CSL''), respectively, responded to the 
Department's questionnaire, identifying themselves as producers of 
carbon steel products with over 0.0008 percent boron. Based on these 
responses, the Department issued a full questionnaire to both CSL and 
MRM on July 30, 1998. CSL filed its response on September 28, 1998. MRM 
filed its response on October 6, 1998. On October 7, 1998, the 
Department issued a supplemental questionnaire to CSL, who responded on 
October 14, 1998. On November 6, 1998, the Department issued a 
supplemental questionnaire to MRM, which responded on December 7, 1998.
    From October 26 through October 28, 1998, Department officials 
conducted a verification of CSL. The Department reviewed documents and 
made inquiries of CSL officials with regard to the sales and production 
of grader blade and draft key carbon steel with and without boron 
added.
    Algoma Steel Inc. and Caterpillar Inc. have also filed notices of 
appearance with the Department as interested parties to this inquiry.
    On December 16, 1998, the Court of International Trade (``CIT'') 
enjoined further proceeding with this inquiry. See Co-Steel Lasco v. 
United States (Co-Steel) Court No. 98-08-02684. However, the Court of 
Appeals for the Federal Circuit subsequently reversed the injunction, 
and on October 12, 2000, the CIT dismissed the case. Thus, we are 
proceeding with this inquiry and we will make our final determination 
no later than January 10, 2001.

Scope of the Investigation

    The scope language contained in the final determination and 
antidumping duty order describes the covered merchandise as follows:

    Certain Cut-to-Length Carbon Steel Plate
    These products include hot-rolled carbon steel universal mill 
plates (i.e., flat-rolled products rolled on four faces or in a 
closed box pass, of a width exceeding 150 millimeters but not 
exceeding 1,250 millimeters and of a thickness of not less than 4 
millimeters, not in coils and without patterns in relief), of 
rectangular shape, neither clad, plated nor coated with metal, 
whether or not painted, varnished, or coated with plastics or other 
nonmetallic substances; and certain hot-rolled carbon steel flat-
rolled products in straight lengths, of rectangular shape, hot 
rolled, neither clad, plated, nor coated with metal, whether or not 
painted, varnished, or coated with plastics or other nonmetallic 
substances, 4.75 millimeters or more in thickness and of a width 
which exceeds 150 millimeters and measures at least twice the 
thickness, as currently classifiable in the HTS under item numbers 
7208.31.000, 7208.32.000, 7208.33.1000, 7208.33.5000, 7208.41.000, 
7208.42.000, 7208.43.0000, 7208.90.0000, 7210.70.3000, 7210.90.9000, 
7211.11.0000, 7211.12.0000, 7211.21.0000, 7211.22.0045, 
7211.90.0000, 7212.40.1000, 7212.40.5000, and 7212.50.0000. Included 
in these investigations are flat-rolled products of nonrectangular 
cross-section where such cross-section is achieved subsequent to the 
rolling process (i.e., products which have been ``worked after 
rolling'')-for example, products which have been beveled or rounded 
at the edges. Excluded from these investigations is grade X-70 
plate.
    Although the Harmonized Tariff Schedule of the United States 
(HTS) subheadings are provided for convenience and customs purposes, 
our written descriptions of the scope of these proceedings are 
dispositive.

    Determination; Certain Cold-Rolled Carbon Steel Flat Products From 
Argentina, 58 FR 37063 (July 9, 1993), Appendix I. See also Antidumping 
Duty Orders: Certain Corrosion-Resistant Carbon Steel Flat Products and 
Certain Cut-to-Length Carbon Steel Plate From Canada, 58 FR 44162 
(August 19, 1993).

Scope of the Anticircumvention Inquiry

    The merchandise subject to this inquiry is certain cut-to-length 
plate, commonly known as grader blade and draft key steel, made of in-
scope high carbon steel to which a small amount of boron (minimum 
0.0008 percent boron

[[Page 64928]]

by weight) has been added, falling within the physical dimensions 
outlined in the scope of the order. High carbon steel is defined as 
steel of AISI or SAE grades 1050, 1152, or 1552, or higher, i.e., 
carbon steels that may contain 0.55 percent or more carbon by weight. 
``Grader blade'' steel is typically used in grading equipment such as 
bulldozers and snowplows. ``Draft key'' steel is used specifically to 
make locking mechanisms for railroad couplings. Unless otherwise 
indicated, the terms ``boron-added grader blade and draft key carbon 
steel'', ``boron-added steel for use in grader blades and draft keys'' 
and ``boron-added steel'' are synonymous for the purpose of this 
notice.

Analysis

    Section 781 of the Act addresses the prevention of circumvention of 
antidumping and countervailing duty orders. Subsection 781(c) 
specifically provides that:
    (1) In general--The class or kind of merchandise subject to--
    (A) an investigation under this title,
    (B) an antidumping duty order issued under section 736,
    (C) a finding under the Antidumping Act of 1921, or
    (D) a countervailing duty order issued under section 706 or section 
303, shall include articles altered in form or appearance in minor 
respects (including raw agricultural products that have undergone minor 
processing), whether or not included in the same tariff classification.
    (2) Exception--Paragraph (1) shall not apply with respect to 
altered merchandise if the administering authority determines that it 
would be unnecessary to consider the altered merchandise within the 
scope of the investigation, order or finding.

The Scope Review and the Holdings of the U.S. Courts

    In its final determination of the scope ruling noted above, the 
Department found that the scope did not include grader blade steel and 
draft key steel produced with 0.0008 percent boron or more by weight 
(``boron-added steel''), the merchandise in question in this inquiry. 
Respondents have argued in this case that by finding that the product 
is outside the scope of the order, the Department may not initiate a 
``minor alterations'' anticircumvention inquiry, citing the decision of 
the CIT in Wheatland Tube Co. v. United States, 973 F.Supp. 149 (CIT 
1997).
    Since the time of initiation, the United States Court of Appeals 
for the Federal Circuit (``CAFC'') has clarified the law in this area. 
In Wheatland Tube Co. v. United States, the CAFC held that, under the 
facts of that case, an anticircumvention inquiry was not appropriate. 
However, the appellate court also determined that ``(i)n essence, 
section 1677j(c) includes within the scope of an antidumping order 
products that are so insignificantly changed from a covered product 
that they should be considered within the scope of the order even 
though the alterations remove them from the order's literal scope.'' 
See Wheatland Tube Co. v. United States, 161 F.3d 1365 (1998) at 12. 
Thus, under Wheatland, the Department may properly inquire whether, 
although the merchandise in question is outside the order's literal 
scope, the merchandise has been altered from an in-scope product in 
such a minor way that it should be considered within the scope of the 
order.
    Petitioner has alleged, and the facts discovered by the Department 
to-date have shown, that the out-of-scope boron-added carbon grader 
blade and draft key steel is made through an economically and 
metallurgically insignificant alteration of in-scope carbon steel. 
Consequently, this case presents precisely the sort of inquiry 
authorized by the court in Wheatland.
    Additionally, in a related case involving nearly identical facts 
and the same scope issue, Nippon Steel Corporation v. United States, 
219 F.3d 1348 (Fed. Cir., July 26, 2000) (``Nippon''), the CAFC further 
clarified that the minor alteration inquiry in Wheatland was prohibited 
only because the product in question was well-known prior to the order 
and was specifically excluded from the investigation. In this respect, 
the Court in Nippon distinguished Wheatland from the inquiry involving 
boron-added carbon steel, and determined that a circumvention inquiry 
of such a product (boron-added carbon steel) was proper. See Decision 
Memorandum: Preliminary Determination of Circumvention of the 
Antidumping Duty Order: Certain Cut-to-Length Carbon Steel Plate from 
Canada (``Decision Memo'') from Joseph A. Spetrini to Troy Cribb dated 
October 23, 2000. Moreover, the Federal Circuit in this case (Co-Steel) 
adopted the Nippon opinion by reference and found that the 
circumvention inquiry was indeed proper. See Co-Steel Lasco v. United 
States, 99-1339 (September 22, 2000). As a result, on October 12, 2000, 
the CIT in this case dissolved the injunction and dismissed the 
complaint.

Minor Alterations

    Petitioner alleges that imports of grader blade and draft key steel 
that contain small amounts of boron are circumventing the order on cut-
to-length carbon steel plate from Canada. As discussed above, minor 
alteration anticircumvention inquiries are used when a petitioner 
claims that, although a product falls outside the literal scope of an 
order, the product should nevertheless be considered within the scope 
of an order because it results from an insignificant minor alteration 
of the in-scope product.
    Carbon steel is produced by first melting scrap and/or iron ore 
with charge carbon in a furnace. Once the steel is sufficiently heated, 
it is transferred to a ladle arc refiner, where alloys are added 
according to the specification required. When the steel's chemistry 
meets specifications, it is poured into a caster to form billets. These 
billets are cut and cooled. After the billets have cooled, they are 
reheated and sent to the structural mill, where the billets are rolled 
and cut according to the customer's specifications.
    The only difference in the production of boron-added carbon steel 
versus ordinary carbon steel is in the refining stage, where boron is 
simply added to the molten steel. All that is required to meet the 
HTSUS threshold level of 0.0008 percent boron is the addition of less 
than 100 pounds of boron to more than a hundred tons of molten steel. 
All other aspects of production are exactly the same as those for 
carbon steel. As discussed in ``Cost of Modification'' below, not only 
was the alteration to the production ``minor'' in all respects, the 
cost of this alteration was also ``minor'': approximately one third of 
one percent of the sales price. For a further discussion of this issue, 
see Decision Memo at 6.
    Respondent CSL argues that ``alloy steel plate,'' or boron-added 
grader blade and draft key steel, cannot be made by altering carbon 
steel plate. CSL states that in order for carbon steel plate, the 
subject merchandise, to be altered into alloy steel plate, the carbon 
steel plate would have to be remelted in order to introduce boron into 
the molten steel, and then follow the production process from pouring 
billets to cutting rolled plate. However, respondent misinterprets the 
minor alterations provision. Neither the statute nor its legislative 
history require that a minor alteration be made to a finished product. 
Indeed, the legislative history indicates that Congress anticipated 
that slight changes in production might allow an exporter to circumvent 
an order.

[[Page 64929]]

Factors of Consideration

    While the statute is silent regarding what factors to consider in 
determining whether alterations are properly considered ``minor,'' the 
legislative history of this provision indicates that there are certain 
factors which should be considered before reaching an anticircumvention 
determination. The petitioner cites to the Senate Finance Committee 
report on the Omnibus Trade and Competitiveness Act of 1988 (which 
amended the Tariff Act of 1930 to include the anticircumvention 
provisions contained in section 781), which states:

    [i]n applying this provision, the Commerce Department should 
apply practical measurements regarding minor alterations, so that 
circumvention can be dealt with effectively, even where such 
alterations to an article technically transform it into a 
differently designated article. The Commerce Department should 
consider such criteria as the overall physical characteristics of 
the merchandise, the expectations of the ultimate users, the use of 
the merchandise, the channels of marketing and the cost of any 
modification relative to the total value of the imported products. 
S. Rep. No.71, 100th Cong., 1st Sess. 100 (1987).

    KES presented evidence with respect to each of the criteria listed 
in the Senate report, and the Department has examined the information 
on the record regarding each of these criteria. Our findings are 
discussed below.

Overall Physical Characteristics

    The cut-to-length plate product at issue in this inquiry is a high 
carbon steel (minimum 0.55 percent by weight) with small amounts of 
boron added. The petitioner claims that while boron is traditionally 
added to steel to improve ``hardenability,'' when the level of carbon 
is already at 0.60 percent by weight or above, the added boron's effect 
on the final product is negligible. For this reason, petitioner claims 
that it is the steelmaking industry's practice not to add boron to 
high-carbon grades.
Co-Steel Lasco
    According to CSL, the only metallurgical difference between boron-
added steel and carbon steel is the amount of boron added. All other 
specifications remain the same, within a given ASTM grade. CSL contends 
that its rationale for adding boron is not to increase hardness, but to 
improve the grain size, and therefore, the ``toughness'' of the steel. 
``Toughness'' refers to the steel's ability to withstand shearing, 
breaking and cracking on impact. At verification, CSL officials stated 
that members of the steelmaking industry were ``skeptical'' regarding 
whether boron added to high carbon steel improves toughness. CSL 
officials also stated that to the best of their knowledge, no other 
producer uses boron as a grain refiner in high carbon steel. See 
Verification Report at 14. CSL stated that it did not represent to its 
customers that the boron-added steel was an improvement over the carbon 
steel, because it could not quantify the improvement. However, CSL was 
aware that there were tests that could indicate if the boron was 
improving toughness. One of these tests is a test for grain size. The 
smaller the grain size of the steel, the tougher it is. We believe that 
record evidence indicates that CSL did not assign a high priority to 
confirming the alleged improvement to the boron-added steel. See 
Decision Memorandum.
Gerdau MRM Steel
    Respondent MRM contends that the addition of boron facilitates the 
formation of martensite, which, if the steel is subsequently heat 
treated and quick-quenched (a process of raising the temperature of the 
metal to a ``critical'' level and cooling it rapidly), imparts greater 
hardenability to the steel, particularly ``through hardness.'' MRM has 
stated that ``it is of the opinion that all customers who purchase 
alloy grade steel do include heat treatment and/or flame hardening as 
part of their production process.'' See MRM submission, dated October 
6, 1998. However, both CSL and petitioner have stated that grader blade 
and draft key customers do not heat treat steel. Moreover, MRM's 
discussion of martensite only appears to apply to low carbon steel, not 
to the high carbon grade blade and draft key steels which are the 
subjects of this inquiry. See Decision Memo at 8.
    In addition, respondents have often referred to the boron-added 
grader blade steel as an ``alloy steel'' and have discussed general 
differences between ``alloy steel'' and carbon steel. However, we 
believe that this reference is misleading. Although the carbon steel to 
which a small amount of boron has been added is technically an ``other 
alloy'' steel for the purposes of the HTSUS classification, a true 
alloy steel as recognized by the industry is markedly different from 
the product at issue. The ITC Staff Report describes a true alloy steel 
as a significantly higher priced product with distinct characteristics 
and uses, containing much higher levels of alloys. Staff Report, 
Certain Flat-Rolled Carbon Steel Products from Various Countries, USITC 
Pub. 2664, Vol. 2 (August 1993), at I-37. The ``alloy'' steel produced 
by respondents has, with the exception of its boron content, exactly 
the same physical and metallurgical properties of its carbon steel 
counterpart.
    Based on the record evidence, the Department finds that there is no 
substantial difference in the physical characteristics between boron-
added and carbon steel--indeed the differences are ``minor''. Both 
kinds of steel are produced to the same specifications with the 
exception of boron content. Although respondents claim that differences 
exist in terms of toughness and through hardening, neither respondent 
has made any effort to confirm and quantify any improvement that would 
indicate a difference in physical characteristics. The record evidence 
indicates that respondents are not primarily concerned with the steel's 
purported improvement.

Expectations of the Ultimate Users

    The petitioner maintains that carbon steel users purchase high 
carbon steel with the expectation that the product be especially hard 
and durable, and that these characteristics are imparted by the 
presence of sufficient levels of carbon. Petitioner states that 
consumers of this product are fully aware that carbon steel of the sort 
at issue does not rely on or benefit from the presence of boron, and 
thus ``do not expect, seek, or desire'' its presence.
    Typical uses for grader blade steel are blades for snowplows and 
bulldozers. Draft key steel is used to make locking devices for 
railroad car couplings. Because of their application, customers require 
and expect that the steel they buy will be hard. The primary 
characteristic of high carbon steel is its hardness, due to the level 
of carbon. Although CSL and MRM claim to have improved the steel, no 
evidence has been presented to significantly distinguish boron-added 
steel from the in-scope high carbon steel in terms of use or 
performance. CSL reports that there is no application that restricts 
customers to using boron-added steel versus a carbon steel. MRM 
presented no evidence for the record that customers could use the 
boron-added steel in applications where they could not use the carbon 
steel.
Co-Steel Lasco
    Respondent CSL reports that the decision to use boron was not the 
result of customer dissatisfaction, specific requests, or problems with 
the process of production. CSL reported at verification that customers 
did not request boron, and have to date made no comment regarding its 
addition, or any purported improvement. In addition,

[[Page 64930]]

CSL did not indicate to its customers that the boron-added product was 
significantly better than the carbon product, nor did the company 
charge more for the product. CSL reported that it only told its 
customers that boron was being added to the steel as a grain refiner, 
and that its addition ``wouldn't hurt the steel.'' Record evidence 
offers other indications that CSL has sold both boron-added and carbon 
grader blade steel to its customers, and that none of CSL's customers 
made any distinction between the two products. For a further discussion 
of this issue, see Decision Memo.
Gerdau MRM Steel
    MRM has not presented any corroborated evidence that the ultimate 
users of its products have any expectations with regard to any 
improvement in the increased surface and through hardness of the boron-
added grader blade and draft key steel vis-a-vis an ordinary carbon 
grader blade and draft key steel. For a further discussion of this 
issue, see Decision Memo.

Use of the Merchandise

    The petitioner maintains that, with or without boron, high carbon 
grader blade and draft key steel have the same uses: making blades on 
grading equipment and locking devices on railroad couplings. The 
petitioner states that knowledgeable purchasers would be aware that 
there are no uses of high carbon steel containing small amounts of 
boron that cannot fully be met without boron, and that the addition of 
boron neither responds to a new need in the market, nor improves the 
way existing technical needs are met.
    CSL reports that there is no difference in the use of the boron-
added product versus the carbon product, both in its responses and at 
verification. As noted above in ``Expectations of End-Users,'' CSL has 
sold both boron-added and carbon steel to the same customer, and has 
not received any comments concerning any differences in application or 
performance.
    MRM claims that it ``cannot state with certainty what their 
customers ``intended use'' was or is with alloy steel or carbon 
steel.'' See MRM response, October 6, 1998, at 15. However, the sales-
related documentation MRM submitted in its responses indicate that MRM 
did have knowledge of its customers' use of the merchandise. Every 
sample sale presented by MRM in its October 6 and December 7, 1998 
responses include descriptions of products that are either clearly 
grader blade products, or clearly not grader blade products. This 
evidence, coupled with the sales and marketing process of direct 
contact with customers, indicates that MRM is fully aware of customers' 
use of the merchandise. MRM has not presented any evidence that 
indicates that boron-added steel is used in a manner different from 
that of ordinary carbon steel. For a further discussion of this issue, 
see Decision Memo.

Channels of Marketing

    The petitioner states that steel producers, with few exceptions, 
sell directly to manufacturers of grader blades and draft keys through 
company sales forces. Petitioner claims that, because carbon grader 
blade and draft key steels are used for precisely the same products as 
are the boron-added versions of the products, boron-added steel is sold 
in precisely the same sales channels as carbon steel.
    The grader blade and draft key steel market has been reported to be 
mature, with few customers and a limited number of suppliers. Record 
evidence indicates that CSL and MRM have sold their products to the 
same U.S. customers before and after the investigation in 1993. Both 
CSL and MRM have stated that their products are marketed by direct 
contact with the customer, and have made no distinction between the 
sales and marketing process for either the boron-added or carbon steel.

Cost of Modification

    Petitioner alleges that, by adding boron to high carbon steels, 
Canadian producers have been able to avoid dumping duties ranging from 
1.47 percent to 68.7 percent, and that the cost of avoiding these 
duties, relative to the total value of the product itself, is 
negligible. Based on records examined at verification of CSL, the 
additional cost of making a boron-added steel is wholly insignificant. 
For a further discussion of this issue, see Decision Memo.
    MRM claims that ``it has no basis for a comparison between carbon 
steel and high-carbon/boron alloy steel.'' See MRM response, dated 
December 7, 1998, at 4. MRM's only reference to a price difference 
between carbon steel and ``high-carbon/boron alloy steel'' is a 
comparison of all carbon steels (not just grader blade and draft key 
steels) in unadjusted dollars over a four year period. Id. However, MRM 
has not made any claim regarding additional cost in the cost of 
producing a boron-added steel vis-a-vis a carbon steel without boron. 
If the only additional cost is the cost of the boron, it may be assumed 
that CSL's boron costs and MRM's costs are similar, and therefore, the 
price differential would also be similar.

Additional Factors

    In addition to the criteria above, we note that the Department has 
in a prior anticircumvention proceeding considered other factors as 
relevant to the circumvention allegation. These factors are: (i) the 
circumstances under which the subject products entered the United 
States, (ii) the timing of these entries during the circumvention 
review period, and (iii) the total quantity of the merchandise entered 
during this period. See Brass Sheet and Strip from Germany; Negative 
Preliminary Determination of Circumvention of Antidumping Duty Order, 
55 FR 32655 (August 10, 1990).
1. Circumstances Under Which the Products Enter the United States
    The Department is not required to determine intent during a 
circumvention inquiry. Nevertheless, the facts surrounding CSL's 
production and importation of boron-added steel tend to indicate a 
deliberate attempt to modify carbon steel so as to avoid the effects of 
the antidumping duty order.
    Record evidence indicates that CSL clearly distinguishes its boron-
added grader blade and carbon grader blade. CSL's own metallurgical 
specification records indicate a deliberate effort to avoid antidumping 
duties on products shipped to the United States. Boron-added grader 
blade steel is almost exclusively, and seemingly by design, produced 
for U.S. customers, while grader blade steel without boron represents 
the vast majority of products sold to Canadian customers. If the 
addition of boron served any purpose other than circumvention, we would 
expect to see boron added to steel regardless of whether the customer 
was located in the United States or Canada. For a further discussion of 
this issue, see Decision Memo.
2. The Timing of the Entries During the Circumvention Review Period
    Generally speaking, a preliminary affirmative determination by the 
Department in an antidumping investigation is seen by foreign 
manufacturers/exporters as the first reliable indication that 
antidumping duties will most likely be imposed. This is because it is 
the first formal determination by the Department, and the first time 
the Department directs the Customs Service to suspend liquidation and 
collect a cash deposit of estimated dumping duties. In the antidumping 
investigation of cut-to-length carbon

[[Page 64931]]

steel plate from Canada, a preliminary affirmative determination was 
published on February 4, 1993. See Notice of Preliminary Determinations 
of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat 
Products, Certain Cold-Rolled Carbon Steel Flat Products, Certain 
Corrosion-Resistant Carbon Steel Flat Products, and Certain Cut-to-
Length Carbon Steel Plate from Canada, 58 FR 7085 (February 4, 1998).
    CSL's records indicate that boron-added steel, technically out of 
the scope of the order, was first produced shortly after the 
publication of the preliminary affirmative determination. This suggests 
that the addition of boron may have been in response to the preliminary 
determination.
    Each ``batch'' of steel, called a heat, has a specific chemistry, 
namely, the content levels of certain elements and alloys in the heat. 
On one occasion, CSL appears to have modified a heat to contain boron 
levels above the HTSUS threshold. This could indicate a deliberate 
attempt to exceed the 0.0008 percent threshold. For a further 
discussion of this issue, see Decision Memo.
    The facts surrounding MRM's production and importation of boron-
added steel also indicates circumvention. According to MRM's July 17, 
1998 response, boron-added grader blade and draft key steels were not 
sold to either Canadian or U.S. customers prior to 1993, but were sold 
exclusively to U.S. customers after 1993, the year of the 
investigation. In contrast, with the exception of a negligible amount, 
all of MRM's sales to its Canadian customers, before and after 1993, 
involved grades that did not include boron. For a further discussion of 
this issue, see Decision Memo.
3. The Quantity of Merchandise Entered During the Circumvention Review 
Period
    Record evidence indicates that, after the investigation in 1993, 
both CSL and MRM shifted all of their production for U.S. customers to 
boron-added steel. Sales data submitted by both respondents indicate 
that all grader blade and draft key steel sold in the United States has 
boron added, while steel sold in Canada is, for the most part, produced 
without boron. Neither respondent has presented any evidence that 
explains why only U.S. customers are sold the allegedly ``improved'' 
boron-added steel.

Preliminary Ruling

    As a result of our inquiry, we preliminarily determine that exports 
of boron-added grader blade and draft key steel from Canada are 
circumventing the antidumping order on certain cut-to-length carbon 
steel plate from Canada. While carbon steel plate products containing 
over 0.0008 percent boron by weight are, by definition, technically 
outside the literal scope of the antidumping duty order, we have 
preliminarily determined that, pursuant to ``minor alterations'' 
provision of the statue, it is appropriate to include the putatively 
out-of-scope boron-added steel, which is the subject of this inquiry, 
in the class or kind of merchandise subject to the order on cut-to-
length carbon steel plate. See Section 781(c) of the Act.
    Boron-added steel is made by slightly altering carbon steel during 
its production process. With the exception of the presence of boron, 
boron-added steel has the same physical characteristics as carbon 
steel. There are no differences in the expectations of the ultimate 
users, uses of the merchandise, and channels of marketing between 
boron-added steel and the subject merchandise. Furthermore, the cost of 
adding boron in the course of production is negligible. Since the 
original investigation, respondents have shifted their entire 
production for U.S. customers away from in-scope carbon steel to out-
of-scope carbon steel to out-of-scope boron-added steel. No similar 
shift has occurred in the home market, where the majority, if not all, 
of both respondents' production is devoted to carbon grader blade and 
draft key steel without boron. The timing of this shift further 
indicates circumvention of the order by making a minor alteration. 
Taken as a whole, this evidence leads to our determination that boron-
added grader blade and draft key steel is being produced in 
circumvention of the antidumping law, undermining its intent, and 
eviscerating its effectiveness.
    After a thorough analysis of the physical characteristics of the 
merchandise subject to this inquiry, the expectations of the ultimate 
users, the ultimate use of the merchandise, the cost of modification, 
and the additional factors listed above, we have determined that 
Canadian manufacturers/exporters of grader blade and draft key steel 
have made minor alterations in their in-scope merchandise within the 
meaning of section 781(c) of the Act, resulting in circumvention of the 
antidumping order covering certain cut-to-length carbon steel plate 
from Canada. This preliminary determination extends only to those 
products manufactured by Co-Steel Lasco and Gerdau MRM Steel.

Suspension of Liquidation

    In accordance with section 351.225(1) of the Department's 
regulations, we are directing the U.S. Customs Service to suspend 
liquidation of all imports of high carbon (minimum 0.55 percent by 
weight) cut-to-length carbon steel plate with boron (minimum 0.0008 
percent by weight), falling within the physical parameters outlined in 
the scope of this order, manufactured or exported by Co-Steel Lasco or 
Gerdau MRM Steel that are entered, or withdrawn from warehouse, for 
consumption on or after the date of publication of this notice in the 
Federal Register. We will also instruct the U.S. Customs Service to 
require a cash deposit of estimated duties for each unliquidated entry 
of the product entered, or withdrawn from warehouse, on or after the 
date of initiation of this inquiry, in accordance with section 
351.225(1)(2) of our regulations. We will instruct the U.S. Customs 
Service to require a cash deposit at the applicable rates for MRM and 
CSL listed below. These suspension-of-liquidation instructions will 
remain in effect until further notice.

------------------------------------------------------------------------
                                                              Weighted-
                                                               average
                   Exporter/manufacturer                        margin
                                                              percentage
------------------------------------------------------------------------
Co-Steel Lasco.............................................        61.88
Gerdau MRM Steel...........................................          0.0
------------------------------------------------------------------------

    As a result of this preliminary determination, the merchandise 
subject to the scope of this order includes merchandise entered under 
the following additional HTSUS number: 7211.14.0030.

Public Comment

    Case briefs or other written comments in at least ten copies must 
be submitted to the Assistant Secretary for Import Administration no 
later than 30 days after the publication of the preliminary 
determination, and rebuttal briefs, limited to issues raised in case 
briefs, no later than 35 days after the publication of the preliminary 
determination. A list of authorities used and an executive summary of 
issues should accompany any briefs submitted to the Department. Such 
summary should be limited to five pages total, including footnotes. We 
will hold a public hearing, if requested, to afford interested parties 
an opportunity to comment on arguments raised in case or rebuttal 
briefs. Tentatively, the hearing will be held 37 days after the 
publication of the preliminary determination, time and room to be 
determined, at the U.S. Department of Commerce, 14th Street and 
Constitution

[[Page 64932]]

Avenue, N.W., Washington, D.C. 20230. Parties should confirm by 
telephone the time, date, and place of the hearing 48 hours before the 
scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request to the Assistant 
Secretary for Import Administration, U.S. Department of Commerce, Room 
1870, within 30 days of the publication of this notice. Requests should 
contain: (1) The party's name, address, and telephone number; (2) the 
number of participants; and (3) a list of the issues to be discussed. 
Oral presentations will be limited to issues raised in the briefs. If 
this investigation proceeds normally, we will make our final 
determination no later than January 10, 2001.
    This determination is issued and published in accordance with 
section 777(i)(1) of the Act.

    Dated: October 23, 2000.
Troy H. Cribb,
Acting Assistant Secretary for Import Administration.
[FR Doc. 00-27949 Filed 10-30-00; 8:45 am]
BILLING CODE 3510-DS-P