Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16555

DEPARTMENT OF COMMERCE

International Trade Administration

[C–412–811]

Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products From the

United Kingdom; Preliminary Results

of Countervailing Duty Administrative

Review

AGENCY: Import Administration,

International Trade Administration,

Department of Commerce.

ACTION: Notice of preliminary results of

countervailing duty administrative

review.

SUMMARY: The Department of Commerce

(the Department) is conducting an

administrative review of the

countervailing duty order on certain

hot-rolled lead and bismuth carbon steel

products from the United Kingdom. The

period covered by this administrative

review is January 1, 1995, through

December 31, 1995. For information on

the net subsidy for each reviewed

company, as well for all non-reviewed

companies, please see the ‘‘Preliminary

Results of Review’’ section of this

notice. If the final results remain the

same as these preliminary results of

administrative review, we will instruct

the U.S. Customs Service to assess

countervailing duties as indicated in the

‘‘Preliminary Results of Review’’ section

of this notice. Interested parties are

invited to comment on these

preliminary results.

EFFECTIVE DATE: April 7, 1997.

FOR FURTHER INFORMATION CONTACT:

Christopher Cassel or Dana

Mermelstein, Office of CVD/AD

Enforcement VI, Import Administration,

International Trade Administration,

U.S. Department of Commerce, 14th

Street and Constitution Avenue, N.W.,

Washington, D.C. 20230; telephone:

(202) 482–2786.

SUPPLEMENTARY INFORMATION:

Background

On March 22, 1993, the Department

published in the Federal Register (58

FR 15327) the countervailing duty order

on certain hot-rolled lead and bismuth

carbon steel products from the United

Kingdom. On March 4, 1996, the

Department published a notice of

‘‘Opportunity to Request an

Administrative Review’’ (61 FR 8238) of

this countervailing duty order. We

received timely requests for review from

Inland Steel Bar Co. and United States/

Kobe Steel Co., interested parties to this

proceeding. We initiated the review,

covering the period January 1, 1995,

through December 31, 1995, on April

25, 1996 (61 FR 18378).

In accordance with 19 CFR

§ 355.22(a), this review covers only

those producers or exporters for which

a review was specifically requested.

Accordingly, this review covers British

Steel Engineering Steel Limited

(formerly United Engineering Steels

Limited), and British Steel plc. On

November 29, 1996, we extended the

period for completion of the preliminary

results pursuant to section 751(a)(3) of

the Tariff Act of 1930, as amended.

Extension of the Time Limit for Certain

Countervailing Duty Administrative

Review, 61 FR 60684 (November 29,

1996). Therefore, the deadline for these

preliminary results is no later than

March 31, 1997, and the deadline for the

final results of this review is no later

than 120 days from the date on which

these preliminary results are published

in the Federal Register.

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 (URAA) effective

January 1, 1995 (the Act). The

Department is conducting this

administrative review in accordance

with section 751(a) of the Act.

Scope of the Review

Imports covered by this review are

hot-rolled bars and rods of non-alloy or

other alloy steel, whether or not

descaled, containing by weight 0.03

percent or more of lead or 0.05 percent

or more of bismuth, in coils or cut

lengths, and in numerous shapes and

sizes. Excluded from the scope of this

review are other alloy steels (as defined

by the Harmonized Tariff Schedule of

the United States (HTSUS) Chapter 72,

note 1 (f)), except steels classified as

other alloy steels by reason of

containing by weight 0.4 percent or

more of lead or 0.1 percent or more of

bismuth, tellarium, or selenium. Also

excluded are semi-finished steels and

flat-rolled products. Most of the

products covered in this review are

provided for under subheadings

7213.20.00.00 and 7214.30.00.00 of the

HTSUS. Small quantities of these

products may also enter the United

States under the following HTSUS

subheadings: 7213.31.30.00, 60.00;

7213.39.00.30, 00.60, 00.90;

7214.40.00.10, 00.30, 00.50;

7214.50.00.10, 00.30, 00.50;

7214.60.00.10, 00.30, 00.50; and

7228.30.80. Although the HTSUS

subheadings are provided for

convenience and for Customs purposes,

our written description of the scope of

this proceeding is dispositive.

Verification

As provided in section 782(i) of the

Act, we verified information submitted

by the Government of the United

Kingdom, British Steel plc., and British

Steel Engineering Steels. We followed

standard verification procedures,

including meeting with government and

company officials and examining

relevant accounting and financial

records and other original source

documents. Our verification results are

outlined in the public versions of the

verification reports, which are on file in

the Central Records Unit (Room B–099

of the Main Commerce Building).

Facts Available

Section 776(a)(2) of the Act, requires

the Department to use facts available if

‘‘an interested party or any other person

* * * withholds information that has

been requested by the administering

authority * * * under this title.’’ The

facts on the record show that British

Steel plc received assistance during the

period of review (POR) under the

European Union BRITE/EuRAM

program. The facts also show that this

assistance was unreported in the

questionnaire response,

notwithstanding a specific question on

this program in the Department’s

questionnaire. See the March 31, 1997,

Memorandum for Acting Assistant

Secretary Re: Facts Available for New

Subsidies Discovered at Verification,

public document, on file in the Central

Records Unit, Room B–099 of the

Department of Commerce).

Section 776(b) of the Act permits the

administering authority to use an

inference that is adverse to the interests

of an interested party if that party has

‘‘failed to cooperate by not acting to the

best of its ability to comply with a

request for information.’’ Such adverse

inference may include reliance on

information derived from: (1) The

petition, (2) a final determination in the

investigation under this title, (3) any

previous review under section 751 or

determination under section 753

regarding the country under

consideration, or (4) any other

information placed on the record.

Because respondents were aware of the

requested information but did not

comply with the Department’s request

for such information, we find that

respondents failed to cooperate by not

acting to the best of their ability to

comply with the Department’s request.

Therefore, we are using adverse

inferences in accordance with section

776(b) of the Act. The adverse inference
16556 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

is a finding that the BRITE/EuRAM

program is specific under section

771(5A) of the Act, and that the grants

constitute a financial contribution

which benefits the recipient. As such,

these grants are countervailable. This

finding conforms with the Department’s

facts available determination in the

Final Affirmative Countervailing Duty

Determination; Certain Pasta From

Turkey, 61 FR 30366, 30367 (June 14,

1996).

Change in Ownership

(I) Background

On March 21, 1995, British Steel plc

(BS plc) acquired all of Guest, Keen &

Nettlefolds’ (GKN) shares in United

Engineering Steels (UES), the company

which produced and exported the

subject merchandise to the United

States during the original investigation.

Thus, during the POR, UES became a

wholly-owned subsidiary of BS plc and

was renamed British Steel Engineering

Steels (BSES). For ease of reference, we

will continue to refer to the company as

UES in this notice.

Prior to this change in ownership,

UES was a joint venture company

formed in 1986 by British Steel

Corporation (BSC), a government-owned

company, and GKN. In return for shares

in UES, BSC contributed a major portion

of its Special Steels Business, the

productive unit which produced the

subject merchandise. GKN contributed

its Brymbo Steel Works and its forging

business to the joint venture. BSC was

privatized in 1988 and now bears the

name BS plc.

In the investigation of this case, the

Department found that BSC had

received a number of subsidies prior to

the 1986 transfer of its Special Steels

Business to UES. See Final Affirmative

Countervailing Duty Determination:

Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products From the United

Kingdom, 58 FR 6237, 6243 (January 27,

1993) (Lead Bar). Further, the

Department determined that the sale to

UES did not alter the effect of these

previously bestowed subsidies, and thus

the portion of BSC’s pre-1986 subsidies

attributable to its Special Steels

Business transferred to UES. Lead Bar at

6240.

In the 1993 certain steel products

investigations, the Department modified

the Lead Bar allocation methodology.

Specifically, the Department stated that

it could no longer be assumed that the

entire amount of subsidies allocated to

a productive unit follows it when it is

sold. Rather, when a productive unit is

spun-off or acquired, a portion of the

sales price of the productive unit

represents the reallocation of prior

subsidies. See the General Issues

Appendix (GIA), appended to the Final

Countervailing Duty Determination;

Certain Steel Products From Austria, 58

FR 37217, 37269 (July 9, 1993) (Certain

Steel). In a subsequent Remand

Determination, the Department aligned

Lead Bar with the methodology set forth

in the ‘‘Privatization’’ and

‘‘Restructuring’’ sections of the GIA.

Certain Hot-Rolled Lead and Bismuth

Carbon Steel Products from the United

Kingdom: Remand Determination

(October 12, 1993) (Remand).

(II) Analysis of BS plc’s Acquisition of

UES

On March 21, 1995, BS plc acquired

100 percent of UES. In determining how

this change in ownership affects our

attribution of subsidies to the subject

merchandise, we relied on Section

771(5)(F) of the Act, which states that a

change in ownership does not require a

determination that past subsidies

received by an enterprise are no longer

countervailable, even if the transaction

is accomplished at arm’s length. The

Statement of Administrative Action,

H.R. Doc. No. 316, 103d Cong., 2d Sess.

(1994) (SAA), explains that the aim of

this provision is to prevent the extreme

interpretation that the arm’s length sale

of a firm automatically, and in all cases,

extinguishes any prior subsidies

conferred. While the SAA indicates that

the Department retains the discretion to

determine whether and to what extent a

change in ownership eliminates past

subsidies, it also indicates that this

discretion must be exercised carefully

by considering the facts of each case.

SAA at 928.

In accordance with the SAA, we have

examined the facts of BS plc’s

acquisition of UES, and we

preliminarily determine that the change

in ownership does not render

previously bestowed subsidies

attributable to UES no longer

countervailable. However, we also

preliminarily determine that a portion

of the purchase price paid for UES is

attributable to its prior subsidies.

Therefore, we have reduced the amount

of the subsidies that ‘‘travel’’ with UES

to BS plc, taking into account the

allocation of subsidies to GKN, the

former joint-owner of UES. See the

March 31, 1997, Memorandum For

Acting Assistant Secretary Re: BS plc’s

March 1995 Acquisition of UES (public

document, on file in the Central Records

Unit, Room B–099 of the Department of

Commerce) (Acquisition Memo). To

calculate the amount of UES’ subsidies

that passed through to BS plc as a result

of the acquisition, we applied the

methodology described in the

‘‘Restructuring’’ section of the GIA. See

GIA, 58 FR at 37268–37269. This

determination is in accordance with our

changes in ownership finding in Final

Affirmative Countervailing Duty

Determination; Pasta From Italy, 61 FR

30288, 30289–30290 (June 14, 1996),

and our finding in the 1994

administrative review of this case, in

which we determined that ‘‘[t]he URAA

is not inconsistent with and does not

overturn the Department’s General

Issues Appendix methodology or its

findings in the Lead Bar Remand

Determination.’’ Certain Hot-Rolled

Lead and Bismuth Carbon Steel

Products From the United Kingdom;

Final Results of Countervailing Duty

Administrative Review, 61 FR 58377,

58379 (November 14, 1996).

With the acquisition of UES, we also

need to determine whether BS plc’s

remaining subsidies are attributable to

the subject merchandise. Where the

Department finds that a company has

received untied countervailable

subsidies, to determine the

countervailing duty rate, the

Department allocates those subsidies to

that company’s total sales of

domestically produced merchandise,

including the sales of 100-percentowned domestic subsidiaries. If the

subject merchandise is produced by a

subsidiary company, and the only

subsidies in question are the untied

subsidies received by the parent

company, the countervailing duty rate

calculation for the subject merchandise

is the same as described above.

Similarly, if such a company purchases

another company, as was the case with

BS plc’s purchase of UES, then the

current benefit from the parent

company’s allocable untied subsidies is

attributed to total sales, including the

sales of the newly acquired company.

See, e.g., GIA, 58 FR at 3762 (‘‘the

Department often treats the parent entity

and its subsidiaries as one when

determining who ultimately benefits

from a subsidy’); Final Affirmative

Countervailing Duty Determinations:

Certain Steel Products from Germany,

58 FR 37315 (July 9, 1993). Accordingly,

we preliminarily determine that it is

appropriate to collapse BSES with BS

plc for purposes of calculating the

countervailing duty for the subject

merchandise. BSES, as a 100 percentowned subsidiary of BS plc, now also

benefits from the remaining benefit

stream of BS plc’s untied subsidies.

In collapsing UES with BS plc, we

also preliminarily determine that UES’

untied subsidies ‘‘rejoin’’ BS plc’s pool

of subsidies with the company’s 1995

acquisition. All of these subsidies were
Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16557

untied subsidies originally bestowed

upon BSC (BS plc). After the formation

of UES in 1986, the subsidies that

‘‘traveled’’ with the Special Steels

Business to their new home were also

untied, and were found to benefit the

company as a whole. See the

Acquisition Memo.

(III) Calculation of Benefit

To calculate the countervailing duty

rate for the subject merchandise in 1995,

we first determined BS plc’s benefits in

1995, taking into account all spin-offs of

productive units (including the Special

Steel Business) and BSC’s full

privatization in 1988. See Final

Affirmative Countervailing Duty

Determination; Certain Steel Products

from the United Kingdom, 58 FR 37393

(July 9, 1993) (UK Certain Steel). We

then calculated the amount of UES’s

subsidies that ‘‘rejoined’’ BS plc after

the 1995 acquisition, taking into

account the reallocation of subsidies to

GKN. As indicated above, in

determining both these amounts, we

followed the methodology outlined in

the GIA. After adding BS plc’s and UES’

benefits for each program, we then

divided that amount by BS plc’s total

sales of domestically produced

merchandise in 1995.

In this administrative review, we

preliminarily find it appropriate to

make two changes to the calculation

methodology. These changes involve (1)

The calculation of the net present value

in administrative reviews and (2) the

period of allocation for non-recurring

subsidies.

(1) The Net Present Value Calculation in

Administrative Reviews

To calculate the benefit to UES in the

original investigation, we determined

the subsidies that were allocated from

BSC to UES by following the GIA

methodology described above. To do

this, we first divided the asset value of

BSC’s Special Steels Business by the

value of BSC’s total assets. This ratio

represents the portion of BSC’s

subsidies that were attributable to its

Special Steels Business. The

Department then applied this ratio to

the net present value, in the year of the

spin-off, of the future benefit streams

from all of BSC’s prior subsidies. The

future benefit stream took into account

prior spin-offs of BSC productive units.

That amount represented the subsidies

allocated to the Special Steels Business.

The Department next estimated the

portion of the purchase price that could

be attributed to prior subsidies by

determining the portion of BSC’s net

worth that was accounted for by

subsidies at the time of the spin-off.

This was calculated by dividing the face

value of the allocable subsidies received

by BSC in each year from fiscal year

1977/78 through fiscal year 1984/85 (the

year prior to the spin-off) by BSC’s net

worth in the same year. The simple

average of these ratios was then

multiplied by the purchase price of the

productive unit to determine the portion

of the purchase price that can be

attributed to prior subsidies. This

amount was then subtracted from the

amount of subsidies attributed to BSC’s

Special Steels Business at the time of

the sale. The result is the amount of

subsidies allocated to UES in 1986. We

then divided the subsidies allocated to

UES by the net present value in 1986 of

the future benefit streams from all nonrecurring subsidies received by BSC

prior to the spin-off. The resulting

percentage represented the portion of

BSC’s future benefit streams

apportioned to UES. This percentage

was then multiplied by the benefit

amount from BSC’s previously bestowed

subsidies. The result represented the

total amount of countervailable

subsidies to UES for that period.

In each of the two prior

administrative reviews of this case, and

in each administrative review of other

cases involving changes in ownership,

we recalculated the amount of subsidies

that were extinguished due to

privatization, or which ‘‘pass-through’’

as a result of a change in ownership.

Specifically, we revisited the original

privatization or change in ownership

calculation, and excluded from the

future benefit streams subsidies whose

benefit had expired in the year prior to

the POR. We then recalculated the net

present value of the remaining subsidies

in the year of the transaction. This

recalculation results in a change in the

amount of subsidies that pass-through

or that may be extinguished as a result

of a change in ownership. The rationale

underlying that approach was that in

the calculation for a specific POR, the

net present value of the future stream of

benefits should include only the

subsidies benefitting the company

during the POR.

We have revisited that methodology

in this administrative review and

preliminarily determine that it is not

appropriate to modify the calculation in

the manner described above. The

change in ownership of a company is a

fixed event at a particular point in time.

Thus, the percentage of subsidies that

‘‘travel’’ with a company or that may be

extinguished due to privatization in a

given year is also fixed at that same

point in time and does not change. See

the March 31, 1997, Memorandum for

Acting Assistant Secretary Re:

Privatization/Change in Ownership

Calculation Methodology (public

document on file in the Central Records

Unit, Room B–099 of the Department of

Commerce). Therefore, the pass-through

percentage will no longer be altered

once it has initially been determined in

an investigation or administrative

review. We have modified the UES spinoff calculations in this administrative

review to reflect the change outlined

above.

(2) Allocation Methodology

In the past, the Department has relied

upon information from the U.S. Internal

Revenue Service (IRS) on the industryspecific average useful life (AUL) of

assets in determining the allocation

period for non-recurring subsidies. GIA,

58 FR at 37226. However, in British

Steel plc. v. United States, 879 F. Supp.

1254 (CIT 1995) (British Steel I), 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 based on the AUL of

non-renewable physical assets for BS

plc. This allocation period was 18 years.

This remand determination was

affirmed by the Court on June 4, 1996.

British Steel plc v. United States, 929 F.

Supp. 426, 439 (CIT 1996) (British Steel

II).

The Department has acquiesced to the

Court’s decision and, as such, we have

been determining the allocation period

for non-recurring subsidies using

company-specific AUL data where

reasonable and practicable. In other

cases, the Department has stated that it

is reasonable and practicable to allocate

all new non-recurring subsidies (i.e.,

subsidies that have not yet been

assigned an allocation period) based on

a company-specific AUL. However, we

have further determined that if a

subsidy has already been countervailed

based on an allocation period

established in an earlier segment of the

proceeding, it does not appear

reasonable or practicable to reallocate

that subsidy over a different period of

time. In other words, since the

countervailing duty rate in earlier

segments of the proceeding was

calculated based on a certain allocation

period and resulting benefit stream,

redefining the allocation period in later

segments of the proceeding would entail

taking the original grant amount and

creating an entirely new benefit stream

for that grant. Such a practice may lead

to an increase or decrease in the amount

countervailed and, thus, would result in

the possibility of over-countervailing or

under-countervailing the actual benefit.
16558 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

As such, the Department found that a

more reasonable and accurate approach

was, normally, to continue using the

allocation period first assigned to the

subsidy. See, e.g., Certain Carbon Steel

Products from Sweden; Preliminary

Results of Countervailing Duty

Administrative Review, 61 FR 64062

(December 3, 1996) (Swedish Steel).

However, notwithstanding the general

approach outlined above, due to the

unique circumstances of this case, we

preliminarily determine that it is

appropriate to change the allocation

period for the previously bestowed

subsidies attributed to UES, even

though all of these subsidies were

bestowed prior to the POR and had

established allocation periods. The

Department’s acquiescence to the CIT’s

decision in the Certain Steel cases has

resulted in different allocation periods

between the UK Certain Steel and Lead

Bar proceedings (18 years vs. 15 years).

Different allocation periods for the same

subsidies in two different proceedings

involving the same company generate

significant inconsistencies. For instance,

the portion of BSC’s subsidies attributed

to UES in UK Certain Steel is different

from the portion calculated in the Lead

Bar proceeding. Furthermore, with BS

plc’s reacquisition of UES in 1995, UES

became a wholly-owned subsidiary of

BS plc. Because we have now collapsed

the two companies, UES’ subsidies now

‘‘rejoin’’ BS plc’s subsidies (see the

Acquisition Memo). To maintain a

consistent allocation period across the

Lead Bar and UK Certain Steel

proceedings, as well as in the different

segments of Lead Bar, we preliminarily

determine that it is appropriate to apply

the company-specific 18-year allocation

period to all non-recurring subsidies in

this review. See the March 31, 1997,

Memorandum For Acting Assistant

Secretary Re: Allocation Period for

Nonrecurring Subsidies (in the Central

Records Unit of the Department of

Commerce, Room B–099 of the Main

Commerce Building) (Allocation Memo).

Analysis of Programs

I. Programs Conferring Subsidies

In determining the subsidies

previously bestowed to BSC/BS plc that

were allocated to UES, we examined the

following programs: equity infusions,

Regional Development Grants, a

National Loan Fund loan cancellation,

and loans and interest rebates under

ECSC Article 54.

(A) Equity Infusions

In every year from 1978/79 through

1985/86, BSC/BS plc received equity

capital from the Secretary of State for

Trade and Industry pursuant to section

18(1) of the Iron and Steel Acts 1975,

1981, and 1982. According to section

18(1), the Secretary of State for the

Department of Trade and Industry may

‘‘pay to the Corporation (BSC) such

funds as he sees fit.’’ The Government

of the United Kingdom’s equity

investments in BSC/BS plc were made

pursuant to an agreed external financing

limit which was based upon mediumterm financial projections. BSC’s

performance was monitored by the

Government of the United Kingdom on

an ongoing basis and requests for capital

were examined on a case-by-case basis.

The UK government did not receive any

additional ownership, such as stock or

additional rights, in return for the

capital provided to BSC/BS plc under

section 18(1) since it already owned 100

percent of the company.

In Lead Bar (58 FR at 6241), the

Department found BSC/BS plc to be

unequityworthy from 78/79 through

1985/86, and thus determined that the

Government of the United Kingdom’s

equity infusions were inconsistent with

commercial considerations. Although,

prior to the formation of UES, BSC’s

section 18(1) equity capital was written

off in two stages (£3,000 million in 1981

and £1,000 million in 1982) as part of

a capital reconstruction of BSC, the

Department determined that BSC/BS plc

benefitted from these equity infusions,

notwithstanding the subsequent writeoff of equity capital. Therefore, the

Department countervailed the equity

investments as grants given in the years

the equity capital was received. No new

information or evidence of changed

circumstances was presented in this

review to warrant a reconsideration of

that finding.

Because the Department determined

in Lead Bar that the infusions are nonrecurring, we have allocated the benefits

over BS plc’s company-specific average

useful life of renewable physical assets

(18 years).

To calculate the benefit from these

grants, we have used a discount rate

which includes a risk premium. See,

e.g., Final Affirmative Countervailing

Duty Determinations: Certain Steel

Products From Mexico, 58 FR 37352,

37354 (July 9, 1993) (Mexican Steel).

While uncreditworthiness was not

specifically alleged or investigated

during the investigation on lead bar, in

UK Certain Steel the Department found

that BSC/BS plc was uncreditworthy

from 1977/78 through 1985/86. No new

information or evidence of changed

circumstances was presented in this

review to warrant a reconsideration of

that finding.

To calculate the benefit to the subject

merchandise from this program, we first

summed the benefit to BS plc from all

infusions allocated to 1995. Then, we

determined the portion of that benefit

still remaining with BS plc after

accounting for privatization and spinoffs. To that we added the portion of

UES’s subsidies under this program that

‘‘rejoined’’ BS plc with the acquisition.

See the ‘‘Change in Ownership’’ section

of the notice. We then divided the result

by BS plc’s total sales of all products

domestically-produced during 1995. On

this basis, we preliminarily determine

the net subsidy for this program to be

6.55 percent ad valorem in 1995.

(B) Regional Development Grant

Program

Regional development grants were

paid to BSC/BS plc under the Industry

Act of 1972 and the Industrial

Development Act of 1982. In order to

qualify for assistance under these two

Acts, an applicant had to be engaged in

manufacturing and located in an

assisted area. Assisted areas are older,

industrial regions identified as having

deep-seated, long-term problems such as

high levels of unemployment,

migration, slow economic growth,

derelict land, and obsolete factory

buildings. Regional development grants

were given for the purchase of specific

assets. According to the Government of

the United Kingdom, the program

involved one-time grants, sometimes

disbursed over several years.

BSC/BS plc received regional

development grants during the period

between fiscal years 1978/79 and 1985/

86. The Department found this program

countervailable in Lead Bar (58 FR at

6242), because it is limited to specific

regions. No new information or

evidence of changed circumstances was

presented in this review to warrant a

reconsideration of that finding.

In Lead Bar, we determined that,

since each grant required a separate

application, these grants are nonrecurring. Accordingly, we have

calculated the benefits from this

program by allocating the benefits over

BS plc’s company-specific average

useful life of renewable physical assets

(18 years). See British Steel II, 929 F.

Supp. at 439. Since BSC/BS plc was

uncreditworthy from 1978/79 through

1985/86 (as discussed under the ‘‘Equity

Infusions’’ section, above), we have

used a discount rate which includes a

risk premium (see Mexican Steel, 58 FR

at 37354) to calculate the benefits from

these grants.

To calculate the benefit from this

program, we followed the same

methodology described above for equity
Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices 16559

infusions. On this basis, we

preliminarily determine the net subsidy

for this program to be 0.23 percent ad

valorem in 1995.

(C) National Loan Funds Loan

Cancellation

In conjunction with the 1981/1982

capital reconstruction of BSC, section

3(1) of the Iron and Steel Act of 1981

extinguished certain National Loans

Fund (NLF) loans, as well as the

accrued interest thereon, at the end of

BSC’s 1980/81 fiscal year. Because this

loan cancellation was provided

specifically to BSC, the Department

determined in Lead Bar (58 FR at 6242)

that it provided a countervailable

benefit. No new information or evidence

of changed circumstances was presented

in this review to warrant a

reconsideration of that finding.

We calculated the benefit for this

review using our standard methodology

for non-recurring grants. We allocated

the benefits from this loan cancellation

over BS plc’s company-specific average

useful life of renewable physical assets

(18 years). See British Steel II, 929 F.

Supp. at 439. Because BSC/BS plc was

found to be uncreditworthy in 1981/82

(as discussed under ‘‘Equity Infusions’’

section, above), we have used a discount

rate which includes a risk premium. See

Mexican Steel, 58 FR at 37354.

To calculate the benefit from this

program, we followed the same

methodology described above for equity

infusions. On this basis, we

preliminarily determine the net subsidy

for this program to be 0.56 percent ad

valorem in 1995.

(D) European Coal and Steel

Community (ECSC) Article 54 Loans/

Interest Rebates

The European Coal and Steel

Community’s (ECSC) Article 54

Industrial Investment loans are direct,

long-term loans from the Commission of

the European Communities to be used

by the iron and steel industry for

purchasing new equipment or financing

modernization. The purpose of the

program is to facilitate the borrowing

process for companies in the ECSC,

some of which may not otherwise be

able to obtain loans. In UK Certain Steel,

the Department determined that this

program is limited to the iron and steel

industry, and thus is countervailable to

the extent that it provides loans on

terms inconsistent with commercial

considerations. 58 FR at 37397. No new

information or evidence of changed

circumstances was presented in this

review to warrant a reconsideration of

that finding.

In addition, interest rebates on Article

54 loans were granted to steel

companies during the restructuring and

modernization of the industry in the

early 1980s. To qualify for the rebates,

companies had to meet certain criteria,

such as being in the process of reducing

their steel production capacity or of

implementing improvements in

processing that would yield energy

savings and improved efficiency.

The interest rebates, which were

limited to a maximum of 3 percent of

the total investment over a period of five

years, were funded from the ECSC

operational budget. While levies

imposed on ECSC steel companies have

provided the revenues for the

operational budget since 1985,

contributions by Member States

supplemented the budget before that

time. For this reason, the Department

determined in UK Certain Steel that a

portion of those interest rebates was

countervailable. Id. Following the same

methodology in this review to

determine the countervailable portion,

we calculated the ratio of the

contributions by Member States to the

ECSC’s total available funds for each

year in which the rebates were given,

and then multiplied this ratio by the

rebate amount.

BSC/BS plc received one Article 54

loan in fiscal year 76/77 and two Article

54 loans in fiscal year 77/78, all of

which were provided in U.S. dollars

were still outstanding during the POR.

BSC/BS plc also received interest

rebates during the first five years of the

76/77 loan. Because BSC/BS plc

qualified for the interest rebate at the

time the loan was granted, we

considered the rebate to constitute a

reduction in the interest rate charged

rather than a grant.

We considered the loan made to BSC/

BS plc during its creditworthy period

(i.e., in BSC’s 76/77 fiscal year)

separately from the two loans made

during its uncreditworthy period (i.e., in

BSC’s 77/78 fiscal year). For the Article

54 loan provided when BSC/BS plc was

creditworthy, we used as our

benchmark the average U.S. long-term

commercial rate for 1977. We used this

rate because we did not have

information on U.S. dollar loans

borrowed in the United Kingdom in

1977. To calculate the benefit from this

loan we employed our long-term loan

methodology. See, e.g., Final

Affirmative Countervailing Duty

Determinations: Certain Steel Products

From France, 58 FR 37304, 37308 (July

9, 1993) (French Steel). We then

compared the amount of interest that

would have been paid on the

benchmark loan to the interest paid by

BSC/BS plc (factoring in the interest

rebate as discussed above) and found

that BSC’s interest payments were

higher than those it would have made

on the benchmark loan. Therefore, we

find that this particular loan was

provided on terms consistent with

commercial considerations.

For the loans provided when BSC/BS

plc was uncreditworthy, we used as our

benchmark the highest U.S. lending rate

available for long-term fixed rate loans

at the time the loan was granted, plus

a risk premium equal to 12 percent of

the U.S. prime rate for 1977. See, e.g.,

Final Affirmative Countervailing Duty

Determination: New Steel Rail, Except

Light Rail, from Canada, 54 FR 31991

(August 3, 1989); see also, French Steel,

58 FR at 37309. Again, we used a U.S.

interest rate because we did not have

information on U.S. dollar loans

borrowed in the United Kingdom in

1977. We then compared the cost of the

benchmark financing to the cost of the

financing that BSC/BS plc received

under this program and found that the

two Article 54 loans to BSC/BS plc

during its uncreditworthy period were

provided on terms inconsistent with

commercial considerations.

To calculate the benefit from these

loans we used our long-term loan

methodology and a benchmark discount

rate which includes a risk premium

(French Steel, 58 FR at 37308). We first

calculated the grant equivalent and

allocated it over the life of the loans. We

then followed the same methodology

described above for equity infusions. On

this basis, we preliminarily determine

the net subsidy for this program to be

0.001 percent ad valorem in 1995.

(E) BRITE/EuRAM

As explained in the ‘‘Facts Available’’

section of this notice, BS plc received

assistance under the BRITE/EuRAM

program during the POR that was

unreported in the questionnaire

response, notwithstanding a specific

question on this program in the

Department’s questionnaire. Because

respondents failed to comply with the

Department’s request for information,

we are applying adverse inferences in

accordance with section 776(b) of the

act. Therefore, we preliminarily

determine that the BRITE/EuRAM

program is specific under section

771(5A) of the Act and, therefore,

countervailable. See the March 31, 1997,

Memorandum for Acting Assistant

Secretary Re: Facts Available for New

Subsidies Discovered at Verification,

public document, on file in the Central

Records Unit, Room B–099 of the

Department of Commerce).

We have calculated the benefit under

this program for the POR using our

standard methodology for non-recurring
16560 Federal Register / Vol. 62, No. 66 / Monday, April 7, 1997 / Notices

grants. See GIA, 58 FR at 37226.

However, the grants received by BS plc

under this program were less than 0.5

percent of BS plc’s total sales, and thus

were allocated to the year of receipt. On

this basis, we preliminarily determine

the net subsidies for this program to be

0.001 percent ad valorem.

II. Programs Preliminarily Determined

To Be Not Used

We examined the following programs

and preliminarily find that the

producers and/or exporters of the

subject merchandise subject to this

review did not apply for or receive

benefits under these programs during

the POR:

(A) New Community Instrument Loans

(B) ECSC Article 54 Loan Guarantees

(C) NLF Loans

(D) ECSC Conversion Loans

(E) European Regional Development Fund

Aid

(F) Article 56 Rebates

(G) Regional Selective Assistance

(H) ECSC Article 56(b)(2) Redeployment Aid

(I) Inner Urban Areas Act of 1978

(J) LINK Initiative

(K) Transportation Assistance

III. Programs Preliminarily Determined

To Be Terminated Transportation

Assistance

The Department originally found that

BS plc received preferential rail

transport freight subsidies under this

program in the Certain Steel

investigation. UK Certain Steel, 58 FR at

37397. During this administrative

review, however, we found that this

program has been terminated and that

there are no residual benefits. See the

March 31, 1997, Memorandum to the

File Re: Transportation Assistance

(public document on file in the Central

Records Unit, Room B–099 of the

Department of Commerce).

Preliminary Results of Review

In accordance with 19 CFR

355.22(c)(4)(ii), we have calculated an

individual subsidy rate for each

producer/exporter subject to this

administrative review. As discussed in

the ‘‘Change in Ownership’’ section of

the notice, above, we are treating British

Steel plc and British Steel Engineering

Steels as one company for purposes of

this proceeding. For the period January

1, 1995 through December 31, 1995, we

preliminarily determine the net subsidy

for British Steel plc/British Steel

Engineering Steel/United Engineering

Steel (BS plc/BSES/UES) to be 7.35

percent ad valorem. If the final results

of this review remain the same as these

preliminary results, the Department

intends to instruct the U.S. Customs

Service to assess countervailing duties

for BS plc/BSES at 7.35 percent ad

valorem. The Department also intends

to instruct the U.S. Customs Service to

collect a cash deposit of 7.35 percent of

the f.o.b. invoice price on all shipments

of the subject merchandise from BS plc/

BSES/UES, entered, or withdrawn from

warehouse, for consumption on or after

the date of publication of the final

results of this review.

The URAA replaced the general rule

in favor of a country-wide rate with a

general rule in favor of individual rates

for investigated and reviewed

companies. The procedures for

countervailing duty cases are now

essentially the same as those in

antidumping cases, except as provided

for in section 777A(e)(2)(B) of the Act.

Requests for administrative reviews

must now specify the companies to be

reviewed. See 19 CFR § 355.22(a). The

requested review will normally cover

only those companies specifically

named. Pursuant to 19 CFR § 355.22(g),

for all companies for which a review

was not requested, duties must be

assessed at the cash deposit rate, and

cash deposits must continue to be

collected, at the rate previously ordered.

As such, the countervailing duty cash

deposit rate applicable to a company

can no longer change, except pursuant

to a request for a review of that

company. See Federal–Mogul

Corporation and The Torrington

Company v. United States, 822 F. Supp.

782 (CIT 1993); see also, Floral Trade

Council v. United States, 822 F. Supp.

766 (CIT 1993) (interpreting 19 CFR

§ 353.22(e), the antidumping regulation

on automatic assessment, which is

identical to 19 CFR § 355.22(g)).

Therefore, the cash deposit rates for all

companies except those covered by this

review will be unchanged by the results

of this review. We will instruct Customs

to continue to collect cash deposits for

non-reviewed companies at the most

recent company-specific or countrywide rate applicable to the company.

Accordingly, the cash deposit rates

that will be applied to non-reviewed

companies covered by this order are

20.33 percent ad valorem for Allied

Steel Wire and 9.76 percent ad valorem

for all other non-reviewed companies,

which are the rates calculated in the

most recently completed administrative

proceeding. See Certain Hot–Rolled

Lead and Bismuth Carbon Steel

Products from the United Kingdom;

Final Results of Countervailing Duty

Administrative Review, 60 FR 54841

(October 26, 1995). These rates shall

apply to all non-reviewed companies

until a review of a company assigned

these rates is requested. In addition, for

the period January 1, 1995 through

December 31, 1995, the assessment rates

applicable to all non-reviewed

companies covered by this order are the

cash deposit rates in effect at the time

of entry.

Public Comment

Parties to the proceeding may request

disclosure of the calculation

methodology and interested parties may

request a hearing not later than 10 days

after the date of publication of this

notice. Interested parties may submit

written arguments in case briefs on

these preliminary results within 30 days

of the date of publication. Rebuttal

briefs, limited to arguments raised in

case briefs, may be submitted seven

days after the time limit for filing the

case brief. 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. Any hearing,

if requested, will be held seven days

after the scheduled date for submission

of rebuttal briefs. Copies of case briefs

and rebuttal briefs must be served on

interested parties in accordance with 19

CFR § 355.38.

Representatives of parties to the

proceeding may request disclosure of

proprietary information under

administrative protective order no later

than 10 days after the representative’s

client or employer becomes a party to

the proceeding, but in no event later

than the date the case briefs, under 19

CFR § 355.38, are due. The Department

will publish the final results of this

administrative review including the

results of its analysis of issues raised in

any case or rebuttal brief or at a hearing.

This administrative review and notice

are in accordance with section 751(a)(1)

of the Act (19 U.S.C. 1675(a)(1)).

Dated: March 31, 1997.

Robert S. LaRussa,

Acting Assistant Secretary for Import

Administration.

[FR Doc. 97–8841 Filed 4–4–97; 8:45 am]

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