[Federal Register Volume 62, Number 66 (Monday, April 7, 1997)]
[Notices]
[Pages 16555-16560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-8841]



[[Page 16555]]

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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.

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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 Sec. 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

[[Page 16556]]

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-
percent-owned 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 
percent-owned 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

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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 non-recurring 
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 spin-off 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 industry-specific 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.

[[Page 16558]]

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 medium-term 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 
(<brit-pound>3,000 million in 1981 and <brit-pound>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 write-off 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 non-recurring, 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 
spin-offs. 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 non-recurring. 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

[[Page 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

[[Page 16560]]

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 Sec. 355.22(a). The requested review will normally cover 
only those companies specifically named. Pursuant to 19 CFR 
Sec. 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 Sec. 353.22(e), the antidumping regulation on automatic assessment, 
which is identical to 19 CFR Sec. 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 country-wide 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 Sec. 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 Sec. 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]
BILLING CODE 3510-DS-P