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 Department of Commerce International Trade Administration [A-588-857]
 AGENCY: Import Administration, International Trade Administration, Department of Commerce.
 EFFECTIVE DATE: June 27, 2001.
 FOR FURTHER INFORMATION CONTACT: John Drury or Helen Kramer at (202) 482-0195 and (202) 482-0405, respectively; AD/CVD, Enforcement, Office 8, Group III, Import Administration, Room 7866, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. The Applicable Statute and Regulations Unless otherwise indicated, 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 indicated, all citations to Department of Commerce (the Department) regulations refer to the regulations codified at 19 CFR part 351 (April 2000). Preliminary Determination We preliminarily determine that certain welded large diameter line pipe from Japan is being, or is likely to be, sold in the United States at less than fair value (LTFV), as provided in section 733 of the Act. The estimated margins of sales at LTFV are shown in the Suspension of Liquidation section of this notice. Case History On January 10, 2001, the Department received a petition on welded large diameter line pipe from Japan and Mexico in proper form by American Steel Pipe Division of American Cast Iron Pipe Company, Berg Steel Pipe Corporation, and Stupp Corporation (collectively “petitioners”). The Department received information from the petitioners supplementing the petition on January 22, January 24, January 26, and January 29, 2001. This investigation was initiated on January 30, 2001. 
                        *See Notice of Initiation of Antidumping Duty Investigations: Welded Large Diameter Line Pipes from Mexico and Japan,*66 FR 11266 (February 23, 2001) (Initiation Notice). Since the initiation of these investigations, the following events have occurred. The Department set aside a period for all interested parties to raise issues regarding product coverage. 
                        *See*
                         Initiation Notice, 66 FR 11267. We received comments regarding product coverage in the Japan investigation from Sumitomo Metal Industries on February 20, 2001 and February 23, 2001, Kawasaki Steel Corporation, Nippon Steel Corporation, NKK Corporation, and Sumitomo Metal Industries on February 20, 2001, and from petitioners on April 9, 2001. For the concurrent investigation of welded large diameter line pipe from Mexico, respondent Tubesa submitted comments on scope which also affect both investigations. In response to comments by interested parties the Department has determined that certain welded large diameter line pipe products are excluded from the scope of this investigation. These excluded products are described below in the section on the scope of the investigation. 
                        *See*
                         also 
                        *Memorandum from Richard Weible and Ed Yang to Joseph Spetrini, Scope Issues for Welded Large Diameter Line Pipe,*
                         June 19, 2001. On February 26, 2001, the Department issued a letter to interested parties in the two concurrent antidumping investigations, providing an opportunity to comment on the Department's proposed model matching characteristics and hierarchy. Comments were submitted by the petitioners, and respondents Nippon Steel Corporation and Kawasaki Steel Corporation. All comments were received on March 8, 2001. Petitioners agreed with the Department's proposed characteristics categories, but wished to add more subcategories. Furthermore, petitioners suggested that the Department change its hierarchy of characteristics. Nippon Steel Corporation suggested that the Department elevate “weld type” to the top of the model match criteria hierarchy. Kawasaki also suggested that weld type be used as the first model matching criterion. Also, Kawasaki proposed that the Department change 
                        ( print page 34152)
                        the individual product codes for wall thickness from absolute numbers to ranges. Based on these comments, the Department made a number of changes which were reflected in subsequent questionnaires to the respondents. The Department changed the hierarchy by placing weld type as the second criterion for model match purposes. Additionally, the Department consolidated the subcategories in outside diameter, wall thickness, and end finish, as well as adding a subcategory to surface finish. These changes are a better reflection of the cost and price differentials between products and allow for better comparisons between sales of identical or similar welded large diameter line pipe products. On March 6, 2001, the United States International Trade Commission (ITC) preliminarily determined that there is a reasonable indication that imports of the products subject to this investigation are materially injuring an industry in the United States producing the domestic like product. 
                        *See Certain Welded Large Diameter Line Pipe from Japan and Mexico,*66 FR 13568(March 6, 2001). On February 26, 2001, the Department issued an antidumping questionnaire to Kawasaki Steel Corporation, Nippon Steel Corporation, NKK Corporation, and Sumitomo Metal Industries. On March 20, 2001, the Department limited the respondents in the investigation to Nippon Steel Corporation and Kawasaki Steel Corporation (
                        *See*
                         Memorandum from Ed Yang to Joseph A. Spetrini, March 20, 2001). On March 28, 2001, Kawasaki Steel Corporation submitted a response to section A of the Department's antidumping duty questionnaire. On April 12, 2001, Nippon Steel Corporation notified the Department that it would not be responding to the Department's questionnaire. Nippon provided no further elaboration, nor did it suggest alternatives to the Department's requirements pursuant to section 782(c) of the Act. On April 20, 2001, Kawasaki Steel Corporation notified the Department that it would not be participating further in the investigation. Kawasaki provided no further elaboration, nor did it suggest alternatives to the Department's requirements pursuant to section 782(c) of the Act. Period of Investigation The POI for this investigation is January 1, 2000 through December 31, 2000. This period corresponds to the four most recent fiscal quarters prior to the month of the filing of the petition (
                        *i.e.,*
                         January 2001). Scope of the Investigation The product covered by this investigation is certain welded carbon and alloy line pipe, of circular cross section and with an outside diameter greater than 16 inches, but less than 64 inches, in diameter, whether or not stencilled. This product is normally produced according to American Petroleum Institute (API) specifications, including Grades A25, A, B, and X grades ranging from X42 to X80, but can also be produced to other specifications. The product currently is classified under U.S. Harmonized Tariff Schedule (HTSUS) item numbers 7305.11.10.30, 7305.11.10.60, 7305.11.50.00, 7305.12.10.30, 7305.12.10.60, 7305.12.50.00, 7305.19.10.30, 7305.19.10.60, and 7305.19.50.00. Although the HTSUS item numbers are provided for convenience and customs purposes, the written description of the scope is dispositive. Specifically not included within the scope of this investigation is American Water Works Association (AWWA) specification water and sewage pipe and the following size/grade combinations; of line pipe: Having an outside diameter greater than or equal to 18 inches and less than or equal to 22 inches, with a wall thickness measuring 0.750 inch or greater, regardless of grade.
                    Having an outside diameter greater than or equal to 24 inches and less than 30 inches, with wall thickness measuring greater than 0.875 inches in grades A, B, and X42, with wall thickness measuring greater than 0.750 inches in grades X52 through X56, and with wall thickness measuring greater than 0.688 inches in grades X60 or greater.
                    Having an outside diameter greater than or equal to 30 inches and less than 36 inches, with wall thickness measuring greater than 1.250 inches in grades A, B, and X42, with wall thickness measuring greater than 1.000 inches in grades X52 through X56, and with wall thickness measuring greater than 0.875 inches in grades X60 or greater.
                    Having an outside diameter greater than or equal to 36 inches and less than 42 inches, with wall thickness measuring greater than 1.375 inches in grades A, B, and X42, with wall thickness measuring greater than 1.250 inches in grades X52 through X56, and with wall thickness measuring greater than 1.125 inches in grades X60 or greater.
                    Having an outside diameter greater than or equal to 42 inches and less than 64 inches, with a wall thickness measuring greater than 1.500 inches in grades A, B, and X42, with wall thickness measuring greater than 1.375 inches in grades X52 through X56, and with wall thickness measuring greater than 1.250 inches in grades X60 or greater. Facts Available 1. Application of Facts Available Section 776(a)(2) of the Act provides that, if an interested party (A) withholds information requested by the Department, (B) fails to provide such information by the deadline, or in the form and manner requested, subject to sections 782(c)(1) and (e) of the Act, (C) significantly impedes a proceeding, or (D) provides information that cannot be verified, as provided in section 782(i) of the Act, the Department shall use, subject to sections 782(d) and (e) of the Act, facts otherwise available in reaching the applicable determination. Pursuant to section 782(e) of the Act, the Department shall not decline to consider submitted information if all of the following requirements are met: (1) The information is submitted by the established deadline; (2) the information can be verified; (3) the information is not so incomplete that it cannot serve as a reliable basis for reaching the applicable determination; (4) the interested party has demonstrated that it acted to the best of its ability; and (5) the information can be used without undue difficulties. In selecting from among the facts otherwise available, section 776(b) of the Act authorizes the Department to use an adverse inference, if the Department finds that an interested party failed to cooperate by not acting to the best of its ability to comply with the request for information. 
                        *See, e.g., Certain Welded Carbon Steel Pipes and Tubes From Thailand: Final Results of Antidumping Duty Administrative Review,*62 FR 53808, 53819-20 (October 16, 1997). Finally, section 776(b) of the Act states that an adverse inference may include reliance on information derived from the petition. 
                        *See*
                         also 
                        *Statement of Administrative Action Accompanying the URAA*
                         (SAA), H.R. Rep. No. 103-316 at 870 (1994). In accordance with section 776(a)(2)(A) of the Act and section 776(b) of the Act, for the reasons explained below, because both Nippon Steel Corporation and Kawasaki Steel Corporation failed to respond to Section B (which asks for sales-specific data and information for the comparison market, the basis for the calculation of normal value) or Section C (which asks for sales-specific data and information for 
                        ( print page 34153)
                        the U.S. market, the basis for the calculation of U.S. price) of our questionnaire, we preliminarily determine that the use of total adverse facts available is warranted with respect to both companies. Section 776(b) of the Act provides that the Department may use an inference adverse to the interests of a party that has failed to cooperate by not acting to the best of its ability to comply with the Department's requests for information. 
                        *See also*
                         SAA at 870. In examining whether either Nippon Steel Corporation or Kawasaki Steel Corporation acted to the best of their abilities in responding to our requests for information, we note that neither respondent requested an extension to the deadline for submitting responses to Sections B and C of the questionnaire, nor did they even indicate that they were encountering any difficulties with preparing responses to those sections. Nippon Steel Corporation only stated that it “has determined not to participate further” in the Department's investigation, and asked that its counsel be removed from the service list. 
                        *See*
                         Letter from Nippon Steel Corporation to the Department of Commerce, April 12, 2001. Kawasaki Steel Corporation merely noted that it was “not submitting responses to Sections B or C of the Department's Request for Information.” 
                        *See*
                         Letter from Kawasaki Steel Corporation to the Department of Commerce, April 20, 2001. Neither company offered any further explanation, nor did either company suggest alternative forms in which it could submit the data, as required for application of section 782(c) of the Act. Moreover, both respondents received the Department's standard questionnaire that clearly indicates that failure to respond may result in a determination based on the facts available. 
                        *See*
                         Antidumping Duty Questionnaires to Nippon Steel Corporation and Kawasaki Steel Corporation, March 14, 2001 (General Instructions, p. 1). We find that the evidence on the record indicates that both companies explicitly refused to participate by withholding information requested by the Department. Therefore, we determine that the failure by Nippon Steel Corporation and Kawasaki Steel Corporation to respond fully to the Department's antidumping questionnaire constitutes a failure to act to the best of their ability to comply with a request for information from the Department, within the meaning of section 776(b) of the Act, and that an adverse inference is warranted in selecting the facts available for these companies. As discussed below, consistent with Department practice, we assigned both companies the highest margin alleged in the petition (in this case, in an amendment to the petition), 
                        *i.e.,*
                         30.80 percent. 
                        *See*
                         Initiation Notice. 2. Selection and Corroboration of Facts Available Section 776(b) states that an adverse inference may include reliance on information derived from the petition. See also SAA at 870. Section 776(c) of the Act provides that, when the Department relies on secondary information (such as the petition) in using the facts otherwise available, it must, to the extent practicable, corroborate that information from independent sources that are reasonably at its disposal. The SAA clarifies that “corroborate” means that the Department will satisfy itself that the secondary information to be used has probative value (see SAA at 870). The SAA also states that independent sources used to corroborate such evidence may include, for example, published price lists, official import statistics and customs data, and information obtained from interested parties during the particular investigation (See SAA at 870). To corroborate the margins calculated in the petition, we compared the U.S. price and normal value to independent source material petitioner used to derive these figures, such as import statistics, data from U.S. producers, and other publicly available cost data. We found that EP was determined based on the import average unit value (AUV) for one ten-digit category of the HTSUS accounting for 40 percent of the in-scope imports from Japan during the first eleven months of 2000. The AUVs are based on import statistics derived from U.S. Customs data. This HTSUS classification was the largest portion of line pipe imported from Japan during this period of time. Petitioners presumed that the Customs values used to calculate the AUV reflect the actual “transaction value” of the merchandise being shipped by Japanese mills. No further corroboration of the U.S. price is necessary because it is based on U.S. official import statistics, which the Department considers to be an independent source. 
                        *See Notice of Final Determination of Sales at Less Than Fair Value: Collated Roofing Nails from the People's Republic of China,*62 FR 51410, 51412 (October 1, 1997). To corroborate the CV calculation used for normal value, we reexamined the margin in the petition in light of information obtained during the investigation. Specifically, we examined the cost components used to calculate CV for the petition. Petitioners calculated the cost for a product which falls within the HTSUS category used to calculate EP. The cost components used by petitioners include contemporaneous financial statements from one of the companies under investigation (Nippon Steel Corporation) to calculate SG&A and profit rates. Petitioners obtained costs for plate, the largest cost component from publicly available, contemporaneous sources. Specifically, the plate prices originated from spot rates for plate in Japan during the year 2000, as published by 
                        *Metal Bulletin.*
                         Costs for labor and electricity were obtained from public sources, and were indexed to current prices using the Japanese Wholesale Prices Index. Electricity prices are from data published by the OECD International Energy Agency for the year 1997, while labor costs were obtained from the International Trade Administration's web site. Other costs used by petitioners came from a U.S. surrogate company, such as other materials (wire, flux), and overhead. These costs are also contemporaneous. We consider the normal value calculation, based on CV, to be corroborated because the elements of the CV calculation are based on independent sources. Based on the above, we find that the estimated margins set forth in the petitioner have probative value. All-Others Rate Section 735(c)(5)(B) of the Act provides that, where the estimated weighted-average dumping margins established for all exporters and producers individually investigated are zero or de minimis margins, or are determined entirely under section 776 of the Act, the Department may use any reasonable method to establish the estimated “all-others” rate for exporters and producers not individually investigated. Our recent practice under these circumstances has been to assign, as the “all-others” rate, the simple average of the margins in the petition. 
                        *See Notice of Final Determination of Sales at Less Than Fair Value: Certain Cold-Rolled Flat-Rolled Carbon Quality Steel Flat Products from Venezuela,*65 FR 18047, 18048 (April 6, 2000). However, given that the petition alleges only one rate for all companies, we have used the same rate as the “all-others” rate. Suspension of Liquidation In accordance with section 733(d) of the Act, we are directing Customs to 
                        ( print page 34154)
                        suspend liquidation of all entries of welded large diameter line pipe from Japan 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 instruct Customs to require a cash deposit or the posting of a bond equal to the amount by which the NV exceeds the EP, as indicated in the chart below. These suspension-of-liquidation instructions will remain in effect until further notice. The dumping margins are as follows: Manufacturer/exporter
Margin 
                                 (percent)Nippon Steel Corporation (Nippon)
30.80Kawasaki Steel Corporation (Kawasaki)
30.80All Others
30.80
 ITC Notification In accordance with section 733(f) of the Act, we have notified the ITC of our determination. If our final antidumping determination is affirmative, the ITC will determine whether these imports are materially injuring, or threaten material injury to, the U.S. industry. The deadline for that ITC determination would be the later of 120 days after the date of this preliminary determination or 45 days after the date of our final determination. Public Comment Case briefs must be submitted no later than 50 days after the publication of this notice in the 
                        **Federal Register**
                        . Rebuttal briefs must be filed within five days after the deadline for submission of case briefs. A list of authorities used, a table of contents, and an executive summary of issues should accompany any briefs submitted to the Department. Executive summaries should be limited to five pages total, including footnotes. Public versions of all comments and rebuttals should be provided to the Department and made available on diskette. Section 774 of the Act provides that the Department will hold a hearing to afford interested parties an opportunity to comment on arguments raised in case or rebuttal briefs, provided that such a hearing is requested by any interested party. If a request for a hearing is made in an investigation, the hearing will tentatively be scheduled for two days after the deadline for submission of the rebuttal briefs, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. In the event that the Department receives requests for hearings from parties to more than one large diameter line pipe case, the Department may schedule a single hearing to encompass all cases. 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 within 30 days of the publication of this notice. Requests should specify the number of participants and provide 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 in this investigation no later than 75 days after the date of this preliminary determination. This determination is published pursuant to sections 733(f) and 777(i)(1) of the Act. Dated: June 19, 2001. Faryar Shirzad, Assistant Secretary for Import Administration.


[FR Doc. 01-16169 Filed 6-26-01; 8:45 am] BILLING CODE 3510-DS-P