[Federal Register Volume 59, Number 149 (Thursday, August 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-19066]
[[Page Unknown]]
[Federal Register: August 4, 1994]
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DEPARTMENT OF COMMERCE
International Trade Administration
[A-570-830]
Preliminary Determination of Sales at Less Than Fair Value:
Coumarin From the People's Republic of China
AGENCY: Import Administration, International Trade Administration,
Commerce.
EFFECTIVE DATE: August 4, 1994.
FOR FURTHER INFORMATION CONTACT: David J. Goldberger or Michelle A.
Frederick, Office of Antidumping Investigations, Import Administration,
International Trade Administration, U.S. Department of Commerce, 14th
Street and Constitution Avenue, N.W., Washington, D.C. 20230;
telephone: (202) 482-4136 or (202) 482-0186, respectively.
Preliminary Determination
We preliminarily determine that coumarin from the People's Republic
of China (PRC) 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
Tariff Act of 1930, as amended (the Act). The estimated margins are
shown in the ``Suspension of Liquidation'' section of this notice. We
have also determined that critical circumstances exist.
Case History
Since the initiation of this investigation on January 19, 1994, (59
FR 3841, January 27, 1994), the following events have occurred.
On January 31, 1994, we sent a survey to the PRC's Ministry of
Foreign Trade and Economic Cooperation (MOFTEC) and certain companies
in the PRC requesting information on production and sales of coumarin
exported to the United States. The names of the companies were found in
the petition and in data supplied by the Port Import Export Reporting
Service (PIERS). We requested MOFTEC's assistance in forwarding the
survey to all exporters and producers of coumarin and in submitting
complete responses on their behalf.
On February 14, 1994, the U.S. International Trade Commission (ITC)
notified the Department of Commerce (the Department) of its preliminary
determination that there is a reasonable indication that an industry in
the United States is materially injured by reason of imports of
coumarin from the PRC that are alleged to be sold at less than fair
value.
On February 26 and 27, 1994, responses to the survey were received
from Tianjin No. 1 Perfumery Factory (Tianjin Perfumery) and Shanghai
Perfumery General Factory (Shanghai Perfumery), both of whom
manufacture coumarin. These responses helped us identify other
producers and exporters of coumarin.
On February 28, 1994, MOFTEC and those PRC producers and exporters
identified in the course of this proceeding, for which we had
addresses, were sent full questionnaires. Additionally, during the
month of March, the Department held a questionnaire presentation with
MOFTEC and company officials in Beijing.
In a March 28, 1994, filing, MOFTEC advised the Department that the
following companies produced or exported the subject merchandise to the
U.S. during the POI: Tianjin Perfumery, Shanghai Perfumery, Gaoyo
Perfumery Factory (Gaoyo Perfumery), Changzhou No. 2 Chemical Plant
(Changzhou Chemical) (producers); China Foreign Trade Development
Companies (CFTD), Tianjin Chemicals Import & Export (Tianjin
Chemicals), Tianjin Native Produce Import & Export Corporation (Tianjin
Native), Jiangsu Native Produce Import & Export (Jiangsu Native), and
China Tuhsu Flavors and Fragrances Import and Export Corporation (China
Tuhsu) (exporters).
In March and April, 1994, responses to section A of our
questionnaire were received from the following producers and exporters:
Shanghai Perfumery and CFTD, Tianjin Chemicals and Gaoyo Perfumery,
Tianjin Perfumery and Tianjin Native, and Jiangsu Native and Changzhou
Chemical.
On April 13, 1994, pursuant to section 353.15(c) of the
Department's regulations, we postponed the preliminary determination in
this investigation (see, 59 FR 19692, April 25, 1994).
In April 1994, we received responses to section C of our
questionnaire from Tianjin Chemicals, Tianjin Native, CFTD, and Jiangsu
Native; and responses to section D of our questionnaire from Gaoyo
Perfumery, Tianjin Perfumery, Shanghai Perfumery, and Changzhou
Chemical. China Tuhsu did not respond to any portion of our
questionnaire.
On April 28, 1994, counsel for Shanghai Perfumery and CFTD
submitted public information concerning surrogate values for factors of
production for coumarin. On May 20, 1994, petitioners provided the
Department with Indian prices for certain factors used in the
production of coumarin, and on July 15, 1994, counsel for the remaining
participating respondents submitted information regarding surrogate
values.
On May 13 and 19, 1994, the Department issued supplemental
questionnaires to all producers and exporters in the investigation
except China Tuhsu. On June 9, 1994, counsel for Shanghai Perfumery and
CFTD advised the Department that it was withdrawing its representation
of the companies. On May 27 and June 9, we received responses to our
supplemental questionnaires from all respondents except Shanghai
Perfumery, CFTD, and China Tuhsu. On June 23, 1994, Changzhou Chemical
submitted minor revisions to its factors of production data.
On May 27, 1994, the Department issued a questionnaire to all
respondents except China Tuhsu regarding the issue of separate rates.
Responses were received from Jiangsu Native, Tianjin Native, and
Tianjin Chemical on June 13, 1994 (see, ``Separate Rates'' section
below).
On June 20, 1994, petitioners, pursuant to section 353.16 of the
Department's regulations, amended the petition in this investigation to
allege the existence of critical circumstances with respect to imports
of coumarin from the PRC. On June 22, 1994, the Department sent letters
to Jiangsu Native, Tianjin Chemicals, and Tianjin Native requesting
information on volume and value of shipments of the subject merchandise
to the United States. We received their responses on July 12, 1994.
On July 15, 1994, we sent supplemental ``Separate Rates''
questionnaires to Jiangsu Native, Tianjin Chemicals, and Tianjin
Native.
Scope of Investigation
The product covered by this investigation is coumarin. Coumarin is
an aroma chemical with the chemical formula C9H6O2 that
is also known by other names, including 2H-1-benzopyran-2-one, 1,2-
benzopyrone, cis-o-coumaric acid lactone, coumarinic anhydride, 2-Oxo-
1,2-benzopyran, 5,6-benzo-alpha-pyrone, ortho-hydroxyc innamic acid
lactone, cis-ortho-coumaric acid anhydride, and tonka bean camphor.
All forms and variations of coumarin are included within the scope
of the investigation, such as coumarin in crystal, flake, or powder
form, and ``crude'' or unrefined coumarin (i.e. prior to purification
or crystallization). Excluded from the scope are ethylcoumarins
(C11H10O2) and methylcoumarins (C10H8O2).
Coumarin is classifiable under subheading 2932.21.0000 of the
Harmonized Tariff Schedule of the United States (HTSUS). Although the
HTSUS subheading is provided for convenience and customs purposes, our
written description of the scope of this investigation is dispositive.
Period of Investigation
The period of investigation (POI) is July 1, 1993, through December
31, 1993.
Separate Rates
Jiangsu Native, Tianjin Chemicals, and Tianjin Native have each
requested a separate, company-specific rate. Their respective business
licenses each indicate that they are owned ``by all the people.'' As
stated in the Final Determination of Sales at Less than Fair Value:
Silicon Carbide from the People's Republic of China (59 FR 22585,
22586, May 2, 1994) (``Silicon Carbide''), and the Final Determination
of Sales at Less than Fair Value: Sebacic Acid from the People's
Republic of China (59 FR 28053, May 31, 1994 (``Sebacic Acid''),
``ownership of a company by all the people does not require the
application of a single rate.'' Accordingly, these three respondents
are eligible for consideration for separate rates.
To establish whether a firm is sufficiently independent to be
entitled to a separate rate, the Department analyzes each exporting
entity under a test arising out of the Final Determination of Sales at
Less Than Fair Value: Sparklers from the People's Republic of China (56
FR 20588, May 6, 1991) (``Sparklers'') and amplified in Silicon
Carbide. Under the separate rates criteria, the Department assigns
separate rates only where respondents can demonstrate the absence of
both de jure and de facto governmental control over export activities.
1. Absence of De Jure Control
The respondents in this investigation have submitted a number of
documents to demonstrate absence of de jure control, including three
enactments indicating that the responsibility for managing enterprises
``owned by all of the people'' is with the enterprises themselves and
not with the government. These are the ``Law of the People's Republic
of China on Industrial Enterprises Owned by the Whole People,'' adopted
on April 13, 1988 (``1988 Law''); ``Regulations for Transformation of
Operational Mechanism of State-Owned Industrial Enterprises,'' approved
on August 23, 1992 (``1992 Regulations''); and the ``Temporary
Provisions for Administration of Export Commodities,'' approved on
December 21, 1992 (``Export Provisions'').
The 1988 Law and 1992 Regulations shifted control from the
government to the enterprises themselves. The 1988 Law provides that
enterprises owned ``by the whole people'' shall make their own
management decisions, be responsible for their own profits and losses,
choose their own suppliers, and purchase their own goods and materials.
The 1988 Law also has other provisions which support a finding that
enterprises have management independence from the government. The 1992
Regulations provide that these same enterprises can, for example, set
their own prices (Article IX); make their own production decisions
(Article XI); use their own retained foreign exchange (Article XII);
allocate profits (Article II); sell their own products without
government interference (Article X); make their own investment
decisions (Article XIII); dispose of their own assets (Article XV); and
hire and fire their employees without government approval (Article
XVII).
The Export Provisions list those products subject to direct
government control. Coumarin is not included in the Export Provisions
list and does not, therefore, appear to be subject to the export
constraints of these provisions.
The existence of these enactments indicates that Jiangsu Native,
Tianjin Chemicals, and Tianjin Native are not de jure subject to
governmental control. However, there is some evidence that the
provisions of the above-cited laws and regulations have not been
implemented uniformly among different sectors and/or jurisdictions in
the PRC (see ``PRC Government Findings on Enterprise Autonomy,'' in
Foreign Broadcast Information Service-China-93-133 (July 14, 1993)).
Therefore, the Department has determined that an analysis of de facto
control is critical to determining whether respondents are, in fact,
subject to governmental control.
2. Absence of De Facto Control
The Department typically considers four factors in evaluating
whether each respondent is subject to de facto governmental control of
its export functions: (1) Whether the export prices are set by or
subject to the approval of a governmental authority; (2) whether the
respondent has authority to negotiate and sign contracts and other
agreements; (3) whether the respondent has autonomy from the government
in making decisions regarding the selection of management; and (4)
whether the respondent retains the proceeds of its export sales and
makes independent decisions regarding disposition of profits or
financing of losses (see Silicon Carbide and Sebacic Acid).
Jiangsu Native, Tianjin Chemicals, and Tianjin Native have each
asserted that (1) it establishes its own export prices; (2) it
negotiates contracts without guidance from any governmental entities or
organizations; (3) its management operates with a high degree of
autonomy and there is no information on the record that suggests
central government control over selection of management; and (4) it
retains the proceeds of its export sales, and has the authority to sell
its assets and to obtain loans. In addition, questionnaire responses
indicate that company-specific pricing during the POI does not suggest
any coordination among exporters (i.e., the prices for comparable
products differ among companies). This information supports a
preliminary finding that there is a de facto absence of governmental
control of export functions.
Consequently, Jiangsu Native, Tianjin Chemicals, and Tianjin Native
have preliminarily met the criteria for the application of separate
rates. We will examine this issue in detail at verification and
determine whether the questionnaire responses are supported by
verifiable documentation.
There are two additional issues relating to governmental control
that we will consider further for purposes of our final determination.
First, Jiangsu Native, Tianjin Chemicals, and Tianjin Native have
indicated that the appointments of their general managers are subject
to approval by the local Foreign Trade and Economic Cooperation Bureaus
(local Bureaus). Second, each of the responding exporters has reported
that they are ``administratively subject to'' the local Bureaus. While
the significance of the involvement of the local Bureaus is unclear,
the respondents have reported that the local bureaus do not control the
key functions of the enterprises. However, we will examine at
verification the precise nature of the authority that the local Bureaus
exercise over the enterprises.
Nonmarket Economy Country Status
The PRC has been treated as a nonmarket economy country (NME) in
all past antidumping investigations (see, e.g., Sebacic Acid and
Silicon Carbide). No information has been provided in this proceeding
that would lead us to overturn our former determinations. Therefore, in
accordance with section 771(18)(c) of the Act, we have treated the PRC
as an NME for purposes of this investigation.
Where the Department is investigating imports from an NME, section
773(c)(1) of the Act directs us to base FMV on the NME producers'
factors of production, valued in a comparable market economy that is a
significant producer of the merchandise. Section 773(c)(2) of the Act
alternatively provides that where available information is inadequate
for using the factors of production methodology, FMV may be based on
the export prices for comparable merchandise from market economy
countries at a comparable level of economic development.
For purposes of the preliminary determination, we have relied on
the methodology provided by section 773(c)(1) of the Act to determine
FMV. The sources of individual factor prices are discussed under the
FMV section, below.
Surrogate Country
Section 773(c)(4) of the Act requires the Department to value the
NME producers' factors of production, to the extent possible, in one or
more market economy countries that (1) are at a level of economic
development comparable to that of the NME country, and (2) are
significant producers of comparable merchandise. The Department has
determined that India is the country most comparable to the PRC in
terms of overall economic development (see Memorandum from David
Mueller, Director Office of Policy, to Gary Taverman, Director of
Division I of Office of Antidumping Investigations, dated March 10,
1994). In addition, there is evidence on the record that coumarin is
produced in India.
Fair Value Comparisons
To determine whether sales of coumarin from the PRC to the United
States by Jiangsu Native, Tianjin Chemicals, and Tianjin Native were
made at less than fair value, we compared the United States price (USP)
to the foreign market value (FMV), as specified in the ``United States
Price'' and ``Foreign Market Value'' sections of this notice.
United States Price
We based USP on purchase price, in accordance with section 772(b)
of the Act, because the subject merchandise was sold directly by the
Chinese exporters to unrelated parties in the United States prior to
importation into the United States.
For those exporters that responded to the Department's
questionnaire and were found to be eligible for a separate rate, we
calculated purchase price based on packed, FOB foreign-port prices to
unrelated purchasers in the United States. As necessary, we made
deductions for foreign inland freight, containerization, loading, port
handling expenses, foreign inland and marine insurance, valued in a
surrogate country. We were unable to obtain surrogate value information
for ocean freight, so we valued ocean freight on international shipping
rates between the PRC and U.S. ports, as quoted by a market-economy
shipping company. (For a complete analysis of USP deductions, see the
Calculation Memorandum for this investigation).
Foreign Market Value
In accordance with section 773(c) of the Act, we calculated FMV
based on factors of production reported by the factories in the PRC
which produced the subject merchandise for the three exporters. The
factors used to produce coumarin include materials, labor, and energy.
To calculate FMV, the reported quantities were multiplied by the
appropriate surrogate values from India and Indonesia for the different
inputs. We made adjustments to materials costs for the recovery of by-
products, where applicable. In determining which surrogate value to use
for valuing each factor of production, we selected, where possible,
from publicly available, published information (public information).
For a complete analysis of surrogate values, see the Calculation
Memorandum for this investigation.
We used surrogate transportation rates to value inland freight
between the source of the production factor and the coumarin factories,
and between factories and exporters/ports. In those cases where a
respondent failed to provide any information on transportation
distances, we applied, as best information available, the farthest
distance reported for the input in the public version of questionnaire
responses.
To value certain raw materials, we used public information from
Chemical Business of India for July-October 1993, and India Chemical
Weekly for July-November 1993. For raw materials not listed in Chemical
Business of India, or India Chemical Weekly, we used the Monthly Trade
Statistics of Foreign Trade of India, Volume II--Imports (Indian Import
Statistics) for April 1992-March 1993. We adjusted the factor values to
the POI using wholesale price indices published in International
Financial Statistics (IFS) by the International Monetary Fund. For
materials sourced from market-economy countries and purchased in
convertible currencies, we applied the actual purchase price paid
during the POI, or the time period closest to the POI. No product-
specific public information pertaining to India or any other potential
surrogate country was available for certain raw materials. With respect
to these raw materials, we have used, privately researched Indian price
quotes, Indian import statistics for categories that include the
specific raw materials (i.e., ``basket'' categories), or Indonesian
import statistics. (For a complete analysis of raw material valuations,
see the Calculation Memorandum for this investigation).
To value electricity, we used public information from the Electric
Utilities Data Book for the Asian and Pacific Region (January 1993)
published by the Asian Development Bank. We selected this source
because it provides an electricity rate for industrial use during the
POI from India, our preferred surrogate country. To value water, we
have used public information for India from the Water Utilities Data
Book for the Asian and Pacific Region (November 1993) which is also
published by the Asian Development Bank. To value coal, we used Indian
Import Statistics. We adjusted the factor values to the POI using
wholesale price indices published in the IFS.
To value hourly labor rates in India, we used the International
Labor Office's 1993 Yearbook of Labor Statistics and Country Reports:
Human Rights Practices for 1990.
To value factory overhead, we calculated percentages based on
relevant data from The Reserve Bank of India Bulletin (RBI), December
1993. We based our overhead percentage calculations on the RBI summary
income statement data applicable to the chemical manufacturing
industry, and adjusted to reflect an energy-exclusive overhead
percentage. For selling, general and administrative (SG&A) expenses, we
calculated percentages based on the RBI summary income statement data.
We used the calculated SG&A percentages because they were greater than
the ten percent statutory minimum. For profit we used the statutory
minimum of eight percent of materials, labor, factory overhead, and
SG&A expenses, because the RBI percentage was less than eight percent.
We added packing based on Indian values obtained from Indian Import
Statistics.
Best Information Available (BIA)
Because information has not been presented to the Department to
prove otherwise, any PRC company that did not respond fully to the
Department's questionnaires or otherwise did not participate in this
investigation, are assumed to be under government control, and,
therefore, are not entitled to separate dumping margins. In the absence
of responses from those companies that did not fully respond to the
Department's questionnaire, and other PRC exporters during the POI, we
are basing the All Other rate on BIA, pursuant to section 776(c) of the
Act (see Silicon Carbide). In determining what to use as BIA, the
Department follows a two-tiered methodology, whereby the Department
normally assigns lower margins to those respondents that cooperated in
an investigation and more adverse margins for those respondents which
did not cooperate in an investigation. When a company refuses to
provide the information requested in the form required, or otherwise
significantly impedes the Department's investigation, it is appropriate
for the Department to assign to that company the higher of (a) the
highest margin alleged in the petition, or (b) the highest calculated
rate of any respondent in the investigation (see Final Determination of
Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat
Products, Certain Cold-Rolled Carbon Steel Flat Products, and Certain
Cut-to-Length Carbon Steel Plate From Belgium (58 FR 37083, July 9,
1993). In this investigation, since some PRC exporters failed to
respond to our questionnaire, we are assigning to them the highest
margin based on information submitted in the petition (see Initiation
of Antidumping Duty Investigation: Coumarin from the People's Republic
of China, 59 FR 3841, January 27, 1994). This rate applies to all
exporters other than those responding exporters that are receiving
separate rates.
Critical Circumstances
Petitioners allege that ``critical circumstances'' exist with
respect to imports of coumarin from the PRC. Section 733(e)(1) of the
Act provides that there is a reasonable basis to believe or suspect
that critical circumstances exist if:
(A)(i) there is a history of dumping in the United States or
elsewhere of the class or kind of merchandise which is the subject of
the investigation, or
(ii) the person by whom, or for whose account, the merchandise was
imported knew or should have known that the exporter was selling the
merchandise which is the subject of investigation at less than its fair
value, and
(B) there have been massive imports of the class or kind of
merchandise which is the subject of the investigation over a relatively
short period.
Regarding criterion (A) above, we normally consider margins of 25
percent or more (in purchase price situations) as sufficient to impute
knowledge of dumping (see Silicon Carbide). Since the preliminary
estimated dumping margins for exporters of coumarin in the PRC are in
excess of 25 percent, we can impute knowledge of dumping to the
importers of the subject merchandise.
Regarding criterion (B) above, pursuant to 19 CFR 353.16(f), we
generally consider the following factors in determining whether imports
have been massive over a short period of time: (1) The volume and value
of the imports; (2) seasonal trends (if applicable); and (3) the share
of domestic consumption accounted for by the imports. If imports during
the period immediately following the petition increase by 15 percent
over imports during a comparable period immediately preceding the
filing of a petition, we consider them massive pursuant to section
353.16(f)(2) of the Department's regulations. Three respondents have
responded to the Department's request for the quantity and value of
monthly exports to the U.S. To determine whether there have been
massive imports of coumarin from the PRC, we compared each respondent's
volume of shipments for the period following the petition (January
through June 1994) to the period immediately preceding the petition
(July through December 1993). Based on an analysis of these export
data, we find that imports from Tianjin Chemical and Tianjin Native
have been massive, while imports from Jiangsu Native have not been
massive.
With respect to share of domestic consumption, the information
available to us at this time does not allow us to evaluate whether the
increase in absolute volume of coumarin shipments can be accounted for
by a change in domestic consumption.
For Tianjin Chemical and Tianjin Native, because the preliminary
dumping margins are sufficient to impute knowledge of dumping, and
because we have found that imports of coumarin have been massive, we
preliminarily determine that critical circumstances do exist for these
two exporters.
With respect to Jiangsu Native, because we have found that imports
of coumarin have not been massive, we preliminarily determine that
critical circumstances do not exist for this exporter.
As regards the firms covered by the ``All Others'' rate, we have
used BIA as the basis for determining whether critical circumstances
exist for non-respondent exporters. The BIA margin exceeds the 25
percent threshold for imputing a knowledge of dumping to the importers
of the merchandise. In addition, we have adversely assumed, as BIA, a
massive increase in imports from these non-respondent exporters. We,
therefore, determine that critical circumstances also exist for these
exporters.
Verification
As provided in section 776(b) of the Act, we will verify all
information determined to be acceptable for use in making our final
determination.
Suspension of Liquidation
In accordance with section 733(d)(1) of the Act, we are directing
the Customs Service to suspend liquidation of all entries of coumarin
from the PRC, that are entered, or withdrawn from warehouse, for
consumption on or after the date 90 days before the date of publication
of this notice in the Federal Register, except for imports from Jiangsu
Native, in which case the effective date of suspension of liquidation
is the date of publication of this notice in the Federal Register. The
Customs Service shall require a cash deposit or posting of a bond equal
to the estimated amount by which the FMV exceeds the USP as shown
below. These suspension of liquidation instructions will remain in
effect until further notice.
The weighted-average dumping margins are as follows:
------------------------------------------------------------------------
Weighted-
average Critical
Manufacturer/Producer/Exporter margin circumstances
percentage
------------------------------------------------------------------------
Tianjin Chemicals I/E Corp............. 143.40 Affirmative.
Jiangsu Native Produce I/E Corp........ 97.61 Negative.
Tianjin Native Produce I/E Corp........ 35.21 Affirmative.
All Others............................. 444.37 Affirmative.
------------------------------------------------------------------------
ITC Notification
In accordance with section 733(f) of the Act, we have notified the
ITC of our determination. If our final determination is affirmative,
the ITC will determine before the later of 120 days after the date of
this preliminary determination or 45 days after our final determination
whether these imports are materially injuring, or threaten material
injury to, the U.S. industry.
Public Comment
In accordance with 19 CFR 353.38, case briefs or other written
comments in at least six copies must be submitted to the Assistant
Secretary for Import Administration no later than September 13, 1994,
and rebuttal briefs, no later than September 20, 1994. In accordance
with 19 CFR 353.38(b), we will hold a public hearing, if requested, to
afford interested parties an opportunity to comment on arguments raised
in case or rebuttal briefs. Tentatively, the hearing will be held at
1:00 p.m. on September 22, 1994, at the U.S. Department of Commerce,
Room 3708, 14th Street and Constitution Avenue, NW., Washington, DC
20230. Parties should confirm by telephone the time, date, and place of
the hearing 48 hours before the scheduled time.
Interested parties who wish to request a hearing, or to participate
if one is requested, must submit a written request to the Assistant
Secretary for Import Administration, U.S. Department of Commerce, Room
B-099, within ten days of the publication of this notice. Requests
should contain: (1) The party's name, address, and telephone number;
(2) the number of participants; and (3) a list of the issues to be
discussed. In accordance with 19 CFR 353.38(b), oral presentations will
be limited to issues raised in the briefs. If this investigation
proceeds normally, we will make our final determination by the 135th
day after the date of publication of the affirmative preliminary
determination in the Federal Register.
This determination is published pursuant to section 733(f) of the
Act and 19 CFR 353.15(a)(4).
Dated: July 28, 1994.
Barbara R. Stafford,
Acting Assistant Secretary for Import Administration
[FR Doc. 94-19066 Filed 8-3-94; 8:45 am]
BILLING CODE 3510-DS-P