[Federal Register Volume 60, Number 117 (Monday, June 19, 1995)]
[Notices]
[Pages 31974-31981]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-14938]



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DEPARTMENT OF COMMERCE
[A-428-820]


Notice of Final Determination of Sales at Less Than Fair Value: 
Small Diameter Circular Seamless Carbon and Alloy Steel, Standard, Line 
and Pressure Pipe From Germany

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

EFFECTIVE DATE: June 19, 1995.

FOR FURTHER INFORMATION CONTACT: Irene Darzenta or Fabian Rivelis, 
Office of Antidumping Investigations, Import Administration, U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230; telephone (202) 482-6320 or (202) 482-3853, 
respectively.

FINAL DETERMINATION: The Department of Commerce (the Department) 
determines that small diameter circular seamless carbon and alloy 
steel, standard, line and pressure pipe (seamless pipe) from Germany is 
being, or is likely to be, sold in the United States at less than fair 
value, as provided in section 735 of the Tariff Act of 1930, as amended 
(the Act). The estimated margins are shown in the ``Suspension of 
Liquidation'' section of this notice.

Case History

    Since the notice of the preliminary determination published on 
January 27, 1995, (60 FR 5355), the following events have occurred.
    On February 8, 1995, petitioner alleged that the Department made a 
ministerial error in its preliminary margin calculations. The 
Department determined on February 17, 1995, that the allegation raised 
by petitioners was methodological in nature and improperly raised under 
Section 751(f) of the Act.
    In our notice of preliminary determination we stated that we would 
solicit further information on various scope-related issues, including 
class or kind of merchandise.
    On February 10, 1995, we issued a questionnaire to interested 
parties to request further information on whether the scope of the 
investigation constitutes more than one class or kind of merchandise. 
Responses to this questionnaire were submitted on March 27, 1995.
    On February 10, 1995, we issued a supplemental questionnaire to 
Mannesmannrohren-Werke AG (MRW). MRW submitted its supplemental 
responses and revised home market and U.S. sales listings on February 
28, 1995, and March 6, 1995, respectively.
    Pursuant to requests by petitioner and respondent, on February 16, 
1995, a notice was published in the Federal Register (60 FR 9012) 
announcing the postponement of the final determination until June 12, 
1995.
    In March and April 1995, we conducted verification of MRW's 
questionnaire responses. Our verification reports were issued in May 
1995.
    On April 27, 1995, Koppel Steel Corporation, a U.S. producer of 
subject merchandise which appeared as an interested party from the 
outset of this investigation, requested co-petitioner status.
    Respondent and petitioner submitted case briefs on May 16, 1995, 
and rebuttal briefs on May 23, 1995. No public hearing was requested. 
On May 23, 1995, we returned portions of MRW's case brief because we 
determined that it contained new factual information submitted after 
the deadline specified in 19 CFR 353.31 (a)(i)) for the submission of 
factual information. On May 24, 1995, MRW refiled its case brief with 
the new information deleted.

Scope of Investigation

    The following scope language reflects certain modifications made 
for purposes of the final determination, where appropriate, as 
discussed in the ``Scope Issues'' section below.
    The scope of this investigation includes seamless pipes produced to 
the ASTM A-335, ASTM A-106, ASTM A-53 and API 5L specifications and 
meeting the physical parameters described below, regardless of 
application. The scope of this investigation also includes all products 
used in standard, line, or pressure pipe [[Page 31975]] applications 
and meeting the physical parameters below, regardless of specification.
    For purposes of this investigation, seamless pipes are seamless 
carbon and alloy (other than stainless) steel pipes, of circular cross-
section, not more than 114.3 mm (4.5 inches) in outside diameter, 
regardless of wall thickness, manufacturing process (hot-finished or 
cold-drawn), end finish (plain end, bevelled end, upset end, threaded, 
or threaded and coupled), or surface finish. These pipes are commonly 
known as standard pipe, line pipe or pressure pipe, depending upon the 
application. They may also be used in structural applications. Pipes 
produced in non-standard wall thicknesses are commonly referred to as 
tubes.
    The seamless pipes subject to these investigations are currently 
classifiable under subheadings 7304.10.10.20, 7304.10.50.20, 
7304.31.60.50, 7304.39.00.16, 7304.39.00.20, 7304.39.00.24, 
7304.39.00.28, 7304.39.00.32, 7304.51.50.05, 7304.51.50.60, 
7304.59.60.00, 7304.59.80.10, 7304.59.80.15, 7304.59.80.20, and 
7304.59.80.25 of the Harmonized Tariff Schedule of the United States 
(HTSUS).
    The following information further defines the scope of this 
investigation, which covers pipes meeting the physical parameters 
described above:
    Specifications, Characteristics and Uses: Seamless pressure pipes 
are intended for the conveyance of water, steam, petrochemicals, 
chemicals, oil products, natural gas and other liquids and gasses in 
industrial piping systems. They may carry these substances at elevated 
pressures and temperatures and may be subject to the application of 
external heat. Seamless carbon steel pressure pipe meeting the American 
Society for Testing and Materials (ASTM) standard A-106 may be used in 
temperatures of up to 1000 degrees fahrenheit, at various American 
Society of Mechanical Engineers (ASME) code stress levels. Alloy pipes 
made to ASTM standard A-335 must be used if temperatures and stress 
levels exceed those allowed for A-106 and the ASME codes. Seamless 
pressure pipes sold in the United States are commonly produced to the 
ASTM A-106 standard.
    Seamless standard pipes are most commonly produced to the ASTM A-53 
specification and generally are not intended for high temperature 
service. They are intended for the low temperature and pressure 
conveyance of water, steam, natural gas, air and other liquids and 
gasses in plumbing and heating systems, air conditioning units, 
automatic sprinkler systems, and other related uses. Standard pipes 
(depending on type and code) may carry liquids at elevated temperatures 
but must not exceed relevant ASME code requirements.
    Seamless line pipes are intended for the conveyance of oil and 
natural gas or other fluids in pipe lines. Seamless line pipes are 
produced to the API 5L specification.
    Seamless pipes are commonly produced and certified to meet ASTM A-
106, ASTM A-53 and API 5L specifications. Such triple certification of 
pipes is common because all pipes meeting the stringent A-106 
specification necessarily meet the API 5L and ASTM A-53 specifications. 
Pipes meeting the API 5L specification necessarily meet the ASTM A-53 
specification. However, pipes meeting the A-53 or API 5L specifications 
do not necessarily meet the A-106 specification. To avoid maintaining 
separate production runs and separate inventories, manufacturers triple 
certify the pipes. Since distributors sell the vast majority of this 
product, they can thereby maintain a single inventory to service all 
customers.
    The primary application of ASTM A-106 pressure pipes and triple 
certified pipes is in pressure piping systems by refineries, 
petrochemical plants and chemical plants. Other applications are in 
power generation plants (electrical-fossil fuel or nuclear), and in 
some oil field uses (on shore and off shore) such as for separator 
lines, gathering lines and metering runs. A minor application of this 
product is for use as oil and gas distribution lines for commercial 
applications. These applications constitute the majority of the market 
for the subject seamless pipes. However, A-106 pipes may be used in 
some boiler applications.
    The scope of this investigation includes all seamless pipe meeting 
the physical parameters described above and produced to one of the 
specifications listed above, regardless of application, and whether or 
not also certified to a non-covered specification. Standard, line and 
pressure applications and the above-listed specifications are defining 
characteristics of the scope of this investigation. Therefore, seamless 
pipes meeting the physical description above, but not produced to the 
A-335, A-106, A-53, or API 5L standards shall be covered if used in a 
standard, line or pressure application.
    For example, there are certain other ASTM specifications of pipe 
which, because of overlapping characteristics, could potentially be 
used in A-106 applications. These specifications generally include A-
162, A-192, A-210, A-333, and A-524. When such pipes are used in a 
standard, line or pressure pipe application, such products are covered 
by the scope of this investigation.
    Specifically excluded from this investigation are boiler tubing and 
mechanical tubing, if such products are not produced to A-335, A-106, 
A-53 or API 5l specifications and are not used in standard, line or 
pressure applications. In addition, finished and unfinished OCTG are 
excluded from the scope of this investigation, if covered by the scope 
of another antidumping duty order from the same country. If not covered 
by such an OCTG order, finished and unfinished OCTG are included in 
this scope when used in standard, line or pressure applications. 
Finally, also excluded from this investigation are redraw hollows for 
cold-drawing when used in the production of cold-drawn pipe or tube.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the scope of this 
investigation is dispositive.

Scope Issues

    Interested parties in these investigations have raised several 
issues related to the scope. We considered these issues in our 
preliminary determination and invited additional comments from the 
parties. These issues, which are discussed below, are: (A) Whether to 
continue to include end use as a factor in defining the scope of these 
investigations; (B) whether the seamless pipe subject to these 
investigations constitutes more than one class or kind of merchandise; 
and (C) miscellaneous scope clarification issues and scope exclusion 
requests.

A. End Use

    We stated in our preliminary determination that we agreed with 
petitioner that pipe products identified as potential substitutes used 
in the same applications as the four standard, line, and pressure pipe 
specifications listed in the scope would fall within the class or kind 
of subject merchandise and, therefore, within the scope of any orders 
issued in these investigations. However, we acknowledged the 
difficulties involved with requiring end-use certifications, 
particularly the burdens placed on the Department, the U.S. Customs 
Service, and the parties, and stated that we would strive to simplify 
any procedures in this regard.
    For purposes of these final determinations, we have considered 
carefully additional comments submitted by the parties and have 
determined that it is appropriate to [[Page 31976]] continue to employ 
end use to define the scope of these cases with respect to non-listed 
specifications. We find that the generally accepted definition of 
standard, line and pressure seamless pipes is based largely on end use, 
and that end use is implicit in the description of the subject 
merchandise. Thus, end use must be considered a significant defining 
characteristic of the subject merchandise. Given our past experience 
with substitution after the imposition of antidumping orders on steel 
pipe products 1, we agree with petitioner that if products 
produced to a non-listed specification (e.g., seamless pipe produced to 
A-162, a non-listed specification in the scope) were actually used as 
standard, line, or pressure pipe, then such product would fall within 
the same class or kind of merchandise subject to these investigations.

    \1\ See Preliminary Affirmative Determination of Scope Inquiry 
on Antidumping Duty Orders on Certain Welded Non-Alloy Steel Pipes 
from Brazil, the Republic of Korea, Mexico and Venezuela, 59 FR 
1929, January 13, 1994.
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    Furthermore, we disagree with respondents' general contention that 
using end use for the scope of an antidumping case is beyond the 
purview of the U.S. antidumping law. The Department has interpreted 
scope language in other cases as including an end-use specification. 
See Ipsco Inc. v. United States, 715 F.Supp. 1104 (CIT 1989)(Ipsco). In 
Ipsco, the Department had clarified the scope of certain orders, in 
particular the phrase, ``intended for use in drilling for oil and 
gas,'' as covering not only API specification OCTG pipe but, `` `all 
other pipe with [certain specified] characteristics used in OCTG 
applications * * *' '' Ipsco at 1105. In reaching this determination, 
the Department also provided an additional description of the covered 
merchandise, and initiated an end-use certification procedure.
    Regarding implementation of the end use provision of the scope of 
these investigations, and any orders which may be issued in these 
investigations, we are well aware of the difficulty and burden 
associated with such certifications. Therefore, in order to maintain 
the effectiveness of any order that may be issued in light of actual 
substitution in the future (which the end-use criterion is meant to 
achieve), yet administer certification procedures in the least 
problematic manner, we have developed an approach which simplifies 
these procedures to the greatest extent possible.
    First, we will not require end-use certification until such time as 
petitioner or other interested parties provide a reasonable basis to 
believe or suspect that substitution is occurring.2 Second, we 
will require end-use certification only for the product(s) (or 
specification(s)) for which evidence is provided that substitution is 
occurring. For example, if, based on evidence provided by petitioner, 
the Department finds a reasonable basis to believe or suspect that 
seamless pipe produced to A-162 specification is being used as pressure 
pipe, we will require end- use certifications for imports of A-162 
specification. Third, normally we will require only the importer of 
record to certify to the end use of the imported merchandise. If it 
later proves necessary for adequate implementation, we may also require 
producers who export such products to the United States to provide such 
certification on invoices accompanying shipments to the United States. 
For a complete discussion of interested party comments and the 
Department's analysis on this topic, see June 12, 1995, End Use 
Decision Memorandum from Deputy Assistant Secretary Barbara Stafford 
(DAS) to Assistant Secretary Susan Esserman (AS).

    \2\ This approach is consistent with petitioner's request.
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B. Class or Kind

    In the course of these investigations, certain respondents have 
argued that the scope of the investigations should be divided into two 
classes or kinds. Siderca S.A.I.C., the Argentine respondent, has 
argued that the scope should be divided according to size: seamless 
pipe with an outside diameter of 2 inches or less and pipe with an 
outside diameter of greater than 2 inches constitute two classes or 
kinds. Mannesmann S.A., the Brazilian respondent, and Mannesmannrohren-
Werke AG, the German respondent, argued that the scope should be 
divided based upon material composition: carbon and alloy steel 
seamless pipe constitute two classes or kinds.
    In our preliminary determinations, we found insufficient evidence 
on the record that the merchandise subject to these investigations 
constitutes more than one class or kind. We also indicated that there 
were a number of areas where clarification and additional comment were 
needed. For purposes of the final determination, we considered a 
significant amount of additional information submitted by the parties 
on this issue, as well as information from other sources. This 
information strongly supports a finding of one class or kind of 
merchandise. As detailed in the June 12, 1995, Class or Kind Decision 
Memorandum from DAS to AS, we analyzed this issue based on the criteria 
set forth by the Court of International Trade in Diversified Products 
v. United States, 6 CIT 155, 572 F. Supp. 883 (1983). These criteria 
are as follows: (1) The general physical characteristics of the 
merchandise; (2) expectations of the ultimate purchaser; (3) the 
ultimate use of the merchandise; (4) the channels of trade in which the 
merchandise moves; and (5) the cost of that merchandise.
    In the past, the Department has divided a single class or kind in a 
petition into multiple classes or kinds where analysis of the 
Diversified Products criteria indicates that the subject merchandise 
constitutes more than one class or kind. See, for example, Final 
Determination of Sales at Less than Fair Value; Anti-Friction Bearings 
(Apart from Tapered Roller Bearings) from Germany, 54 FR 18992, 18998 
(May 3, 1989) (``AFBs from Germany''); Pure and Alloy Magnesium from 
Canada: Final Affirmative Determination; Rescission of Investigation 
and Partial Dismissal of Petition, 57 FR 30939 (July 13, 1992).
1. Physical Characteristics
    We find little meaningful difference in physical characteristics 
between seamless pipe above and below two inches. Both are covered by 
the same technical specifications, which contains detailed 
requirements.3 While we recognize that carbon and alloy pipe do 
have some important physical differences (primarily the enhanced heat 
and pressure tolerances associated with alloy grade steels), it is 
difficult to say where carbon steel ends and alloy steel begins. As we 
have discussed in our Class or Kind Decision Memorandum of June 12, 
1995, carbon steel products themselves contain alloys, and there is a 
range of percentages of alloy content present in merchandise made of 
carbon steel. We find that alloy grade steels, and pipes made 
therefrom, represent the upper end of a single continuum of steel 
grades and associated attributes.4

    \3\ The relevant ASTM specifications, as well as product 
definitions from other independent sources (e.g., American Iron and 
Steel Institute (AISI)), describe the sizes for standard, line, and 
pressure pipe, as ranging from 1/2 inch to 60 inches (depending on 
application). None of these descriptions suggest a break point at 
two inches.
    \4\ The Department has had numerous cases where steel products 
including carbon and alloy grades were considered to be within the 
same class or kind. See, e.g., Preliminary Determination of Sales at 
Less than Fair Value: Oil Country Tubular Goods from Austria, et 
al., 60 FR 6512 (February 2, 1995); Final Determination of Sales at 
Less than Fair Value: Certain Alloy and Carbon Hot-Rolled Bars, 
Rods, and Semi-Finished Products of Special Bar Quality Engineered 
Steel from Brazil, 58 FR 31496 (June 3, 1993); Final Determination 
of Sales at Less than Fair Value: Forged Steel Crankshafts from the 
United Kingdom, 60 FR 22045 (May 9, 1995). [[Page 31977]] 
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    In those prior determinations where the Department divided a single 
class or kind, the Department emphasized that differences in physical 
characteristics also affected the capabilities of the merchandise 
(either the mechanical capabilities, as in AFBs from Germany, 54 FR at 
18999, 19002-03, or the chemical capabilities, as in Pure and Alloy 
Magnesium from Canada, 57 FR at 30939), which in turn established the 
boundaries of the ultimate use and customer expectations of the 
products involved.
    As the Department said in AFBs from Germany,

    [t]he real question is whether the physical differences are so 
material as to alter the essential nature of the product, and, 
therefore, rise to the level of class or kind distinctions. We 
believe that the physical differences between the five classes or 
kinds of the subject merchandise are fundamental and are more than 
simply minor variations on a theme.

54 Fed. Reg. at 19002. In the present cases, there is insufficient 
evidence to conclude that the differences between pipe over 2 inches in 
outside diameter and 2 inches or less in outside diameter, rise to the 
level of a class or kind distinction.
    Furthermore, with regard to Siderca's allegation that a two-inch 
breakpoint is widely recognized in the U.S. market for seamless pipe, 
the Department has found only one technical source of U.S. market data 
for seamless pipe, the Preston Pipe Report. The Preston Pipe Report, 
which routinely collects and publishes U.S. market data for this 
merchandise, publishes shipment data for the size ranges \1/2\ to 4\1/
2\ inches: It does not recognize a break point at 2 inches. 
Accordingly, the Department does not agree with Siderca that ``the U.S. 
market'' recognizes 2 inches as a physical boundary line for the 
subject merchandise.
    In these present cases, therefore, the Department finds that there 
is insufficient evidence that any physical differences between pipe 
over 2 inches in outside diameter and 2 inches or less in outside 
diameter, or between carbon and alloy steel, rise to the level of class 
or kind distinctions.
2. Ultimate Use and Purchaser Expectations
    We find no evidence that pipe above and below two inches is used 
exclusively in any specific applications. Rather, the record indicates 
that there are overlapping applications. For example, pipe above and 
below two inches may both be used as line and pressure pipe. The 
technical definitions for line and pressure pipe provided by ASTM, 
AISI, and a variety of other sources do not recognize a distinction 
between pipe over and under two inches.
    Likewise, despite the fact that alloy grade steels are associated 
with enhanced heat and pressure tolerances, there is no evidence that 
the carbon or alloy content of the subject merchandise can be 
differentiated in the ultimate use or expectations of the ultimate 
purchaser of seamless pipe.
3. Channels of Trade
    Based on information supplied by the parties, we determine that the 
vast majority of the subject merchandise is sold through the same 
channel of distribution in the United States and is triple-stenciled in 
order to meet the greatest number of applications.
    Accordingly, the channels of trade offer no basis for dividing the 
subject merchandise into multiple classes or kinds based on either the 
size of the outside diameter or on pipe having a carbon or alloy 
content.
4. Cost
    Based on the evidence on the record, we find that cost differences 
between the various products do exist. However, the parties varied 
considerably in the factors which they characterized as most 
significant in terms of affecting cost. There is no evidence that the 
size ranges above and below two inches, and the difference between 
carbon and alloy grade steels, form a break point in cost which would 
support a finding of separate classes or kinds.
    In conclusion, while we recognize that certain differences do exist 
between the products in the proposed class or kind of merchandise, we 
find that the similarities significantly outweigh any differences. 
Therefore, for purposes of the final determination, we will continue to 
consider the scope as constituting one class or kind of merchandise.

C. Miscellaneous Scope Clarification Issues and Exclusion Requests

    The miscellaneous scope issues include: (1) Whether OCTG and 
unfinished OCTG are excluded from the scope of these investigations; 
(2) whether pipes produced to non-standard wall thicknesses (commonly 
referred to as ``tubes'') are covered by the scope; (3) whether certain 
merchandise (e.g., boiler tubing, mechanical tubing) produced to a 
specification listed in the scope but used in an application excluded 
from the scope is covered by the scope; and (4) whether redraw hollows 
used for cold drawing are excluded from the scope. For a complete 
discussion of interested party comments and the Department's analysis 
on these topics, see June 12, 1995, Additional Scope Clarifications 
Decision Memorandum from DAS to AS.
    Regarding OCTG, petitioner requested that OCTG and unfinished OCTG 
be included within the scope of these investigations if used in a 
standard, line or pressure pipe application. However, OCTG and 
unfinished OCTG, even when used in a standard, line or pressure pipe 
application, may come within the scope of certain separate, concurrent 
investigations. We intend that merchandise from a particular country 
not be classified simultaneously as subject to both an OCTG order and a 
seamless pipe order. Thus, to eliminate any confusion, we have revised 
the scope language above to exclude finished and unfinished OCTG, if 
covered by the scope of another antidumping duty order from the same 
country. If not covered by such an OCTG order, finished and unfinished 
OCTG are included in this scope when used in a standard, line or 
pressure pipe application, and, as with other non-listed 
specifications, may be subject to end-use certification if there is 
evidence of substitution.
    Regarding pipe produced in non-standard wall thicknesses, we 
determine that these products are clearly within the parameters of the 
scope of these investigations. For clarification purposes, we note that 
the physical parameters of the scope include all seamless carbon and 
alloy steel pipes, of circular cross-section, not more than 4.5 inches 
in outside diameter, regardless of wall thickness. Therefore, the fact 
that such products may be referred to as tubes by some parties, and may 
be multiple-stenciled, does not render them outside the scope.
    Regarding pipe produced to a covered specification but used in a 
non-covered application, we determine that these products are within 
the scope. We agree with the petitioner that the scope of this 
investigation includes all merchandise produced to the covered 
specifications and meeting the physical parameters of the scope, 
regardless of application. The end-use criteria included in the scope 
is only applicable to products which can be substituted in the 
applications to which the covered specifications are put i.e. standard, 
line, and pressure applications.
    It is apparent that at least one party in this case interpreted the 
scope incorrectly. Therefore, we have clarified the scope to make it 
more explicit that all products made to ASTM A-335, [[Page 31978]] ASTM 
A-106, ASTM A-53 and API 5L are covered, regardless of end use.
    With respect to redraw hollows for cold drawing, the scope language 
excludes such products specifically when used in the production of 
cold-drawn pipe or tube. We understand that petitioner included this 
exclusion language expressly and intentionally to ensure that hollows 
imported into the United States are sold as intermediate products, not 
as merchandise to be used in a covered application.

Standing

    The Argentine, Brazilian, and German respondents have challenged 
the standing of Gulf States Tube to file the petition with respect to 
pipe and tube between 2.0 and 4.5 inches in outside diameter, arguing 
that Gulf States Tube does not produce these products.
    Pursuant to section 732(b)(1) of the Act, an interested party as 
defined in section 771(9)(C) of the Act has standing to file a 
petition. (See also 19 CFR 353.12(a).) Section 771(9)(C) of the Act 
defines ``interested party,'' inter alia, as a producer of the like 
product. For the reasons outlined in the ``Scope Issues'' section 
above, we have determined that the subject merchandise constitutes a 
single class or kind of merchandise. The International Trade Commission 
(ITC) has also preliminarily determined that there is a single like 
product consisting of circular seamless carbon and alloy steel 
standard, line, and pressure pipe, and tubes not more than 4.5 inches 
in outside diameter, and including redraw hollows. (See USITC 
Publication 2734, August 1994 at 18). For purposes of determining 
standing, the Department has determined to accept the ITC's definition 
of like product, for the reasons set forth in the ITC's preliminary 
determination. Because Gulf States is a producer of the like product, 
it has standing to file a petition with respect to the class or kind of 
merchandise under investigation. Further, as noted in the ``Case 
History'' section of this notice, on April 27, 1995, Koppel, a U.S. 
producer of the product size range at issue, filed a request for co-
petitioner status, which the Department granted. As a producer of the 
like product, Koppel also has standing.
    The Argentine respondent argues that Koppel's request was filed too 
late to confer legality on the initiation of these proceedings with 
regard to the products at issue. Gulf States Tube maintains that the 
Department has discretion to permit the amendment of a petition for 
purposes of adding co-petitioners who produce the domestic like 
product, at such time and upon such circumstances as deemed appropriate 
by the Department.
    The Court of International Trade (CIT) has upheld in very broad 
terms the Department's ability to allow amendments to petitions. For 
example, in Citrosuco Paulista, S.A. v. United States, 704 F. Supp. 
1075 (Ct. Int'l Trade 1988), the Court sustained the Department's 
granting of requests for co-petitioner status filed by six domestic 
producers on five different dates during an investigation. The Court 
held that the addition of the co-petitioners cured any defect in the 
petition, and that allowing the petition to be amended was within 
Commerce's discretion:

    [S]ince Commerce has statutory discretion to allow amendment of 
a dumping petition at any time, and since Commerce may self-initiate 
a dumping petition, any defect in a petition filed by [a domestic 
party is] cured when domestic producers of the like product [are] 
added as co-petitioners and Commerce [is] not required to start a 
new investigation.

Citrosuco, 704 F. Supp. at 1079 (emphasis added). The Court reasoned 
that if Commerce were to have dismissed the petition for lack of 
standing, and to have required the co-petitioners to refile at a later 
date, it ``would have elevated form over substance and fruitlessly 
delayed the antidumping investigation . . . when Congress clearly 
intended these cases to proceed expeditiously.'' Id. at 1083-84.
    Koppel has been an interested party and a participant in these 
investigations from the outset. The timing of Koppel's request for co-
petitioner status and the fact that it made its request in response to 
Siderca's challenge to Gulf States's Tube's standing does not render 
its request invalid. See Final Affirmative Countervailing Duty 
Determination; Live Swine and Fresh, Chilled, and Frozen Pork Products 
from Canada, 50 FR 25097 (June 17, 1985). The Department has rejected a 
request to add a co-petitioner based on the untimeliness of the request 
only where the Department determined that there was not adequate time 
for opposing parties to submit comments and for the Department to 
consider the relevant arguments. See Final Affirmative Countervailing 
Duty Determination: Certain Stainless Steel Hollow Products from 
Sweden, 52 FR 5794, 5795, 5803 (February 26, 1987). In this 
investigation, the respondents have had an opportunity to comment on 
Koppel's request for co-petitioner status, and the Argentine respondent 
has done so in its case brief. Therefore, we have determined that, 
because respondents would not be prejudiced or unduly burdened, 
amendment of the petition to add Koppel as co-petitioner is 
appropriate.

Period of Investigation

    The period of investigation (POI) is January 1, through June 30, 
1994.

Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute and to the 
Department's regulations are in reference to the provisions as they 
existed on December 31, 1994.
Such or Similar Comparisons

    We have determined that all the products covered by this 
investigation constitute a single category of such or similar 
merchandise.

Best Information Available (BIA)

    We have determined that the questionnaire responses submitted by 
MRW are unusable because we were unable to verify their accuracy. Most 
importantly, we found at verification that MRW failed to include the 
costs incurred by one of its two manufacturing facilities which 
produced subject merchandise during the POI among the costs reported 
for differences-in-merchandise (difmer) adjustment purposes, despite 
the fact that the response had indicated, and MRW claimed up until the 
final hours of verification, that its reported costs reflected a 
weighted-average of the two plants. Accurate difmer information is 
crucial to the Department's analysis in this case because there are 
very few, if any, comparisons of identical merchandise. In general, 
seamless pipe in Germany is produced and sold to DIN specifications 
while seamless pipe exported to the United States is produced to ASTM 
specifications.
    Other significant problems were discovered at verification. Company 
officials could not explain or provide adequate support documentation 
to explain numerous discrepancies and omissions. MRW was unable to tie 
the reported difmer data to its financial statements. MRW also failed 
to adequately demonstrate that the sales data reported to the 
Department took into account changes in price, quantity and date of 
sale. Finally, numerous other errors were found ranging in magnitude 
from significant discrepancies to minor clerical errors, for the 
majority of the items we attempted to verify. Collectively, these 
discrepancies and omissions demonstrate that MRW's questionnaire 
response is unreliable and unusable for purposes of the final 
determination.
    Section 776(b) of the Act provides that if the Department is unable 
to verify, within the time specified, the accuracy and completeness of 
the factual information submitted, it shall [[Page 31979]] use BIA as 
the basis for its determination. Consequently, we have based this 
determination on BIA. (See decision memorandum from The Team to Barbara 
R. Stafford dated June 12, 1995, for a detailed discussion of our 
verification findings and BIA recommendation.)
    In determining what rate to use as BIA, the Department follows a 
two-tiered BIA methodology, whereby the Department may impose the most 
adverse rate upon those respondents who refuse to cooperate or 
otherwise significantly impede the proceeding, or assign a lower rate 
for those respondents who have cooperated in an investigation. When a 
company is deemed uncooperative, it has been the Department's practice 
to apply as BIA the higher of the highest margin alleged in the 
petition or the highest rate calculated for any respondent. The 
Department's practice for applying BIA to cooperative respondents is to 
use the higher of the average of the margins alleged in the petition or 
the highest calculated margin for another firm for the same class or 
kind of merchandise from the same country. See Final Determination of 
Sales at Less Than Fair Value: Antifriction Bearings (Other Than 
Tapered Roller Bearings) and Parts Thereof From the Federal Republic of 
Germany, 54 FR 18992, 19033 (May 3, 1989). The Department's two-tier 
methodology for assigning BIA based on the degree of respondents' 
cooperation has been upheld by the U.S. Court of Appeals for the 
Federal Circuit. (See Allied-Signal Aerospace Co. v. the United States, 
996 F2d 1185 (Fed Cir. 1993); see also Krupp Stahl AG. et al v. the 
United States, 822 F. Supp. 789 (CIT 1993).)
    We have determined that MRW was uncooperative during this 
proceeding and have assigned a margin based on uncooperative BIA. 
Because there are no other respondents in this investigation we are 
assigning, as BIA, the highest margin among the margins alleged in the 
petition. MRW significantly impeded our administration of the case by 
misrepresenting the methodology it used in the response regarding the 
costs of the unreported plant.
    MRW did not alert the Department at any time to any difficulties in 
providing the information requested in the questionnaire concerning the 
unreported manufacturing facility, and had indicated that the plant's 
costs had been included in a weighted-average calculation. In addition, 
much of the documentation we requested at verification was received 
late in the verification process, was incomplete, or, in some cases, 
not received at all. MRW was unable to demonstrate: (1) How many of the 
figures reported on the sales listing were calculated; (2) how they 
tied to source documentation; and (3) a tie to financial statements. 
Therefore, we are assigning MRW the highest margin alleged in the 
petition as uncooperative BIA.

Fair Value Comparisons

    To determine whether sales of subject merchandise from Germany to 
the United States were made at less than fair value, we compared United 
States price (USP) to foreign market value (FMV) as reported in the 
petition. See Initiation of Antidumping Duty Investigation of Small 
Diameter Circular Seamless Carbon and Alloy Steel Standard, Line, and 
Pressure Pipe From Argentina, Brazil, Germany and Italy (59 FR 37025, 
July 20, 1994).

Interested Party Comments

General Issues

    Comment 1. MRW argues that petitioner lacks standing to seek the 
imposition of antidumping duties on products that it does not produce. 
According to MRW, petitioner has admitted that it is incapable of 
manufacturing seamless pipe and tube in dimensions above two inches in 
outside diameter. Therefore, respondent maintains that petitioner is 
not an ``interested party'' with respect to this merchandise. 
Accordingly, the Department should amend the scope of the investigation 
to limit it only to those dimensions and pipe types that petitioner has 
a proven ability to manufacture.
    Gulf States Tube contends that the antidumping statute neither 
requires nor permits the Department to limit the scope of the 
investigation to products that the petitioner itself produces. Gulf 
States Tube also maintains that respondent's standing claim is untimely 
and may not be considered by the Department at this stage of the 
proceeding. Nevertheless, Gulf States Tube asserts that the issue is 
rendered moot by the request of Koppel Steel Corporation, a domestic 
producer of subject merchandise in sizes larger two inches in outside 
diameter, for co-petitioner status.
    DOC Position. We agree with petitioner for the reasons outlined in 
the ``Standing'' section of this notice.
    Comment 2. MRW contends that including an end-use certification 
requirement in the scope would be both illegal and unworkable. 
Respondent maintains that petitioner is effectively seeking to 
circumvent the established legal procedure by arguing for an open-ended 
scope definition that encompasses products that it does not manufacture 
and that petitioner has conceded are not causing present injury. In 
addition, respondent states that it is clear that any end-use 
certification procedure designed to implement such a scope definition 
is wholly unworkable because of the manner in which the subject 
products are sold. That is, in almost all cases the importer of record 
never knows the ultimate use of the pipe products it sells, and in many 
instances, neither do its customers. According to MRW, as a practical 
matter, the effect of an end-use certification requirement would be to 
ask the impossible of importers. Furthermore, respondent states that 
the anticircumvention procedures of the antidumping law provide ample 
remedy to petitioner in cases of circumvention via product 
substitution. MRW emphasizes that absent the detailed inquiry required 
by anti-circumvention legal provisions, the Department cannot include 
within the scope of this investigation other merchandise simply because 
such other products might in theory be utilized for the same purposes 
as pipe meeting the listed specifications. According to respondent, to 
do otherwise is contrary to the antidumping law and deprives 
respondents of their right to a full and fair hearing on any 
circumvention allegations that might be advanced by petitioner at some 
later date.
    Petitioner argues that there is no factual or legal basis for 
eliminating end-use as a defining element of the scope of the 
investigation. Furthermore, not only is the feasibility of specific 
enforcement mechanisms irrelevant to the scope determination, but it is 
also untrue that any end-use certification procedure would be 
unworkable. According to petitioner, there is no evidence on the record 
of this investigation that an end-use certification program must 
require the submission of an end-use certificate by the importer at the 
time of importation. Rather, petitioner envisions a program whereby the 
end-use certificate travels with the pipe to the ultimate end-user, who 
may then send it back up the line of distribution. When final duties 
are assessed, the Department may assume that any pipe for which no 
certificates can be produced was used in subject applications. Contrary 
to MRW's arguments, petitioner maintains that the Department and the 
U.S. Customs Service are perfectly capable of administering an order 
that includes end use in its scope definition. In the event that 
products meeting the [[Page 31980]] physical description of subject 
merchandise, but which are not certified to one or more of the covered 
specifications are being substituted into one of the listed 
applications, the burden would be on the petitioner, other domestic 
producers or interested parties, to notify Customs and the Department 
with some objective evidence supporting a reasonable belief that 
substitution is occurring. However, it is both unnecessary and 
inappropriate at this point to engage in debate about the feasibility 
and desirability of specific end-use certification procedures. 
According to petitioner, the facts and policy considerations relevant 
to such a debate are not available on this record, and the selection of 
a specific enforcement mechanism is beyond the Department's 
responsibilities in this proceeding.
    DOC Position. We disagree with respondent's assertion that 
including end-use in the scope of the investigation would be unlawful. 
The Department has interpreted scope language in other cases as 
including an end-use specification. See Ipsco Inc. v. United States, 
715 F. Supp. 1104 (CIT 1989). See the ``Scope Issues'' section of this 
notice for further discussion on end-use.
    Comment 3. MRW contends that the carbon and alloy pipe products 
subject to investigation are distinct classes or kinds of merchandise. 
MRW asserts that the criteria set out in Diversified Products support a 
division between carbon and alloy products. Specifically, MRW argues 
that carbon and alloy pipes differ in terms of physical 
characteristics, uses, customer expectations and cost. With respect to 
physical characteristics, alloy seamless pipes contain higher grade 
steel than carbon seamless pipe, and because of their different 
chemistries, these products have different performance characteristics. 
With respect to end use which, according to respondent, is inherently 
tied to physical characteristics, carbon pipe is not as versatile as 
alloy steel pipe and is not suited for the more sophisticated 
applications, such as operations in high temperature environments. 
Respondent asserts that the Department has consistently emphasized the 
relationship between physical characteristics and end use in past cases 
(e.g., Torrington Co. v. United States, 745 F.Supp. at 726 (CIT 1990)). 
In addition, respondent states that customer expectations vary 
depending upon the ability of specific merchandise to perform a given 
task. With regard to alloy and carbon steel pipe, the ultimate 
purchaser does not expect these two types of pipe to be 
interchangeable, and is willing to pay more for alloy steel pipe 
because it must perform under more adverse conditions than those for 
which carbon pipe is suited. With respect to cost, respondent states 
that the cost of alloy pipe is higher than that of carbon pipe because 
of the more expensive raw materials and production costs incurred in 
producing alloy pipe. Finally, with respect to channels of trade, 
respondent states that carbon and alloy pipe move in similar channels; 
however, this factor is not determinative as to class or kind of 
merchandise.
    Petitioner maintains that the subject merchandise constitutes a 
single class or kind. With respect to MRW's proposal for a split in 
class or kind on the basis of material composition, petitioner asserts 
that the factual evidence does not support such a division. 
Petitioner's state that the application of the criteria employed by the 
Department in Diversified Products compels the conclusion that there is 
a single class or kind of merchandise. According to petitioner, the 
physical characteristics of carbon and alloy pipe represent a single 
continuum of product produced with varying chemical compositions to 
meet a range of heat, pressure and tensile requirements. According to 
petitioner, there is simply no bright dividing line between the 
physical characteristics of the products. Petitioner states that the 
customer's expectations and use of the product are dictated by the 
engineering specification required by the intended application. Because 
the majority of all subject seamless pipe is triple-certified, the pipe 
may be put to any of the uses that apply to each of the individual 
specifications to which it is certified. Petitioner points out that the 
vast majority of seamless pipe is sold through the same channel of 
trade--distributors. Finally, petitioner adds that because the majority 
of seamless pipe is triple-certified, it has identical costs regardless 
of the customer to whom it is sold.
    DOC Position. We agree with petitioner that the subject merchandise 
constitutes a single class or kind for the reasons outlined in the 
``Scope Issues'' section of this notice.

Company-Specific Issues

    For a number of reasons articulated in its briefs, with which we 
concur, petitioner argues that the final determination should be based 
on BIA, and that MRW should be found to be uncooperative.
    MRW disagrees and argues that the Department's verification report 
does not offer a balanced assessment of the verification. MRW states 
that the Department verified the accuracy of its reported sales 
information and that the discrepancies found at verification were 
minor. Furthermore, respondent argues that the minor discrepancies 
detailed in the verification report should be evaluated in the context 
of the vast majority of data that tied exactly to source documentation. 
Respondent states that the minor discrepancies found at verification do 
not affect the Department's ability to perform its antidumping 
analysis.
    Respondent states that the delays in providing information 
requested by the Department at verification were a result of the manner 
in which its records are kept in the ordinary course of business. MRW 
cites to Nippon Pillow Block Sales Co. v. United States, 820 F. Supp. 
1444, 1449 (CIT 1993), and Fresh Cut Roses from Colombia (Final) 60 FR 
6980, 7009 (February 6, 1995) as examples of Department policy that 
respondents cannot be penalized because of the way their records are 
kept.
    Regarding its failure to include the costs of one of its plants in 
its reported difmer costs, MRW states the manner in which it reported 
difmer costs is reasonable given that this plant is a newly acquired 
facility located in the former German Democratic Republic, which was a 
non-market economy until recently. Furthermore, MRW states that it is 
extraordinarily difficult to calculate actual, verifiable costs for a 
plant that has operated under a planned economy and that it is 
appropriate to use the surrogate costs of a plant in the Federal 
Republic of Germany to perform antidumping calculations.
    DOC Position. We agree with petitioner that the magnitude and 
nature of the problems found at verification require that we base MRW's 
margin on BIA. (See Best Information Available (BIA) section of this 
notice).
    We disagree with respondent's assertion that it is being penalized 
for the way its records are kept. We must hold all respondents to a 
basic standard of accuracy and completeness at verification while 
taking into account the limitations existing with respect to the 
respondent's sales and cost accounting systems. We require all 
respondents, regardless of record keeping systems, to prepare for 
verification in such a manner that the Department's questions can be 
answered within a specified period of time. To this end, we supply all 
respondents with an outline which specifies the type of documentation 
that needs to be available at verification. MRW did not have the 
necessary documentation readily available, which prevented us from 
verifying its response. Most [[Page 31981]] significantly, respondents 
are expected to be forthcoming in their responses to the Department's 
requests for information. In this case, respondent failed to report 
fundamental information--cost data relating to one of its plants 
producing subject merchandise. In other words, respondent withheld 
information critical to verification and thus BIA is required.

Other Comments

    Petitioner and respondent made additional comments on various 
charges and adjustments contained in MRW's home market and U.S. sales 
listings. However, since we are basing our final determination on BIA, 
we consider these comments to be moot.

Continuation of Suspension of Liquidation
    In accordance with section 733(d)(1) of the Act, 19 USC 
1673b(d)(1), we directed the Customs Service to suspend liquidation of 
all entries of seamless pipe from Germany, as defined in the ``Scope of 
Investigation'' section of this notice, that are entered, or withdrawn 
from warehouse, for consumption on or after January 27, 1995.
    Pursuant to the results of this final determination, we will 
instruct the Customs Service to require a cash deposit or posting of a 
bond equal to the estimated final dumping margin, as shown below for 
entries of seamless pipe from Germany that are entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
this notice in the Federal Register. The suspension of liquidation will 
remain in effect until further notice.

------------------------------------------------------------------------
                                                                 Margin 
                Manufacturer/producer/exporter                   percent
------------------------------------------------------------------------
Mannesmannrohren-Werke AG.....................................     58.23
All Others....................................................     58.23
------------------------------------------------------------------------

ITC Notification

    In accordance with section 735(d) of the Act, we have notified the 
ITC of our determination. The ITC will make its determination whether 
these imports materially injure, or threaten injury to, a U.S. industry 
within 45 days of the publication of this notice. If the ITC determines 
that material injury or threat of material injury does not exist, the 
proceeding will be terminated and all securities posted as a result of 
the suspension of liquidation will be refunded or canceled. However, if 
the ITC determines that material injury or threat of material injury 
does exist, the Department will issue an antidumping duty order.

Notification to Interested Parties

    This notice serves as the only reminder to parties subject to 
administrative protective order (APO) in these investigations of their 
responsibility covering the return or destruction of proprietary 
information disclosed under APO in accordance with 19 CFR 353.34(d). 
Failure to comply is a violation of the APO.
    This determination is published pursuant to section 735(d) of the 
Act (19 USC 1673(d)) and 19 CFR 353.20.

    Dated: June 12, 1995.
Susan G. Esserman,
Assistant Secretary for Import Administration.
[FR Doc. 95-14938 Filed 6-16-95; 8:45 am]
BILLING CODE 3510-DS-P