[Federal Register Volume 61, Number 198 (Thursday, October 10, 1996)]
[Notices]
[Pages 53199-53203]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-26086]



[[Page 53199]]

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DEPARTMENT OF COMMERCE
[A-427-811]


Certain Stainless Steel Wire Rods From France: Preliminary 
Results of Antidumping Duty Administrative Review

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

ACTION: Notice of Preliminary Results of Antidumping Duty 
Administrative Review.

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SUMMARY: In response to a request by Imphy S.A. and Ugine-Savoie 
(respondents), the Department of Commerce (the Department) is 
conducting an administrative review of the antidumping duty order on 
certain stainless steel wire rods from France. This review covers the 
above manufacturers/exporters of the subject merchandise to the United 
States. The period of review (POR) is January 1, 1995 through December 
31, 1995.
    We have preliminarily determined that respondents sold subject 
merchandise at less than normal value (NV) during the POR. If these 
preliminary results are adopted in our final results of this 
administrative review, we will instruct U.S. Customs to assess 
antidumping duties equal to the difference between the export price 
(``EP'') or constructed export price (``CEP'') and the NV.
    We invite interested parties to comment on these preliminary 
results. Parties who submit argument in this proceeding should also 
submit with the argument (1) a statement of the issue, and (2) a brief 
(no longer than five pages, including footnotes) summary of the 
argument.

EFFECTIVE DATE: October 10, 1996.

FOR FURTHER INFORMATION CONTACT: Stephen Jacques or Jean Kemp, AD/CVD 
Enforcement Group III, Office 9, Import Administration, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, N.W., Washington, DC 20230; telephone: (202) 482-
3434 or (202) 482-4037, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the Tariff Act of 
1930, as amended (the Act), are references to the provisions effective 
January 1, 1995, the effective date of the amendments made to the Act 
by the Uruguay Round Agreements Act (URAA). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
to the current regulations, as amended by the interim regulations 
published in the Federal Register on May 11, 1995 (60 FR 25130).

Background

    On December 29, 1993, the Department published in the Federal 
Register (58 FR 68865) the final affirmative antidumping duty 
determination on certain stainless steel wire rods from France, and 
published an amended final determination and antidumping duty order on 
January 28, 1994. On January 26, 1996, the Department published the 
Opportunity to Request an Administrative Review of this order for the 
period January 1, 1995-December 31, 1995 (61 FR 2488). The Department 
received a request for an administrative review from Imphy, S.A. 
(``Imphy'') and Ugine-Savoie (``Ugine''), related producers/exporters 
of the subject merchandise, on January 22, 1996. We initiated the 
review on February 20, 1996 (61 FR 6347).
    The Department is now conducting this review in accordance with 
section 751 of the Act. The review covers sales of certain stainless 
steel wire rods by Imphy, Ugine, and their affiliated companies, 
Metalimphy Alloys Corp. (``MAC''), and Techalloy Company, Inc. 
(``Techalloy'').

Scope of the Review

    The products covered by this administrative review are certain 
stainless steel wire rods (SSWR) products which are hot-rolled or hot-
rolled annealed, and/or pickled rounds, squares, octagons, hexagons, or 
other shapes, in coils. SSWR are made of alloy steels containing, by 
weight, 1.2 percent or less of carbon and 10.5 percent or more of 
chromium, with or without other elements. These products are only 
manufactured by hot-rolling, are normally sold in coiled form, and are 
of solid cross section. The majority of SSWR sold in the United States 
is round in cross-sectional shape, annealed, and pickled. The most 
common size is 5.5 millimeters in diameter.
    The SSWR subject to this review is currently classifiable under 
subheadings 7221.00.0005, 7221.00.0015, 7221.00.0020, 7221.00.0030, 
7221.00.0040, 7221.00.0045, 7221.00.0060, 7221.00.0075, and 
7221.00.0080 of the Harmonized Tariff Schedule of the United States 
(HTSUS). Although the HTSUS subheadings are provided for convenience 
and Customs purposes, our written description of the scope of the order 
is dispositive.

Verification

    As provided in section 782(i) of the Tariff Act, we verified 
information provided by the respondents by using standard verification 
procedures, including onsite inspection of the manufacturer's 
facilities, the examination of relevant sales and financial records, 
and selection of original documentation containing relevant 
information. Our verification results are outlined in the public 
versions of the verification reports.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by the respondents, covered by the description in the 
Scope of the Review section, above, and sold in the home market during 
the POR, to be foreign like products for purposes of determining 
appropriate product comparisons to U.S. sales. Where there were no 
sales of identical merchandise in the home market to compare to U.S. 
sales, we compared U.S. sales to the next most similar foreign like 
product on the basis of the characteristics listed in Appendix III of 
the Department's March 21, 1996 antidumping questionnaire. In making 
the product comparisons, we matched foreign like products based on the 
physical characteristics reported by the respondents and verified by 
the Department.

Fair Value Comparisons

    To determine whether sales of subject merchandise to the United 
States were made at less than fair value, we compared the EP or CEP to 
the NV, as described in the ``Export Price and Constructed Export 
Price'' and ``Normal Value'' sections of this notice. In accordance 
with section 777A(d)(2), we calculated monthly weighted-average prices 
for NV and compared these to individual U.S. transactions.

Transactions Reviewed

    As we stated in our final results of the first administrative 
review, sales of merchandise that can be demonstrably linked with 
entries prior to the suspension of liquidation, and in the absence of 
an affirmative critical circumstances finding, are not subject 
merchandise and therefore are not subject to review by the Department 
(see Certain Stainless Steel Wire Rods from France; Final Results of 
Antidumping Duty Administrative Review, 61 FR 47874-6 (September 11, 
1996)).
    In this review, as in the first administrative review, respondents 
claimed that sales of certain merchandise were not subject to review 
because the merchandise entered prior to the suspension of liquidation 
pursuant to the preliminary determination of sales at less-than-fair-

[[Page 53200]]

value. In the first administrative review, we verified respondents' 
ability to link these pre-suspension entries with individual period-of-
review sales (see Certain Stainless Steel Wire Rods from France; Final 
Results of Antidumping Duty Administrative Review, 61 FR 47874, 47875 
(September 11, 1996)). At verification in France during this review, we 
examined documentation, including inventory records, invoices and 
packing lists for U.S. sales, that we tied to respondents' 
questionnaire response. We found no evidence in this review that called 
into question respondents' ability to link particular sales during the 
period of review to entries of merchandise prior to the suspension of 
liquidation. Because respondents have demonstrated that this 
merchandise entered prior to the suspension of liquidation, we excluded 
the sales of this merchandise from our analysis.

Export Price and Constructed Export Price

    We used EP, in accordance with subsections 772 (a) and (c) of the 
Act, where the subject merchandise was sold directly or indirectly to 
the first unaffiliated purchaser in the United States prior to 
importation and CEP was not otherwise warranted based on the facts of 
record. In addition, we used CEP in accordance with subsections 772(b), 
(c) and (d) of the Act, for those sales to the first unaffiliated 
purchaser that took place after importation into the United States.
    We made adjustments as follows:
    We calculated EP based on packed prices to unaffiliated customers 
in the United States. Where appropriate, we made deductions from the 
starting price for discounts, foreign inland freight, foreign brokerage 
and handling, international freight, U.S. inland freight, U.S. 
brokerage and handling, marine insurance and U.S. Customs duties. We 
also adjusted the starting price for billing adjustments to the invoice 
price.
    We calculated CEP sales based on packed prices to unaffiliated 
customers. Where appropriate, we made deductions for early payment 
discounts, credit expenses, warranty expenses, other direct selling 
expenses and commissions. We deducted those indirect selling expenses, 
including inventory carrying costs and product liability premiums, that 
related to commercial activity in the United States. We also made 
deductions for foreign brokerage and handling, foreign inland freight, 
international freight, U.S. inland freight, U.S. brokerage and 
handling, marine insurance, U.S. repacking expenses and U.S. Customs 
duties. We also adjusted the starting price for billing adjustments to 
the invoice price and for interest revenue. Finally, we made an 
adjustment for CEP profit in accordance with section 772(d)(3) of the 
Act.

Further Manufacturing

    For products that were further manufactured after importation, we 
adjusted for all value added in the United States, including the 
proportional amount of profit attributable to the value added. We 
computed profit based on total revenues realized on sales in both the 
U.S. and home markets, less all expenses associated with those sales. 
We then allocated profit to expenses incurred with respect to U.S. 
economic activity (including further manufacturing costs), based on the 
ratio of total U.S. expenses to total expenses for both the U.S. and 
home market.

Normal Value

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV, 
we compared respondents' volume of home market sales of the foreign 
like product to the volume of U.S. sales of the subject merchandise, in 
accordance with section 773(a)(1)(C) of the Act. Since respondents' 
aggregate volume of home market sales of the foreign like product was 
greater than five percent of its aggregate volume of U.S. sales for the 
subject merchandise, we determined that the home market was viable. 
Therefore, we have based NV on home market sales.
    Where appropriate, we deducted discounts, credit expenses, warranty 
expenses, inland freight and inland insurance. We also adjusted the 
starting price for billing adjustments to the invoice price and 
interest revenue. We did not adjust the starting price for commissions 
in the home market (please see the Concurrence Memorandum for a 
discussion of this issue).
    We made adjustments, where appropriate, for physical differences in 
the merchandise in accordance with section 773(a)(6)(C)(ii) of the Act. 
In accordance with the Department's practice, where the difference in 
merchandise adjustment for any product comparison exceeded 20 percent, 
we based normal value on CV. In addition, in accordance with section 
773(a)(6), we deducted home market packing costs and added U.S. packing 
costs.
    We also made adjustments, where applicable, for home market 
indirect selling expenses to offset U.S. commissions in EP and CEP 
comparisons.

Price to CV Comparisons

    Where we compared CV to EP, we deducted from CV the weighted-
average home market direct selling expenses and added the weighted-
average U.S. product-specific direct selling expenses.

Cost of Production Analysis

    As of the initiation of this review, the Department had not 
completed the first administrative review. Therefore, for purposes of 
the COP initiation, pursuant to section 773(b)(2)(A)(ii), we had 
reasonable grounds to believe or suspect that sales of the foreign like 
product under consideration for the determination of NV in this review 
may have been made at prices below the COP because the Department 
disregarded sales below the cost of production (COP) in the LTFV 
investigation (see Final Determination of Sales at Less than Fair 
Value: Certain Stainless Steel Wire Rods from France, 58 FR 68865 
(December 29, 1993)). Therefore, pursuant to section 773(b)(1) of the 
Act, we initiated COP investigations of sales by respondents in the 
home market.
    In accordance with section 773(b)(3) of the Act, we calculated the 
COP based on the sum of the costs of materials and fabrication employed 
in producing the foreign like product plus selling, general and 
administrative (SG&A) expenses and all costs and expenses incidental to 
placing the foreign like product in condition packed ready for 
shipment. In our COP analysis, we used the home market sales and COP 
information provided by respondents in their questionnaire responses.
    After calculating COP, we tested whether home market sales of SSWR 
were made at prices below COP within an extended period of time in 
substantial quantities and whether such prices permit recovery of all 
costs within a reasonable period of time. We compared model-specific 
COPs to the reported home market prices less any applicable movement 
charges, discounts, and rebates.
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of respondents' sales of a given product were at prices less 
than COP, we did not disregard any below-cost sales of that product 
because the below-cost sales were not made in substantial quantities 
within an extended period of time. Where 20 percent or more of 
respondents' sales of a given product during the POR were at prices 
less than the COP, we disregarded the below-cost sales because they (1) 
were made within an extended period of time in

[[Page 53201]]

substantial quantities in accordance with sections 773(b)(2) (B) and 
(C) of the Act, and (2) based on comparisons of prices to weighted-
average COPs for the POR, were at prices which would not permit 
recovery of all costs within a reasonable period of time in accordance 
with section 773(b)(2)(D) of the Act. Based on this test, we 
disregarded certain below-cost sales in these preliminary results.
    Respondents claimed that the prices they paid to an affiliated 
party for subcontracted work for remelting were on an arm's-length 
basis. The respondents paid the affiliated party a price that was at 
the affiliated party's budgeted rate multiplied by the actual 
quantities. The affiliated party only performed remelting services for 
respondents and respondents (Imphy) had no other remelter other than 
the affiliated party. Consequently, we were unable to compare data on 
remelting prices between respondents and an unaffiliated party. During 
verification, we found that the prices that respondents paid for the 
subcontracted remelting did not include any of the affiliated party's 
cost variance expenses nor the affiliated party's selling, general and 
administrative expenses and, therefore, the prices were not above cost. 
We are able to identify these sales by the control number and product 
code. In order to take into account the cost variances and SG&A that 
were not included, we increased the cost of manufacture for these 
remelted sales by the sum of the affiliated party's actual cost 
variances and SG&A (for a more detailed discussion of this issue, 
please see the public version of the Concurrence Memorandum).
    In accordance with section 773(a)(4) of the Act, we used CV as the 
basis for NV when there were no usable sales of the foreign like 
product in the comparison market. We calculated CV in accordance with 
section 773(e) of the Act. We included the cost of materials and 
fabrication, SG&A expenses, and profit. In accordance with section 
773(e)(2)(A) of the Act, we based SG&A expenses and profit on the 
amounts incurred and realized by the respondents in connection with the 
production and sale of the foreign like product in the ordinary course 
of trade for consumption in the foreign country. For selling expenses, 
we used the weighted-average home market selling expenses.

Arm's-Length Sales

    Sales to affiliated customers in the home market not made at arm's 
length were excluded from our analysis. To test whether these sales 
were made at arm's length, we compared the starting prices of sales to 
affiliated and unaffiliated customers net of all movement charges, 
direct selling expenses, discounts and packing. Where the price to the 
related party was 99.5 percent or more of the price to the unrelated 
party, we determined that the sale made to the related party was at 
arm's-length. Where no related customer ratio could be constructed 
because identical merchandise was not sold to unrelated customers, we 
were unable to determine that these sales were made at arm's length 
and, therefore, excluded them from our analysis. See Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Carbon Steel Flat Products from Argentina, (58 FR 37062, 37077 (July 9, 
1993)). Where the exclusion of such sales eliminated all sales of the 
most appropriate comparison product, we made comparison to the next 
most similar model.

Currency Conversion

    For purposes of the preliminary results, we made currency 
conversions based on the official exchange rates in effect on the dates 
of the U.S. sales as certified by the Federal Reserve Bank of New York. 
Section 773A(a) of the Act directs the Department to use a daily 
exchange rate in order to convert foreign currencies into U.S. dollars, 
unless the daily rate involves a 'fluctuation.' For these preliminary 
results of review, we have determined that a fluctuation exists when 
the daily exchange rate differs from a benchmark by 2.25 percent. The 
benchmark is defined as the rolling average of rates for the past 40 
business days. Therefore, when we determined a fluctuation existed, we 
substituted the benchmark for the daily rate.

Level of Trade (``LOT'')

    As set forth in section 773(a)(1)(B)(i) of the Act and the 
Statement of Administrative Action (``SAA'') accompanying the URAA at 
829-31, to the extent practicable, the Department will calculate NV 
based on sales at the same LOT as the U.S. sales. When the Department 
is unable to find sales of the foreign like product in the comparison 
market at the same LOT as the U.S. sale, the Department may compare the 
U.S. sale to sales at a different LOT in the comparison market.
    In accordance with section 773(a)(7)(A) of the Act, if sales at 
different LOTs are compared, the Department will adjust the NV to 
account for the difference in level of trade if two conditions are met. 
First, there must be differences between the actual selling activities 
performed by the exporter at the LOT of the U.S. sale and the LOT of 
the comparison market sales used to determine NV. Second, the 
differences in the LOTs must affect price comparability as evidenced by 
a pattern of consistent price differences between sales at the 
different LOTs in the country in which NV is determined.
    Section 773(a)(7)(B) of the Act establishes that a CEP ``offset'' 
may be made when two conditions exist: (1) NV is established at a level 
of trade which constitutes a more advanced stage of distribution than 
the level of trade of the CEP; and (2) the data available do not 
provide an appropriate basis for a level-of-trade adjustment.
    In order to determine that there is a difference in level of trade, 
the Department must find that two sales have been made at different 
phases of marketing, or the equivalent. Different phases of marketing 
necessarily involve differences in selling functions, but differences 
in selling functions (even substantial ones) are not alone sufficient 
to establish a difference in the level of trade. Similarly, seller and 
customer descriptions (such as ``distributor'' and ``wholesaler'') are 
useful in identifying different levels of trade, but are insufficient 
to establish that there is a difference in the level of trade.
    Pursuant to section 773(a)(7)(B)(i) of the Act and the SAA at 827, 
in identifying levels of trade for EP and home market sales, we 
considered the selling functions reflected in the starting price before 
any adjustments. For CEP sales, we considered only the selling 
activities reflected in the constructed price, i.e., after the expenses 
and profit were deducted under section 772(d) of the Act. Whenever 
sales were made by or through an affiliated company or agent, we 
considered all selling activities of both affiliated parties, except 
for those selling activities related to the expenses deducted under 
section 772(d) of the Act in CEP situations.
    In implementing these principles in this review, we obtained 
information about the selling activities of the producers/exporters 
associated with each phase of marketing or the equivalent. We asked 
respondents to identify the specific differences and similarities there 
were in selling functions and/or support services between all phases of 
marketing in the home market and the United States.
    In reviewing the selling functions reported by the respondents, we 
examined all types of selling functions and activities reported in 
respondents' questionnaire response on level of trade. In analyzing 
whether separate levels of trade existed in this review, we found

[[Page 53202]]

that no single selling function was sufficient to warrant a separate 
level of trade in the home market (see Antidumping Duties; 
Countervailing Duties; Proposed Rule, (Proposed Regulations), 61 FR 
7308, 7348).
    In determining whether separate levels of trade existed in or 
between the U.S. and home market, the Department considered the level-
of trade claims of respondents. To test the claimed levels of trade, we 
analyzed, inter alia, the selling activities associated with the phases 
of marketing respondents reported. We determined that fewer and 
different selling functions were performed for CEP sales to MAC than 
for home market sales to end-users. We also found the selling functions 
were sufficiently different in customer sales contacts, technical 
services, inventory maintenance, computer systems and administrative 
functions to warrant treating U.S. sales to distributors and the home 
market sales as different levels of trade. In addition, we found that 
the home market sales involved a more advanced stage of distribution 
(to end-users) as compared to respondents' CEP sales in the United 
States (distributor). In this review there were no sales of the foreign 
like product in the home market at the same level of trade as that of 
the CEP sales. Therefore, we examined whether a level-of-trade 
adjustment was appropriate.
    For the U.S. market, respondents reported two levels of trade: 1) 
sales to end users through MAC (EP sales); and 2) distributors, e.g., 
MAC, Techalloy and US&A (CEP sales). The Department examined and 
verified the selling functions performed for both levels of trade. We 
found that the selling functions were sufficiently different in 
customer sales contacts (i.e., visiting customers/potential customers, 
receiving orders, promotion of new products and following-up on unpaid 
invoices), technical services, inventory maintenance, computer systems 
and administrative functions to warrant two levels of trade in the 
United States.
    To the extent practicable, we compared normal value at the same 
level of trade as the U.S. sale. Because we compared these CEP sales to 
home market sales at a different level of trade, we examined whether a 
level of trade adjustment was appropriate. In this case, respondents 
only sold at one level of trade in the home market; therefore, there is 
no basis upon which respondents can demonstrate a consistent pattern of 
price differences between levels of trade with respect to the foreign 
like product. Further, we do not have information which would allow us 
to examine pricing patterns based on respondents' sales of other 
products and there are no other respondents or other record information 
on which such an analysis could be based.
    Because the data available do not provide an appropriate basis for 
making a level of trade adjustment, but the level of trade in the HM is 
at a more advanced stage of distribution than the LOT of the CEP sale, 
a CEP offset is appropriate. Respondents claimed a CEP offset for those 
U.S. CEP and CEP/FM (CEP/Further Manufactured) sales compared to sales 
in France through Ugine Service. We included a CEP offset for all sales 
in France which are compared with CEP and CEP/FM sales in the United 
States since the comparison of home market sales to CEP sales is at a 
different level of trade. We applied the CEP offset to normal value or 
constructed value, as appropriate.
    To calculate the CEP offset, we took the home market indirect 
selling expenses and deducted htis amount from normal value, on home 
market sales which were compared ot U.S. CEP sales. We limited the home 
market indirect selling expense deduction by the amount of the indirect 
selling expenses incurred in the United States.

Preliminary Results of Reviews

    As a result of our review, we preliminarily determine the weighted-
average dumping margins (in percent) for the period January 1, 1995, 
through December 31, 1995 to be as follows:

------------------------------------------------------------------------
                                                                Margin  
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Imphy/Ugine-Savoie..........................................        6.29
------------------------------------------------------------------------

    Parties to the proceeding may request disclosure within five days 
of the date of publication of this notice. Any interested party may 
request a hearing within 10 days of publication. Any hearing, if 
requested, will be held 44 days after the date of publication or the 
first business day thereafter. Case briefs and/or other written 
comments from interested parties may be submitted not later than 30 
days after the date of publication. Rebuttal briefs and rebuttals to 
written comments, limited to issues raised in those comments, may be 
filed not later than 37 days after the date of publication of this 
notice. The Department will publish the final results of this 
administrative review, including its analysis of issues raised in any 
written comments or at a hearing, not later than 180 days after the 
date of publication of this notice.
    The Department shall determine, and the U.S. Customs Service shall 
assess, antidumping duties on all appropriate entries. We have 
calculated an inter-specific ad valorem duty assessment rate based on 
the ratio of the total amount of antidumping duties calculated for the 
examined sales made during the POR to the total amount of antidumping 
duties calculated for the examined sales made during the POR to the 
total customs value of the sales used to calculate those duties. This 
rate will be assessed uniformly on all entries of that particular 
importer made during the POR. (This is equivalent to dividing the total 
amount of antidumping duties, which are calculated by taking the 
difference between statutory NV and statutory EP or CEP, by the total 
statutory ED or CEP value of the sales compared, and adjusting the 
result by the average difference between EP or CEP and customs value 
for all merchandise examined during the POR).
    Furthermore, the following deposit requirements will be effective 
for all shipments of the subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the publication date of the 
final results of these administrative reviews, as provided by section 
751(a)(1) of the Act: (1) the cash deposit rates for the reviewed 
companies will be those rates established in the final results of these 
reviews (except that no deposit will be required for firms with zero or 
de minimis margins, i.e., margins less than 0.5 percent); (2) for 
previously reviewed or investigated companies not listed above, the 
cash deposit rate will continue to be the company-specific rate 
published for the most recent period; (3) if the exporter is not a firm 
covered in this review, a prior review, or the original LTFV 
investigation, but the manufacturer is, the cash deposit rate will be 
the rate established for the most recent period for the manufacturer of 
the merchandise; and (4) the cash deposit rate for all other 
manufacturers or exporters will continue to be 24.51 percent, the ``All 
Others'' rate made effective by the LTFV investigation. These deposit 
requirements, when imposed, shall remain in effect until publication of 
the final results of the next administrative reviews.
    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 C.F.R. 353.26 to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the relevant entries during this review period. Failure to comply 
with this requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the

[[Page 53203]]

subsequent assessment of double antidumping duties.
    These administrative reviews and notice are in accordance with 
section 751(a)(1) of the Act (19 U.S.C. 1675(a)(1)) and 19 C.F.R. 
353.22(c)(5).

    Dated: October 2, 1996.
Robert S. LaRussa,
Assistant Secretary for Import Administration
[FR Doc. 96-26086 Filed 10-9-96; 8:45 am]
BILLING CODE 3510-DS-P