[Federal Register Volume 64, Number 160 (Thursday, August 19, 1999)]
[Notices]
[Pages 45236-45239]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-21569]


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DEPARTMENT OF COMMERCE

International Trade Administration
[A-821-811]


Initiation of Antidumping Duty Investigation: Solid Fertilizer 
Grade Ammonium Nitrate From the Russian Federation

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

EFFECTIVE DATE: August 19, 1999.

FOR FURTHER INFORMATION CONTACT: Rick Johnson at (202) 482-3818, Import 
Administration, International Trade Administration, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 
20230.

INITIATION OF INVESTIGATION:

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (``the Act'') by 
the Uruguay Round Agreements Act (``URAA''). In addition, unless 
otherwise indicated, all citations to the Department's regulations are 
references to the provisions codified at 19 CFR Part 351 (1998).

The Petition

    On July 23, 1999, the Department of Commerce (``the Department'') 
received a petition filed in proper form by the Committee for Fair 
Ammonium Nitrate Trade (``COFANT'' or ``petitioner''), whose members 
are domestic producers of solid fertilizer grade ammonium nitrate. The 
Department received supplemental information to the petition on August 
6, 1999.
    In accordance with section 732(b) of the Act, petitioner alleges 
that imports of fertilizer grade ammonium nitrate from the Russian 
Federation (``Russia'') are being, or are likely to be, sold in the 
United States at less than fair value within the meaning of section 731 
of the Act, and that such imports are materially injuring an industry 
in the United States.
    The Department finds that petitioner filed the petition on behalf 
of the domestic industry because it is an interested party as defined 
in sections 771(9)(C) and (F) of the Act and has demonstrated 
sufficient industry support with respect to the investigation it is 
requesting the Department to initiate (see Determination of Industry 
Support for the Petition below).

Scope of Investigation

    For purposes of this investigation, the products covered are solid, 
fertilizer grade ammonium nitrate products, whether prilled, granular 
or in other solid form, with or without additives or coating, and with 
a bulk density equal to or greater than 53 pounds per cubic foot. 
Specifically excluded from this scope is solid ammonium nitrate with a 
bulk density less than 53 pounds per cubic foot (commonly referred to 
as industrial or explosive grade ammonium nitrate).
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') at 
subheading 3102.30.00.00. Although the HTSUS subheadings are provided 
for convenience and Customs purposes, the written description of the 
merchandise under investigation is dispositive.
    During our review of the petition, we discussed the scope with 
petitioner to ensure that the scope in the petition accurately reflects 
the product for which the domestic industry is seeking relief. 
Moreover, as we discussed in the preamble to the Department's 
regulations (62 FR 27323), we are setting aside a period for parties to 
raise issues regarding product coverage. In particular, we seek 
comments on the

[[Page 45237]]

specific densities of fertilizer grade ammonium nitrate set out in the 
description above. The Department encourages all parties to submit such 
comments by August 23, 1999. Comments should be addressed to Import 
Administration's Central Records Unit at Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, D.C. 
20230. The period of scope consultations is intended to provide the 
Department with ample opportunity to consider all comments and consult 
with parties prior to the issuance of the preliminary determination.

Determination of Industry Support for the Petitions

    Section 732(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 732(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (1) at least 
25 percent of the total production of the domestic like product; and 
(2) more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether the 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (``ITC''), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to the law.1
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    \1\ See Algoma Steel Corp. Ltd., v. United States, 688 F. Supp. 
639, 642-44 (CIT 1988); High Information Content Flat Panel Displays 
and Display Glass Therefore from Japan: Final Determination; 
Rescission of Investigation and Partial Dismissal of Petition, 56 FR 
32376, 32380-81 (July 16, 1991).
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    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition. Moreover, petitioner does not offer a definition of domestic 
like product distinct from the scope of the investigation.
    The domestic like product referred to in the petition is the single 
domestic like product defined in the ``Scope of the Investigation'' 
section, above. The Department has no basis on the record to find the 
petitioner's definition of domestic like product to be inaccurate. We 
found that petitioner submitted sufficient reasonably available 
information that there is a clear dividing line between fertilizer and 
explosive grade ammonium nitrate based on their physical 
characteristics and uses. The Department has, therefore, adopted the 
domestic like product definition set forth in the petition.
    The Department has determined that the petition contains accurate 
and adequate evidence of industry support because petitioner 
established industry support representing 74 percent of total 
production of the domestic like product (see Attachment to the 
Initiation Checklist, Re: Industry Support, August 12, 1999).
    Accordingly, the Department determines that this petition is filed 
on behalf of the domestic industry within the meaning of section 
732(b)(1) of the Act.

Export Price and Normal Value

    Petitioner identified (1) JSC Angarsk Petrochemical Co., (2) JSC 
Berezniki Azot, (3) JCS Cherepovets PO Azot, (4) JSC Dorogobuzh, (5) 
JSC Kemerovo ``Azot,'' (6) JSC Kirovo-Chepetsk, (7) JSC Meleuz Prod. 
Assoc. Minudobreniya, (8) JSC Nevinnomysskiy Azot, (9) JSC Acron, (10) 
JSC Novomendeleyevsk Chemical Plant, (11) JSC Novomoskovsk AK ``Azot,'' 
(12) JSC ``Minudobreniya'', and (13) JSC ``Kuybyshevazot'' as possible 
producers/exporters of solid fertilizer grade ammonium nitrate from 
Russia. Petitioner further asserted that two of these producers, JSC 
Acron and JSC Nevinnomysskiy Azot, have exported significant amounts of 
ammonium nitrate into the United States during the last twelve months.
    Petitioner based export price (``EP'') on two methods: (1) import 
values declared to the U.S. Customs Service during the anticipated 
period of investigation (``POI''); and (2) an actual U.S. selling price 
known to petitioner based on a quote in the anticipated POI provided by 
a U.S. importer on an ex-factory basis. Petitioner based its 
calculation of EP on the average unit value (customs value) of ammonium 
nitrate from Russia, as provided by the U.S. Bureau of the Census, for 
the applicable HTSUS category (3102.30) for the period January, 1999 
through May, 1999. Petitioner deducted foreign inland freight from the 
customs value in order to obtain ex-factory prices. In order to 
calculate foreign inland freight, petitioner used Polish rail and truck 
rates because the per-capita GNP of Poland is much closer to Russia's 
GNP than is U.S. GNP, and because petitioner found transport rates on a 
per ton basis, based on distance traveled. Petitioner also used the 
Polish transport rates because they were the only published reasonably 
available to petitioner, and petitioner had no reasonable basis to know 
whether Russian producers relied on truck or rail transport to move the 
product from plant to port. Petitioner calculated foreign inland 
freight for the two significant producers noted above. Using estimated 
distances for each of these producers, petitioner calculated both a 
rail freight and truck freight estimate, and calculated normal values 
(``NV'') based on each of these estimates. Based on the information 
provided by petitioner, we believe that the use of Polish transport 
rates represents accurate and adequate information reasonably available 
to petitioner and is acceptable for purposes of initiation of this 
investigation.
    In order to calculate actual U.S. selling prices known to 
petitioner, petitioner relied on a quote offered to an unaffiliated 
purchaser. Because the price was based on a ex-factory basis, no 
adjustments were made for foreign inland freight.
    Petitioner asserted that Russia is a non-market economy country 
(``NME'') to the extent that sales or offers for sale of such or 
similar merchandise in Russia or to third countries do not permit 
calculation of NV under 19 CFR 351.404. Petitioner, therefore, 
constructed NV based on the factors of production methodology pursuant 
to section 773(c) of the Act. In previous investigations, the 
Department has determined that Russia is an NME. See, e.g., Notice of 
Final Determination of Sales at Less Than Fair Value: Hot-Rolled Flat-
Rolled Carbon-Quality Steel Products from the Russian Federation, 64 FR 
38626 (July 19, 1999) (``Russian HR Steel''). In accordance with 
section

[[Page 45238]]

771(18)(C)(i) of the Act, a determination of NME status remains in 
effect until revoked by the Department. The determination of NME status 
for Russia has not been revoked by the Department and, therefore, 
remains in effect for purposes of the initiation of this investigation. 
Accordingly, the NV of the product appropriately is based on factors of 
production valued in a surrogate market economy country in accordance 
with section 773(c) of the Act. In the course of this investigation, 
all parties will have the opportunity to provide relevant information 
related to the issues of Russia's NME status and the granting of 
separate rates to individual exporters. See, e.g., Final Determination 
of Sales at Less Than Fair Value: Silicon Carbide from the PRC, 59 FR 
22585 (May 2, 1994).
    For the calculation of NV, petitioner based the factors of 
production, as defined by section 773(c)(3) of the Act (raw materials, 
labor, energy and capital cost), for ammonium nitrate on the quantities 
of inputs used by a representative U.S. producer. Petitioner stated 
that it was unable to furnish information on Russian factors of 
production. Thus, petitioner has assumed, for purposes of the petition, 
that producers in Russia use the same inputs in the same quantities as 
petitioner. Because data regarding the quantities of inputs used by 
Russian producers was not reasonably available to petitioner, for 
purposes of this initiation we have accepted petitioner's U.S. 
quantities.
    Petitioner selected Poland as its primary surrogate. Petitioner 
stated that the per-capita GNP of Poland differs only slightly from 
that of Russia and, thus, it maintains that Poland is the most suitable 
surrogate among the potential surrogates, because it is at a comparable 
level of economic development and is a significant producer of 
comparable merchandise (in accordance with section 773(c)(4) of the 
Act). Based on the information provided by petitioner, we believe that 
the petition contains adequate and accurate information supporting its 
allegation for using Poland as a surrogate country for purposes of 
initiation of this investigation.
    In accordance with section 773(c)(4) of the Act, petitioner valued 
factors of production, where possible, on reasonably available, public 
surrogate country data. Labor was valued using the regression-based 
wage rate for Russia provided by the Department, in accordance with 19 
CFR 351.408(c)(3). Electricity and natural gas were valued using the 
rate for Poland published in a quarterly report of the OECD's 
International Energy Agency for the fourth quarter of 1998. Petitioner 
attempted to obtain Polish import values for materials used in the 
production of ammonium nitrate, but stated that it could not reasonably 
obtain publicly available surrogate information from a comparable 
economy. Because petitioner could not reasonably identify this 
information for materials used in the production of ammonium nitrate 
(chemicals, stabilizers, coating agents and catalysts), petitioner 
relied on costs incurred by the U.S. producer to value the usage 
requirements, which represent only a small portion of total production 
costs. For overhead (exclusive of depreciation), depreciation, general 
expenses, and profit, petitioner applied rates derived from the 1997 
public annual report of a Polish producer of subject merchandise, 
Zaklady Azotowe Kedzierzyn (``ZAK''). For purposes of initiation, we 
made two minor revisions to general expenses. For a further discussion 
of this revision, see Initiation Checklist, page 6, and Attachment III, 
dated August 12, 1999. Based on the information provided by petitioner, 
we believe that the surrogate values represent information reasonably 
available to petitioner and are acceptable for purposes of initiation 
of this investigation. For a more detailed discussion of home market 
price, U.S. price, factors of production and sources of data, see 
Initiation Checklist, dated August 12, 1999. Should the need arise to 
use as facts available under section 776 of the Act any of this 
information in our preliminary or final determinations, we may re-
examine the information and revise the margin calculations, if 
appropriate.
    Based on comparisons of EP to NV, calculated in accordance with 
section 773(c) of the Act, the calculated dumping margins for ammonium 
nitrate from Russia range from 112.08 to 357.09 percent.

Fair Value Comparisons

    Based on the data provided by petitioner, there is reason to 
believe that imports of solid fertilizer grade ammonium nitrate from 
Russia are being, or are likely to be, sold at less than fair value.

Critical Circumstances

    Petitioner has alleged that critical circumstances exist with 
regard to imports of solid fertilizer grade ammonium nitrate from 
Russia, and has supported its allegations with the following 
information.
    First, petitioner claims that there is a history of injurious 
dumping of the subject merchandise by Russian producers. Petitioner 
argues that the Department considers the existence of an antidumping 
duty order covering the subject merchandise in another country as 
sufficient evidence of a history of injurious dumping. Petitioner 
provided a copy of a 1995 antidumping order imposed by the European 
Union on imports of Russian ammonium nitrate (see Exhibit 32, Petition 
dated July 23, 1999). Since this order is still in effect, petitioner 
claims that there is a history of injurious dumping by Russian 
producers of the subject merchandise.
    Petitioner also has alleged that imports from Russia have been 
massive over a relatively short period. Alleging that there was 
sufficient pre-filing notice of the antidumping duty petition, 
petitioner contends that the Department should compare imports during 
September-December 1998 (base period) to imports during January-April 
1999 (comparison period) for purposes of this determination, as 
provided in 19 CFR. 351.206(h)(2)(i). Specifically, petitioner 
supported this allegation with copies of news articles discussing the 
likelihood of filing antidumping complaints against Russian ammonium 
nitrate producers. See Petition dated July 23, 1999, Exhibit 37. 
According to the import statistics contained in the petition, during 
the time periods petitioner has requested for comparison, imports of 
ammonium nitrate from Russia increased by 270.35 percent (based on 
volume) from the period September-December 1998 to the period January-
April 1999.
    In the instant case, the increase in imports was more than fifteen 
times the amount considered ``massive.'' Taking into consideration the 
foregoing, we find that petitioner has alleged the elements of critical 
circumstances and supported them with information reasonably available 
for purposes of initiating a critical circumstances inquiry. For these 
reasons, we will investigate this matter further and will make a 
preliminary determination at the appropriate time, in accordance with 
section 735(e)(1) of the Act and Department practice (see Policy 
Bulletin 98/4 (63 FR 55364, October 15, 1998)).

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that the U.S. industry producing the domestic 
like product is being materially injured, and is threatened with 
material injury, by reason of the individual and cumulated imports of 
the subject merchandise sold at less than NV. Petitioner explained that 
the industry's injured condition is evident in the declining trends in 
net

[[Page 45239]]

operating profits, net sales volumes, as well as domestic prices of 
ammonium nitrate. The allegations of injury and causation are supported 
by relevant evidence including U.S. Customs import data, lost sales, 
and pricing information. The Department assessed the allegations and 
supporting evidence regarding material injury and causation and 
determined that these allegations are supported by accurate and 
adequate evidence and meet the statutory requirements for initiation 
(see Attachments to Initiation Checklist, Re: Material Injury, August 
12, 1999).

Initiation of Antidumping Investigation

    Based upon our examination of the petition on solid fertilizer 
grade ammonium nitrate and petitioner's responses to our supplemental 
questionnaire clarifying the petition, we have found that the petition 
meets the requirements of section 732 of the Act. Therefore, we are 
initiating an antidumping duty investigation to determine whether 
imports of solid fertilizer grade ammonium nitrate from Russia are 
being, or are likely to be, sold in the United States at less than fair 
value. Unless this deadline is extended, we will make our preliminary 
determinations no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the representatives 
of Russia. We will attempt to provide a copy of the public version of 
the petition to each exporter named in the petition, as appropriate.

International Trade Commission Notification

    We have notified the ITC of our initiations, as required by section 
732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will determine, by no later than September 7, 1999, whether 
there is a reasonable indication that imports of solid fertilizer grade 
ammonium nitrate from Russia are causing material injury, or 
threatening to cause material injury, to a U.S. industry. A negative 
ITC determination will result in the investigation being terminated; 
otherwise, this investigation will proceed according to statutory and 
regulatory time limits.
    This notice is published pursuant to section 777(i) of the Act.

    Dated: August 12, 1999.
Bernard Carreau,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-21569 Filed 8-18-99; 8:45 am]
BILLING CODE 3510-DS-P