[Federal Register Volume 64, Number 250 (Thursday, December 30, 1999)]
[Notices]
[Pages 73519-73523]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-33975]


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DEPARTMENT OF COMMERCE

International Trade Administration
[C-122-805]


Final Results of Expedited Sunset Review: New Steel Rail From 
Canada

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

ACTION: Notice of final results of expedited sunset review: New steel 
rail from Canada.

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SUMMARY: On June 1, 1999, the Department of Commerce (``the 
Department'') initiated a sunset review of the countervailing duty 
order on new steel rail from Canada (64 FR 29261) pursuant to section 
751(c) of the Tariff Act of 1930, as amended (``the Act''). On the 
basis of a notice of intent to participate and an adequate substantive 
response filed on behalf of domestic interested parties and inadequate 
response (in this case, no response) from respondent interested 
parties, the Department determined to conduct an expedited review. As a 
result of this review, the Department finds that revocation of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. The net countervailable 
subsidy and the nature of the subsidy are identified in the Final 
Results of Review section of to this notice.

FOR FURTHER INFORMATION CONTACT: Darla D. Brown or Melissa G. Skinner, 
Office of Policy for Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street & Constitution 
Avenue, NW, Washington, DC 20230; telephone: (202) 482-3207 or (202) 
482-1560, respectively.

Effective Date: December 30, 1999.

Statute and Regulations

    This review was conducted pursuant to sections 751(c) and 752 of 
the Act. The Department's procedures for the conduct of sunset reviews 
are set forth in Procedures for Conducting Five-year (``Sunset'') 
Reviews of Antidumping and Countervailing Duty Orders, 63 FR 13516 
(march 20, 1998) (``Sunset Regulations'') and 19 CFR Part 351 (1999) in 
general. Guidance on methodological or analytical issues relevant to 
the Department's conduct of sunset reviews is set forth in the 
Department's Policy Bulletin 98:3--Policies Regarding the Conduct of 
Five-year (``Sunset'') Reviews of Antidumping and Countervailing Duty 
Orders; Policy Bulletin, 63 FR 18871

[[Page 73520]]

(April 16, 1998) (``Sunset Policy Bulletin'').

Scope

    The merchandise subject to this countervailing duty order is new 
steel rail, whether of carbon, high carbon, alloy or other quality 
steel from Canada. Subject merchandise includes but is not limited to, 
standard rails, all main line sections (at least 30 kilograms per meter 
or 60 pounds per yard), heat-treated or head-hardened (premium) rails, 
transit rails, contact rails (or `'third rail'') and crane rails. Rails 
are used by the railroad industry, by rapid transit lines, by subways, 
in mines, and in industrial applications.
    Specifically excluded from the order are light rails (less than 30 
kilograms per meter or 60 pounds per yard). Also excluded from the 
order are relay rails, which are used rails taken up from primary 
railroad track and relaid in a railroad yard or on a secondary track. 
As a result of a changed circumstances review in 1996, the 
countervailing duty order on new steel rail from Canada was partially 
revoked with regard to 100ARA-A new steel rail, except light rail.\1\ 
Moreover, nominal 60 pounds per yard steel rail is outside the scope of 
this order.\2\
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    \1\ See New Steel Rail, Except Light Rail, From Canada; Final 
Results of Changed Circumstances Antidumping and Countervailing Duty 
Administrative Reviews, and Revocation in Part of Antidumping and 
Countervailing Duty Orders, 61 FR 11607 (March 21, 1996).
    \2\ See New Steel Rail, Except Light Rail, From Canada; Notice 
of Termination of Changed Circumstances Administrative Reviews and 
Clarification of Scope Language, 63 FR 43137 (August 12, 1998).
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    This merchandise is currently classifiable under the Harmonized 
Tariff Schedule (HTS) items 7302.10.1010, 7302.10.1015, 7302.10.1035, 
7302.10.1045, 7302.10.5020, 8548.90.0000.\3\ The HTS item numbers are 
provided for convenience and U.S. Customs purposes only. The written 
description remains dispositive.
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    \3\ Per conversation with April Avalone at U.S. Customs on 
September 7, 1999.
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    This order covers imports from all producers and exporters of new 
steel rail from Canada, except the Algoma Steel Corporation, which was 
excluded from the original order.

History of the Order

    In the final determination, as amended, the Department determined 
that the following programs conferred countervailable benefits:

Federal Programs

    (1) Debenture Guarantees Provided to Sydney Steel Corporation 
(``Sysco'');
    (2) Forgiven Wharf Loan;
    (3) Regional Development Incentives Program (``RDIP'');
    (4) Certain Investment Tax Credits (``ITCs'');

Joint Federal-Provincial Programs

    (5) General Development Agreements (``GDA'');
    (6) Economic and Regional Development Agreements (``ERDA'');
    (7) Iron Ore Freight Subsidy to Algoma;

Provincial Programs (Province of Nova Scotia)

    (8) Grants for Payment of Principal and Interest on Debentures;
    (9) Operating Grants Provided to Sysco; and
    (10) Equity Infusions Provided to Sysco.\4\
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    \4\ See Final Affirmative Countervailing Duty Determination; New 
Steel Rail, Except Light Rail, from Canada, 54 FR 31991 (August 3, 
1989), as amended, Countervailing Duty Order and Amendment to the 
Final Affirmative Countervailing Duty Determination of New Steel 
Rail, Except Light Rail, from Canada, 54 FR 39032 (September 22, 
1989), and, as amended New Steel Rail, Except Light Rail, from 
Canada: Amendment to Final Affirmative Countervailing Duty 
Determination and Order in Accordance with Decision on Remand, 55 FR 
35702 (August 31, 1990).
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    Specifically, the Department calculated that these programs 
conferred a total net subsidy of 94.57 percent ad valorem for all 
Canadian manufacturers, producers, or exporters, excluding Algoma. As a 
result of a de minimis net subsidy determined for Algoma, this Canadian 
producer/exporter was excluded from the order.
    Since the original investigation, the Department has conducted a 
changed circumstances review of the order.\5\ As noted above, as a 
result of this review, the Department revoked the countervailing duty 
order with regard to 100ARA-A new steel rail, except light rail from 
Canada.\6\ The Department has not conducted any administrative reviews 
of this order. The order remains in effect for all manufacturers and 
exporters of the subject merchandise from Canada, except for Algoma.
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    \5\ See footnote 1.
    \6\ See id.
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Background

    On June 1, 1999, the Department initiated a sunset review of the 
countervailing duty order on new steel rail from Canada (64 FR 29261), 
pursuant to section 751(c) of the Act. The Department received a Notice 
of Intent to Participate on behalf of Pennsylvania Steel Technologies, 
Inc. (``PST''), a subsidiary of Bethlehem Steel Corporation, and Rocky 
Mountain Steel Mills (``RMSM'') (collectively, the ``domestic 
interested parties'') on June 16, 1999, within the deadline specified 
in section 351.218(d)(1)(i) of the Sunset Regulations. We received a 
complete substantive response from the domestic interested parties on 
July 1, 1999, within the 30-day deadline specified in the Sunset 
Regulations under section 351.218(d)(3)(i). Both PST and RMSM claimed 
interested party status under 19 USC 1677(9)(C) as U.S. manufacturers 
of the subject merchandise. In addition, PST stated that it is a 
subsidiary of Bethlehem Steel Corporation, a petitioner in the original 
investigation. We did not receive a substantive response from any 
respondent interested party in this case. As a result, pursuant to 19 
CFR 351.218(e)(1)(ii)(C), the Department determined to conduct an 
expedited, 120-day, review of the order.
    In accordance with section 751(c)(5)(C)(v) of the Act, the 
Department may treat a review as extraordinarily complicated if it is a 
review of a transition order (i.e., an order in effect on January 1, 
1995). On October 12, 1999, the Department determined that the sunset 
review of the countervailing duty order on new steel rail from Canada 
is extraordinarily complicated, and extended the time limit for 
completion of the final results of this review until not later than 
December 28, 1999, in accordance with section 751(c)(5)(B) of the 
Act.\7\
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    \7\ See extension of Time Limit for Final Results of Five-Year 
Reviews, 64 FR 55233 (October 12, 1999).
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Determination

    In accordance with section 751(c)(1) of the Act, the Department 
conducted this review to determine whether revocation of the 
countervailing duty order would be likely to lead to continuation or 
recurrence of a countervailable subsidy. Section 752(b) of the Act 
provides that, in making this determination, the Department shall 
consider the net countervailable subsidy determined in the 
investigation and subsequent reviews, and whether any change in the 
programs which gave rise to the net countervailable subsidy has 
occurred that is likely to affect the net countervailable subsidy. 
Pursuant to section 752(b)(3) of the Act, the Department shall provide 
to the International Trade Commission (``the Commission'') the net 
countervailable subsidy likely to prevail if the order is revoked. In 
addition, consistent with section 752(a)(6), the Department shall 
provide the Commission information concerning the nature of each 
subsidy and whether the subsidy is a subsidy

[[Page 73521]]

described in Article 3 or Article 6.1 of the 1994 WTO Agreement on 
Subsidies and Countervailing Measures (``Subsidies Agreement'').
    The Department's determinations concerning continuation or 
recurrence of a countervailable subsidy, the net countervailable 
subsidy likely to prevail if the order is revoked, and nature of the 
subsidy are discussed below. In addition, parties' comments with 
respect to each of these issues are addressed within the respective 
sections below.

Continuation or Recurrence of a Countervailable Subsidy

    Drawing on the guidance provided in the legislative history 
accompanying the Uruguay Round Agreements Act (``URAA''), specifically 
the Statement of Administrative Action (``the SAA''), H.R. Doc. No. 
103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt. 1 
(1994), and the Senate Report, S. Rep. No. 103-412 (1994), the 
Department issued its Sunset Policy Bulletin providing guidance on 
methodological and analytical issues, including the basis for 
likelihood determinations. The Department clarified that determinations 
of likelihood will be made on an order-wide basis (see  section III.A.2 
of the Sunset Policy Bulletin). Additionally the Department normally 
will determine that revocation of a countervailing duty order is likely 
to lead to continuation or recurrence of a countervailable subsidy 
where (a) a subsidy program continues, (b) a subsidy program has been 
only temporarily suspended, or (c) a subsidy program has been only 
partially terminated (see  section III.A.3.a of the Sunset Policy 
Bulletin).
    In addition to considering the guidance on likelihood cited above, 
section 751(c)(4)(B) of the Act provides that the Department shall 
determine that revocation of the order would be likely to lead to 
continuation or recurrence of a countervailable subsidy where a 
respondent interested party waives its participation in the sunset 
review. Pursuant to the SAA, at 881, in a review of a countervailing 
duty order, when the foreign government has waived participation, the 
Department shall conclude that revocation of the order would be likely 
to lead to continuation or recurrence of a countervailable subsidy for 
all respondent interested parties.\8\ In this instant review, the 
Department did not receive a substantive response from the foreign 
government or from any other respondent interested party. Pursuant to 
section 351.218(d)(2)(iii) of the Sunset Regulations, this constitutes 
a waiver of participation.
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    \8\ See 19 CFR 351.218(d)(2)(iv).
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    In their substantive response, the domestic interested parties 
argue that revocation of the countervailing duty order would likely 
result in the continuation or recurrence of countervailable subsidies. 
First, they describe several programs administered on the provincial 
level by the Province of Nova Scotia that were determined in the 
original investigation to confer bounties or grants. They argue that 
Sysco was and continues to be the recipient of these subsidies (see 
July 1, 1999, Substantive Response of the domestic interested parties 
at 8). The domestic interested parties argue that the Grants for 
Payment of Principal and Interest on Debentures, Operating Grants, and 
Equity Infusions programs continue to exist and confer countervailable 
subsidies. As for Long-Term Loan Guarantees, the domestic interested 
parties state that Sysco's public financial statements do not indicate 
that the trust company guarantees found countervailable in the original 
investigation have continued. However, they maintain that the financial 
position of the company is so weak that it could not obtain any 
commercial funding absent provincial guarantees of its debt (see id. at 
10).
    Of the three joint-federal programs, the domestic interested 
parties argue that under the General Development Agreements and 
Economic and Regional Development Agreements programs no direct or 
specific outlays were made to Sysco in the most recent budget, but the 
province or company may still be benefitting from these programs. 
Moreover, they point out that the Canadian government has notified the 
World Trade Organization that it uses both of these programs but that 
it considers them to be ``green box'' programs that cannot be 
countervailed (see id. at 12-13). Finally, the domestic interested 
parties point out that the Iron Ore Freight Subsidy to Algoma did not 
apply to Sysco, but rather to Algoma.
    The domestic interested parties also state that there is no 
evidence that the federal programs found to be countervailable in the 
original investigation, namely, Debenture Guarantees, Forgiven Wharf 
Loan, Regional Development Incentives Program, and Investment tax 
Credits, continue to benefit Sysco. However, they point out, there has 
not been an administrative review of the order and the Government of 
Canada has not provided any information concerning these four programs 
(see id. at 13).
    The domestic interested parties maintain that Sysco benefits from 
past and present subsidies, and therefore, the Department should 
determine that revocation of the countervailing duty order on new steel 
rail from Canada would likely result in the continuation or recurrence 
of countervailable subsidies.
    As noted above, in our final determination, as amended, the 
Department determined that the programs in question conferred a bounty 
or grant, the net amount of which was calculated to be 94.57 percent ad 
valorem for Canadian exporters/producers other than Algoma. The 
Department has conducted no administrative reviews of this outstanding 
countervailing duty order.
    Given that the Department has not conducted an administrative 
review of this order nor have we reviewed the programs in question in 
any other administrative review, the Department does not have any 
information that programs have been terminated without residual 
benefits. Therefore, we agree with the domestic interested parties that 
the Canadian programs remain in place. Based on the continued existence 
of programs found to confer countervailable subsidies, the fact that 
the foreign government and other respondent parties waived their right 
to participate in this review before the Department, and absent 
argument and evidence to the contrary, the Department determines that 
it is likely that a countervailable subsidy will continue if the order 
is revoked.

Net Countervailable Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with the SAA and House Report, the Department normally will 
select a rate from the investigation as the net countervailable subsidy 
likely to prevail if the order is revoked because that is the only 
calculated rate that reflects the behavior of exporters and foreign 
governments without the discipline of an order or suspension agreement 
in place. The Department noted that this rate may not be the most 
appropriate rate if, for example, the rate was derived from subsidy 
programs which were found in subsequent reviews to be terminated, if 
there has been a program-wide change, or if the rate ignores a program 
found to be countervailable in a subsequent administrative review. (See 
section III.B.3 of the Sunset Policy Bulletin). Additionally, where the 
Department determined company-specific countervailing duty rates in the 
original investigation, the Department normally will report to the 
Commission

[[Page 73522]]

company-specific rates from the original investigation or where no 
company-specific rate was determined for a company, the Department 
normally will provide to the Commission the country-wide or ``all 
others'' rate. (See section III.B.2 of the Sunset Policy Bulletin).
    In their substantive response, the domestic interested parties 
argue that the countervailing duty rate likely to prevail if the order 
on new steel rail from Canada is revoked would be at least as large as 
that existing at the time of the original order. The domestic 
interested parties argue that as the rate determined in the original 
investigation is the only calculated rate which reflects the behavior 
of exporters without the discipline of the order in place, the 
Department's policy provides that it normally will select this rate to 
provide to the Commission. Noting that the programs found to provide 
subsidies in the original investigation continue to exist, the domestic 
interested parties maintain that the Department should utilize the 
subsidy rate it originally determined when calculating the net 
countervailable subsidy in this sunset review.
    As discussed in the Sunset Policy Bulletin, the Department normally 
will report to the Commission an original subsidy rate as adjusted to 
take into account terminated programs, program-wide changes, and 
programs found to be countervailable in subsequent reviews. We agree 
with the domestic interested parties that all programs, with the 
exception of the Long-term Loan Guarantees program (which was 
determined on remand not to confer a countervailable subsidy), found in 
the original investigation to provide countervailable subsidies 
continue to exist. Absent evidence or argument that there have been any 
changes to the programs found to be countervailable in the original 
determination, as amended, that would affect the net countervailable 
subsidy, consistent with the Sunset Policy Bulletin, the Department 
determines that the net countervailable subsidy likely to prevail if 
the order were revoked is 94.57 percent.

Nature of the Subsidy

    In the Sunset Policy Bulletin, the Department stated that, 
consistent with section 752(a)(6) of the Act, the Department will 
provide information to the Commission concerning the nature of the 
subsidy and whether it is a subsidy described in Article 3 or Article 
6.1 of the Subsidies Agreement.
    The domestic interested parties maintain that the provincial 
subsidy programs fall under Article 6 of the Subsidies Agreement 
because they cause serious prejudice to the importing country and the 
total value of the subsidies provided over the past ten years, spread 
over the total sales value of that period, far exceeds five percent of 
sales (see July 1, 1999, Substantive Response of the domestic 
interested parties at 21).
    Given that receipt of benefits under any of the programs included 
in our calculation is not contingent upon export, none of these 
programs fall within the definition of an export subsidy under Article 
3.1(a) of the Subsidies Agreement. The Department agrees with the 
domestic interested parties that because the benefits received under 
the provincial programs include subsidies to cover operating losses 
sustained by an enterprise (Operating Grants) and direct forgiveness of 
debt and grants to cover debt repayment (Grants for Payment of 
Principal and Interest Debentures), these programs are actionable under 
Article 6 of the Subsidies Agreement. Moreover, the Equity Infusions 
program could be found to be inconsistent with Article 6 if the net 
countervailable subsidy exceeds 5 percent, as measured in accordance 
with Annex IV of the Subsidies Agreement. The Department, however, has 
no information with which to make such a calculation, nor do we believe 
it appropriate to attempt such a calculation in the course of a sunset 
review. Rather, we are providing the Commission the following program 
descriptions.

Subsidy Programs

    The subsidy programs, including a description of each, identified 
by the Department and used in its determination of the net 
countervailable subsidy likely to prevail if the order were revoked are 
listed below.

Grants for Payment of Principal and Interest on Debentures

    The Government of Nova Scotia has provided Sysco with grants to 
cover principal payments and interest payments on its long-term 
debentures since 1982.

Operating Grants Provided to Sysco

    The Government of Nova Scotia has provided Sysco with operating 
grants to cover its general operating expenses and for capital 
expenditures.

Equity Infusions Provided to Sysco

    The Department determined in the original investigation that Sysco 
is unequityworthy and, therefore, the equity infusions made by the 
Government of Nova Scotia were found to be countervailable.

Debenture Guarantees Provided to Sysco

    Federal debentures were issued in 1973 and 1975 for 20 years.

Forgiven Wharf Loan

    In 1972, the federal government provided Sysco with a loan to 
construct a loading wharf, which was completed in June 1978.

Regional Development Incentive Program

    This program was established in 1969 for the purpose of creating 
stable employment opportunities in certain regions in Canada where 
employment and economic opportunities are chronically low, particularly 
in the Atlantic provinces.

General Development Agreements (GDA)

    GDAs provided the legal basis for various departments of the 
federal and provincial governments to cooperate in the establishment of 
economic assistance programs.

Economic and Regional Development Agreements (ERDA)

    Essentially a continuation of GDAs, ERDAs established programs, 
delineated administrative procedures, and set up the relative funding 
commitments of the federal and provincial governments.

Final Results of Review

    As a result of this review, the Department finds that revocation of 
the countervailing duty order on new steel rail from Canada would be 
likely to lead to continuation or recurrence of countervailable 
subsidies at the rates listed below.\9\
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    \9\ As noted above, due to a de minimis net subsidy found for 
Algoma, this Canadian producer/exporter was excluded from the order.

------------------------------------------------------------------------
                                                                  Net
                                                                subsidy
                    Manufacturer/exporter                        rate
                                                               (percent)
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Sydney Steel Corporation....................................       94.57
Bernard Railtrack Export Inc................................       94.57
All Others..................................................       94.57
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    This notice serves as the only reminder to parties subject to 
administrative protective order (``APO'') of their responsibility 
concerning the disposition of proprietary information disclosed under 
APO in accordance with 19 CFR 351.305 of the Department's regulations. 
Timely notification of return/destruction of APO materials or 
conversion to judicial protective order is hereby requested. Failure to 
comply with the regulations and the terms of an APO is a sanctionable 
violation.

[[Page 73523]]

    This five-year (``sunset'') review and notice are in accordance 
with sections 751(c), 752, and 777(i)(1) of the Act.

    Dated: December 23, 1999.
Richard W. Moreland,
Acting Assistant Secretary for Import Administration.
[FR Doc. 99-33975 Filed 12-29-99; 8:45 am]
BILLING CODE 3510-DS-M