[Federal Register Volume 66, Number 86 (Thursday, May 3, 2001)]
[Notices]
[Pages 22173-22180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-10851]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-791-809]


Notice of Preliminary Determination of Sales at Less Than Fair 
Value: Certain Hot-Rolled Carbon Steel Flat Products from South Africa

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

EFFECTIVE DATE: May 3, 2001.

FOR FURTHER INFORMATION CONTACT: Doug Campau or Maureen Flannery at 
(202) 482-1395 or (202) 482-3020, respectively; Office of Antidumping/
Countervailing Duty Enforcement VII, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW, Washington, DC 20230.

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 of Commerce (Department) 
regulations are to the regulations at 19 CFR part 351 (April 2000).

Preliminary Determination

    We preliminarily determine that certain hot-rolled carbon steel 
flat products (HR products) from South Africa are being, or are likely 
to be, sold in the United States at less than fair value (LTFV), as 
provided in section 733 of the Act. The estimated margin of sales at 
LTFV is shown in the

[[Page 22174]]

``Suspension of Liquidation'' section of this notice.

Case History

    On December 4, 2000, the Department initiated antidumping 
investigations of HR products from Argentina, India, Indonesia, 
Kazakhstan, the Netherlands, the People's Republic of China, Romania, 
South Africa, Taiwan, Thailand, and Ukraine. See Initiation of 
Antidumping Duty Investigations: Certain Hot-Rolled Carbon Steel Flat 
Products from Argentina, India, Indonesia, Kazakhstan, the Netherlands, 
the People's Republic of China, Romania, South Africa, Taiwan, 
Thailand, and Ukraine, 65 FR 77568 (December 12, 2000) (Initiation 
Notice). The petitioners in this investigation are Bethlehem Steel 
Corporation, Gallatin Steel Company, IPSCO Steel Inc., LTV Steel 
Company, Inc., National Steel Corporation, Nucor Corporation, Steel 
Dynamics, Inc., U.S. Steel Group (a unit of USX Corporation), Weirton 
Steel Corporation, and the Independent Steelworkers Union 
(petitioners). Since the initiation of this investigation the following 
events have occurred.
    The Department set aside a period for all interested parties to 
raise issues regarding product coverage (see Initiation Notice at 
77568). We received no comments from any parties in this investigation. 
The Department did, however, receive comments regarding product 
coverage in the investigation of HR products from the Netherlands. In 
that investigation, we received comments regarding product coverage as 
follows: from Duracell Global Business Management Group on December 11, 
2000; from Energizer on December 15, 2000; from Bouffard Metal Goods 
Inc. and Truelove & MacLean, Inc. on December 18, 2000; from the Corus 
Group plc., which includes Corus Steel USA (CSUSA) and Corus Staal BV 
(Corus Staal), and Thomas Steel Strip on December 26, 2000; and from 
Rayovac Corporation on March 12, 2001.
    On December 22, 2000, the Department issued a letter to interested 
parties in all of the concurrent HR products antidumping 
investigations, providing an opportunity to comment on the Department's 
proposed model matching characteristics and hierarchy. Comments were 
submitted by petitioners (January 5, 2001); Corus, respondent in the 
Netherlands investigation (January 3, 2001); Iscor Limited (Iscor), 
respondent in the South Africa investigation (January 3, 2001); and 
Zaporozhstal Iron & Steel Works (Zaporozhstal), respondent in the 
Ukraine investigation (January 3, 2001). Petitioners agreed with the 
Department's proposed characteristics and hierarchy of characteristics. 
Corus suggested adding a product characteristic to distinguish prime 
merchandise from non-prime merchandise. Neither Iscor nor Zaporozhstal 
proposed any changes to either the list of product characteristics 
proposed by the Department or the hierarchy of those product 
characteristics, but provided information relating to their own 
products that was not relevant in the context of determining what 
information to include in the Department's questionnaires. For purposes 
of the questionnaires subsequently issued by the Department to the 
respondents, no changes were made to the product characteristics or the 
hierarchy of those characteristics from those originally proposed by 
the Department in its December 22, 2000 letter. With respect to Corus' 
request, the additional product characteristic suggested by Corus, to 
distinguish prime merchandise from non-prime merchandise, is 
unnecessary. The Department already asks respondents to distinguish 
prime from non-prime merchandise in field number 2.2, ``Prime vs. 
Secondary Merchandise.'' See the Department's Antidumping Duty 
Questionnaire, at B-7 and C-7 (January 4, 2001).
    On December 28, 2000, the United States International Trade 
Commission (ITC) notified the Department of its affirmative preliminary 
injury determination on imports of subject merchandise from Argentina, 
India, Indonesia, Kazakhstan, the Netherlands, the People's Republic of 
China, Romania, South Africa, Taiwan, Thailand, and Ukraine. On January 
4, 2001, the ITC published its preliminary determination that there is 
a reasonable indication that an industry in the United States is 
materially injured by reason of imports of the merchandise under 
investigation from these countries. See ITC Preliminary Notice of 
Determination for Hot-Rolled Steel Products from Argentina, China, 
India, Indonesia, Kazakhstan, Netherlands, Romania, South Africa, 
Taiwan, Thailand, and Ukraine, 66 FR 805, 802 (January 4, 2001).
    On January 4, 2001, the Department issued sections A-E of its 
antidumping duty questionnaire\1\ to Highveld Steel and Vanadium 
Corporation Limited (Highveld), Saldanha Steel Limited (Saldanha), and 
Iscor. On January 25, 2001, Saldanha and Iscor submitted letters to the 
Department indicating that they would not be responding to the 
Department's questionnaires. On January 26, 2001--one day after the due 
date of January 25, 2001--the Department received Highveld's response 
to Section A of its antidumping duty questionnaire. Highveld's section 
A response was not appropriately filed with the Department's Central 
Records Unit, did not include relevant case information in the upper 
right-hand corner of the first page as prescribed by section 
351.303(d)(2) of the Department's regulations, and did not contain a 
request for proprietary treatment of business proprietary information, 
though certain information was bracketed. Furthermore, no public 
version was submitted, and neither version was served on the 
petitioners. On February 2, 2001, the Department sent a letter to 
Highveld addressing these deficiencies, asking Highveld to re-file its 
section A response--revised to comply with the Department's 
requirements--by no later than February 6, 2001, and warning Highveld 
that its failure to comply could result in rejection of its section A 
response. This letter was accompanied by a copy of the Department's 
regulations for the submission of documents to the record. Also on 
February 2, 2001, at Highveld's request, the Department approved an 
extension of the deadline for submitting the section B, C, and D 
questionnaire responses to February 26, 2001.
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    \1\ Section A of the questionnaire requests general information 
concerning a company's corporate structure and business practices, 
the merchandise under investigation that it sells, and the manner in 
which it sells that merchandise in all of its markets. Section B 
requests a complete listing of all home market sales, or, if the 
home market is not viable, of sales in the most appropriate third-
country market (this section is not applicable to respondents in 
non-market economy (NME) cases). Section C requests a complete 
listing of U.S. sales. Section D requests information on the cost of 
production (COP) of the foreign like product and the constructed 
value (CV) of the merchandise under investigation. Section E 
requests information on further manufacturing.
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    On February 6, 2001--twelve days after the original due date of 
January 25, 2001--the Department received the public version of 
Highveld's response to Section A of its antidumping duty questionnaire, 
along with the revised proprietary version. There was substantial 
improper use of bracketing in both the proprietary and public versions 
of this response (e.g., single brackets around public information, 
double brackets used inappropriately numerous times, triple brackets 
used numerous times, and bracketed information not summarized or ranged 
in the public version). On February 9, 2001, the Department held a 
teleconference with Highveld to address

[[Page 22175]]

these issues, and asked Highveld to re-file the entire narrative 
portion of its submissions--revised to comply with the Department's 
requirements--along with any revised exhibits (see Memorandum to the 
File, ``Telephone Conference with Highveld Official,'' dated Feburary 
12, 2001). In this teleconference, the Department again warned Highveld 
that its failure to comply could result in the rejection of its 
submissions. On February 12, 2001, the Department sent Highveld a 
letter reiterating what was discussed in the February 9, 2001 
teleconference. On February 16, 2001, the Department faxed to Highveld 
a copy of those portions of its regulations addressing the procedures 
for proper bracketing, filing and treatment of proprietary information 
subject to administrative protective order (APO). Also on February 16, 
2001, at Highveld's request, the Department approved an extension of 
the deadline for submitting the second revised version of the section A 
questionnaire response to February 21, 2001.
    On February 23, 2001--two days after the due date of February 21, 
2001--the Department received the second revised versions of Highveld's 
public and proprietary responses to the Section A antidumping duty 
questionnaire. The second revised public version still did not contain 
a request for proprietary treatment of business proprietary information 
as required by the Department's APO regulations.
    On February 26, 2001, the Department received the narrative 
portions of Highveld's responses for sections B, C, and D. Highveld 
again failed to serve the petitioners with copies of its submission to 
the Department. Highveld also failed to properly submit any of the 
required home market sales, U.S. sales, or cost of production data to 
either the Department or to the petitioners. Highveld submitted a 
floppy diskette containing no files of any kind, and then sent its 
sales and cost data sets--to the Department only--via electronic mail 
(see Memorandum to the File, ``Compilation of Electronic Mail 
Correspondence with Highveld Officials,'' dated April 23, 2001). In 
analyzing these data sets, the Department discovered that Highveld 
failed to report any data for twelve different types of expenses for 
the majority of its U.S. sales. The fields for which this data was not 
reported were international freight (INTNFRU), marine insurance 
(MARNINU), U.S. inland freight from port to warehouse (INLFPWU), U.S. 
warehousing expense (USWAREHU), U.S. inland freight from warehouse to 
unaffiliated customer (INLFWCU), U.S. inland insurance (USINSURU), 
other U.S. transportation expense (USOTHTRU), U.S. customs duty 
(USDUTYU), commissions (COMMU), indirect selling expenses incurred in 
country of manufacture (INDIRSU), inventory carrying costs incurred in 
the United States (INVCARU), and U.S. repacking cost (REPACKU). In the 
narrative responses for each of the twelve missing sales expenses, 
Highveld simply stated that the subject data had to be supplied by an 
affiliated U.S. reseller. Highveld also failed to provide unique 
product costs that account for cost differences related to the physical 
characteristics defined by the Department. In the narrative response 
related to CONNUM-specific costs, Highveld merely stated that it does 
not account for costs in this manner.
    On February 27, 2001, the Department sent a letter to Highveld, via 
electronic mail, asking Highveld to confirm that it has served the 
sections B, C, and D submissions on all parties to the proceeding. 
Highveld responded, via electronic mail, that because the shipment to 
the petitioners was so large, it would take extra time to arrive via 
express mail. The Department subsequently learned--through its own 
inquiries with the involved express mail company--that the sections B, 
C, and D submissions were shipped late.
    On March 8, 2001, the Department issued a supplemental 
questionnaire for Highveld's Section A response. On March 12, 2001, 
petitioners submitted comments on Highveld's sections B, C, and D 
responses. On March 15, 2001, the Department issued a supplemental 
questionnaire for Highveld's sections B, C, and D responses, along with 
several additional questions for Highveld's section A response. In this 
questionnaire, we asked Highveld to report data for the twelve expenses 
missing from the majority of its U.S. sales observations. We also 
repeated our instruction to Highveld to report CONNUM-specific cost 
information that accounts for cost differences for each of the physical 
characteristics defined by the Department. These instructions directed 
Highveld to rely not only on its existing financial and cost accounting 
records, but on any other information which would allow it to calculate 
a reasonable allocation of its costs. On March 16, 2001--eighteen days 
after the original due date of February 26, 2001--the Department 
finally received a properly submitted copy of Highveld's required home 
market sales, U.S. sales, and COP data.
    On March 26, 2001, at Highveld's request, the Department approved 
an extension of the deadline for submitting the supplemental 
questionnaire response for sections B and C to March 29, 2001. Also on 
March 26, 2001, the Department received Highveld's response to the 
Department's section A supplemental questionnaire, issued on March 8, 
2001. Again, Highveld failed to timely serve either proprietary or 
public versions of its response on the petitioners. The public version 
of this submission was withheld from the record as a consequence of the 
following APO deficiencies: (1) it contained bracketed information that 
had not been blacked out; (2) bracketed information was not summarized 
or ranged; and (3) relevant case information was not included in the 
upper right-hand corner of the first page as prescribed by section 
351.303(d)(2) of the Department's regulations. On March 29, 2001, the 
Department issued a second supplemental questionnaire for sections B 
and C. On March 30, 2001, the Department sent a letter to Highveld 
addressing the deficiencies of Highveld's supplemental section A 
questionnaire response submitted on March 26, 2001, asking Highveld to 
re-file its supplemental section A response--revised to comply with the 
Department's requirements--by no later than April 3, 2001. This letter 
also warned Highveld that if it failed to provide accurately the 
information requested within the time provided, the Department might be 
required to base its findings on the facts available, and that if 
Highveld failed to cooperate with the Department by not acting to the 
best of its ability to comply with a request for information, the 
Department could use information adverse to Highveld's interest in 
conducting its analysis.
    Also on March 30, 2001--one day after the due date of March 29, 
2001--the Department received the narrative portions of Highveld's 
response to the section B and C portions of the supplemental 
questionnaire issued on March 15, 2001. Highveld again failed to submit 
the required home market or U.S. sales data to either the Department or 
the petitioners. On April 2, 2001--three days after the due date of 
March 30, 2001--the Department received the narrative portions of 
Highveld's response to the section D portion of the supplemental 
questionnaire issued on March 15, 2001 (Supplemental D response). 
Highveld again failed to submit the required cost of production data to 
either the Department or the petitioners. Furthermore, in its narrative 
response, Highveld indicated that its cost of production data set would 
not include the unique product costs

[[Page 22176]]

requested in the Department's March 15, 2001 supplemental 
questionnaire. The only explanation offered by Highveld was that it 
does not account for cost in this manner. Highveld failed to offer any 
explanation as to why it did not calculate appropriate cost differences 
for the physical characteristics defined by the Department as 
instructed in the Department's supplemental questionnaire.
    On April 2, 2001, the Department contacted Highveld's staff person 
by telephone to inquire as to the location of the revised data sets 
which should have accompanied Highveld's narrative responses to the 
supplemental questionnaire for sections B, C, and D. Highveld's staff 
person indicated that the revised data sets would be submitted with its 
response to the Department's second supplemental questionnaire for 
sections B and C issued on March 29, 2001 (see Memorandum to the File, 
``Telephone Conference with Highveld Official,'' dated April 3, 2001).
    On April 6--three days after the due date of April 3, 2001--the 
Department received the revised portions of Highveld's response to the 
section A supplemental questionnaire issued on March 8, 2001. Also on 
April 6, the Department received Highveld's revised data sets which 
should have accompanied Highveld's narrative responses to the 
supplemental questionnaire for sections B, C, and D, originally due on 
March 29 (sections B and C) and 30 (section D), 2001. Both the sales 
and cost of production data sets contained major deficiencies which the 
Department--in its March 29, 2001 supplemental questionnaire--had 
specifically asked Highveld to remedy. Specifically, Highveld again 
failed to report data for the twelve expenses missing from the majority 
of its U.S. sales observations, and failed to assign a control number 
for each unique product in the sales data sets, as requested in the 
Department's March 15, 2001 supplemental questionnaire. Furthermore, 
Highveld's COP data set did not include the unique product costs 
requested in the Department's March 15, 2001 supplemental 
questionnaire. Finally, on April 6--one day after the due date of April 
5, 2001--the Department received Highveld's response to the 
Department's second supplemental questionnaire for sections B and C 
issued on March 29, 2001. In this response, Highveld indicated that the 
data for the twelve expenses missing from the majority of its U.S. 
sales had to be supplied by an affiliated U.S. reseller, and that they 
would be made available during verification.
    On April 10, 2001, we sent a second supplemental questionnaire to 
Highveld asking it to resubmit its cost data in accordance with the 
Department's instructions by April 24, 2001. On April 17, 2001, we sent 
Highveld a letter requiring that it submit, by April 27, 2001, certain 
information that was missing from its sections B & C response.

Period of Investigation

    The Period of Investigation (POI) is October 1, 1999 through 
September 30, 2000. This period corresponds to the four most recent 
fiscal quarters prior to the month of the filing of the petition (i.e., 
November 2000), and is in accordance with our regulations. See section 
351.204(b)(1) of the Department's regulations.

Scope of Investigation

    For purposes of this investigation, the products covered are 
certain hot-rolled carbon steel flat products of a rectangular shape, 
of a width of 0.5 inch or greater, neither clad, plated, nor coated 
with metal and whether or not painted, varnished, or coated with 
plastics or other non-metallic substances, in coils (whether or not in 
successively superimposed layers), regardless of thickness, and in 
straight lengths, of a thickness of less than 4.75 mm and of a width 
measuring at least 10 times the thickness. Universal mill plate (i.e., 
flat-rolled products rolled on four faces or in a closed box pass, of a 
width exceeding 150 mm, but not exceeding 1250 mm, and of a thickness 
of not less than 4.0 mm, not in coils and without patterns in relief) 
of a thickness not less than 4.0 mm is not included within the scope of 
this investigation. Specifically included within the scope of this 
investigation are vacuum degassed, fully stabilized (commonly referred 
to as interstitial-free (IF)) steels, high strength low alloy (HSLA) 
steels, and the substrate for motor lamination steels. IF steels are 
recognized as low carbon steels with micro-alloying levels of elements 
such as titanium or niobium (also commonly referred to as columbium), 
or both, added to stabilize carbon and nitrogen elements. HSLA steels 
are recognized as steels with micro-alloying levels of elements such as 
chromium, copper, niobium, vanadium, and molybdenum. The substrate for 
motor lamination steels contains micro-alloying levels of elements such 
as silicon and aluminum.
    Steel products to be included in the scope of these investigations, 
regardless of definitions in the Harmonized Tariff Schedule of the 
United States (HTS), are products in which: (i) Iron predominates, by 
weight, over each of the other contained elements; (ii) the carbon 
content is 2 percent or less, by weight; and (iii) none of the elements 
listed below exceeds the quantity, by weight, respectively indicated:

1.80 percent of manganese, or
2.25 percent of silicon, or
1.00 percent of copper, or
0.50 percent of aluminum, or
1.25 percent of chromium, or
0.30 percent of cobalt, or
0.40 percent of lead, or
1.25 percent of nickel, or
0.30 percent of tungsten, or
0.10 percent of molybdenum, or
0.10 percent of niobium, or
0.15 percent of vanadium, or
0.15 percent of zirconium.

All products that meet the physical and chemical description provided 
above are within the scope of this investigation unless otherwise 
excluded. The following products, by way of example, are outside or 
specifically excluded from the scope of this investigation:

     Alloy hot-rolled steel products in which at least one of 
the chemical elements exceeds those listed above (including, e.g., ASTM 
specifications A543, A387, A514, A517, A506).
     Society of Automotive Engineers (SAE)/American Iron and 
Steel Institute (AISI) grades of series 2300 and higher.
     Ball bearings steels, as defined in the HTS.
     Tool steels, as defined in the HTS.
     Silico-manganese (as defined in the HTS) or silicon 
electrical steel with a silicon level exceeding 2.25 percent.
     ASTM specifications A710 and A736.
     USS Abrasion-resistant steels (USS AR 400, USS AR 500).
     All products (proprietary or otherwise) based on an alloy 
ASTM specification (sample specifications: ASTM A506, A507).
     Non-rectangular shapes, not in coils, which are the result 
of having been processed by cutting or stamping and which have assumed 
the character of articles or products classified outside chapter 72 of 
the HTS.

    The merchandise subject to this investigation is classified in the 
HTS at subheadings: 7208.10.15.00, 7208.10.30.00, 7208.10.60.00, 
7208.25.30.00, 7208.25.60.00, 7208.26.00.30, 7208.26.00.60, 
7208.27.00.30, 7208.27.00.60, 7208.36.00.30, 7208.36.00.60, 
7208.37.00.30, 7208.37.00.60, 7208.38.00.15, 7208.38.00.30, 
7208.38.00.90, 7208.39.00.15, 7208.39.00.30, 7208.39.00.90,

[[Page 22177]]

7208.40.60.30, 7208.40.60.60, 7208.53.00.00, 7208.54.00.00, 
7208.90.00.00, 7211.14.00.90, 7211.19.15.00, 7211.19.20.00, 
7211.19.30.00, 7211.19.45.00, 7211.19.60.00, 7211.19.75.30, 
7211.19.75.60, and 7211.19.75.90. Certain hot-rolled flat-rolled carbon 
steel flat products covered by this investigation, including: vacuum 
degassed fully stabilized; high strength low alloy; and the substrate 
for motor lamination steel may also enter under the following tariff 
numbers: 7225.11.00.00, 7225.19.00.00, 7225.30.30.50, 7225.30.70.00, 
7225.40.70.00, 7225.99.00.90, 7226.11.10.00, 7226.11.90.30, 
7226.11.90.60, 7226.19.10.00, 7226.19.90.00, 7226.91.50.00, 
7226.91.70.00, 7226.91.80.00, and 7226.99.00.00. Subject merchandise 
may also enter under 7210.70.30.00, 7210.90.90.00, 7211.14.00.30, 
7212.40.10.00, 7212.40.50.00, and 7212.50.00.00. Although the HTS 
subheadings are provided for convenience and U.S. Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.

Facts Available (FA)

Highveld

    Section 776(a)(2) of the Act provides that ``if an interested party 
or any other person: (A) withholds information that has been requested 
by the administering authority; (B) fails to provide such information 
by the deadlines for the submission of the information or in the form 
and manner requested, subject to subsections (c)(1) and (e) of section 
782; (C) significantly impedes a proceeding under this title; or (D) 
provides such information but the information cannot be verified as 
provided in section 782(i), the administering authority and the 
Commission shall, subject to section 782(d), use the facts otherwise 
available in reaching the applicable determination under this title.''
    In this case, Highveld failed, within the meaning of section 
776(a)(2)(B) of the Act, to provide requested information in the form 
and manner requested. Notably, Highveld failed, in its original section 
C response, to report any data for international freight (INTNFRU), 
marine insurance (MARNINU), U.S. inland freight from port to warehouse 
(INLFPWU), U.S. warehousing expense (USWAREHU), U.S. inland freight 
from warehouse to unaffiliated customer (INLFWCU), U.S. inland 
insurance (USINSURU), other U.S. transportation expense (USOTHTRU), 
U.S. customs duty (USDUTYU), commissions (COMMU), indirect selling 
expenses incurred in country of manufacture (INDIRSU), inventory 
carrying costs incurred in the United States (INVCARU), and U.S. 
repacking cost (REPACKU), for the majority of its U.S. sales. These 
expenses are essential to the Department's calculation of U.S. price. 
Depending on the type, these expenses are used to adjust the reported 
starting sale price for each observation in the U.S. sales data set. 
Without data for these expenses, it is impossible for the Department to 
calculate U.S. prices from starting sales prices. We issued Highveld a 
supplemental questionnaire requesting that it correct these 
deficiencies, but it failed to do so. Highveld responded that it did 
not have this information, that such information must be supplied by an 
affiliated reseller in the United States, and that the information 
would be provided at verification. Highveld offered no reason as to why 
the data was not being provided within the deadlines provided by the 
Department, nor did it offer or suggest any alternative format for 
providing the needed information. Furthermore, Highveld failed to 
report the sales price from its U.S. affiliate to the first unaffilited 
customer for these sales. As this data is missing from the majority of 
Highveld's reported U.S. sales, it is impossible for the Department to 
calculate U.S. prices for the majority of Highveld's U.S. sales. 
Highveld's failure to provide the requested sales data thus renders its 
U.S. sales response unusable for this preliminary determination.
    Highveld also failed, in its original and supplemental section D 
responses, to provide unique product costs that account for cost 
differences related to the physical characteristics defined by the 
Department. Highveld instead reported its costs by steel grade, 
differentiating those costs only by grade. That methodology does not 
provide product-specific COP information, nor does it provide the 
Department with information to calculate a difference in merchandise 
(DIFMER) adjustment to account for differences in physical 
characteristics beyond product grade when comparing sales of similar 
merchandise. Without product-specific COPs, we are unable to determine 
whether sales of the subject merchandise were made at less than COP as 
directed by section 773(b)(1) of the Act. As a result, we have no way 
of knowing whether to disregard certain sales from the calculation of 
normal value (NV) for falling below COP or whether to disregard all 
sales of the subject merchandise and base NV on CV. Furthermore, in 
accordance with section 773(a)(6)(C)(ii) of the Act, when comparing 
United States sales with home market sales, we may determine that the 
merchandise sold in the United States does not have the same physical 
characteristics as the merchandise sold in the home market and that 
those differences have an effect on prices. In such instances, we are 
required to make reasonable allowances for these differences 
(``DIFMER'') in calculating NV. Without the ability to make the 
appropriate DIFMER adjustment, it is impossible for us to appropriately 
calculate NV. Thus, without product-specific COP information, and 
information necessary for calculating a DIFMER adjustment, we are 
unable to determine the appropriate basis for NV or to calculate NV. As 
noted in the Case History section above, we issued Highveld a 
supplemental questionnaire on March 15, 2001, requesting that it 
correct these deficiencies, but it failed to do so. Instead, Highveld 
stated simply that it does not account for cost in this manner. 
Highveld's failure to provide the requested data renders its cost 
response unusable for this preliminary determination.
    As also noted in detail in the Case History section above, Highveld 
failed, within the meaning of section 776(a)(2)(B) of the Act, to 
provide requested information prior to several deadlines for the 
submission of such information, or in the form and manner requested. 
Highveld's questionnaire responses were often fraught with APO 
formatting deficiencies, including improper bracketing of proprietary 
information, improper labeling of documents containing proprietary 
information, and missing language concerning the release of proprietary 
information under APO. Furthermore, the majority of Highveld's 
questionnaire responses were submitted after the applicable deadlines. 
In such cases, the Department received Highveld's submissions anywhere 
from one to eighteen days late. Notably, Highveld's sales and cost data 
sets--which are absolutely crucial for the Department's analysis--were 
submitted eighteen days late for the initial sections B, C, & D 
response, eight days late for the supplemental sections B & C response, 
and seven days late for the supplemental section D response. These 
responses and accompanying data were similarly served late on the 
petitioners.
    Where the Department determines that a response to a request for 
information does not comply with the request, section 782(d) of the Act 
provides that the Department will so

[[Page 22178]]

inform the party submitting the response and will, to the extent 
practicable, provide that party the opportunity to remedy or explain 
the deficiency. If the party fails to remedy the deficiency within the 
applicable time limits, the Department may, subject to section 782(e), 
disregard all or part of the original and subsequent responses, as 
appropriate. Section 782(e) provides that the Department ``shall not 
decline to consider information that is submitted by an interested 
party and is necessary to the determination but does not meet all the 
applicable requirements established by the administering authority'' if 
the information is timely, can be verified, and is not so incomplete 
that it cannot be used, and if the interested party acted to the best 
of its ability in providing the information. Where all of these 
conditions are met, the statute requires the Department to use the 
information, if it can do so without undue difficulty.
    As noted above, Highveld failed, on numerous occasions, to provide 
its questionnaire responses to the Department or other parties to this 
proceeding by the applicable deadlines, in the form and manner 
requested. As noted in the Case History section above, the Department 
provided Highveld with numerous opportunities to remedy or explain 
major deficiencies in its submissions. To this end, the Department 
issued several supplemental questionnaires, allowed Highveld several 
chances to revise and resubmit documents in order that such documents 
might comply with the Department's regulations governing formatting and 
filing requirements, sent Highveld multiple letters, facsimiles, and 
electronic mail explaining and re-explaining the Department's concerns 
over the deficiencies in Highveld's submissions, held a teleconference 
to explain the Department's concerns over the deficiencies in 
Highveld's submissions, sent Highveld copies of relevant regulations 
and guidelines for the submission of documents to the record, and 
granted Highveld several extensions to deadlines for its submissions. 
Despite all of this, Highveld has continued to submit its responses 
after applicable deadlines. This pattern has significantly impeded the 
Department's ability to conduct a timely analysis, limiting the 
Department's ability to issue supplemental questionnaires to address 
questions and deficiencies related to Highveld's submissions. It has 
also made it virtually impossible for the petitioners or other 
interested parties to submit comments on Highveld's responses in a 
timely manner, so that such comments might be given appropriate 
consideration in the Department's analyses. Moreover, as discussed 
above, Highveld has also failed to remedy the major substantive 
deficiencies in its U.S. sales and COP data sets, leaving the data sets 
so incomplete that they cannot be used to calculate a preliminary 
margin for Highveld. Consequently, we are disregarding Highveld's sales 
and COP data in our analysis.
    In light of Highveld's failure to provide requested information 
necessary to calculate dumping margins in this case, in accordance with 
section 776(a) of the Act, we are forced to resort to total facts 
available for this preliminary determination.
    According to section 776(b) of the Act, if the Department finds 
that an interested party ``has failed to cooperate by not acting to the 
best of its ability to comply with a request for information,'' the 
Department may use information that is adverse to the interests of the 
party as facts otherwise available. Adverse inferences are appropriate 
``to ensure that the party does not obtain a more favorable result by 
failing to cooperate than if it had cooperated fully.'' See Statement 
of Administrative Action (SAA) accompanying the URAA, H.R. Doc. No. 
316, 103d Cong., 2d Session at 870 (1994). Furthermore, ``an 
affirmative finding of bad faith on the part of the respondent is not 
required before the Department may make an adverse inference.'' 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27340 (May 19, 1997) (Final Rule).
    In this case, we have determined that Highveld has not acted to the 
best of its ability in responding to the Department's request for 
complete U.S. sales data, including data for the twelve expenses 
missing from the majority of Highveld's U.S. sales observations. As 
noted in the Case History section above, we repeated our request for 
such data in a supplemental questionnaire, but Highveld failed to 
provide it. Highveld's explanation was that it did not have this 
information, that such information must be supplied by an affiliated 
reseller in the United States, and that the information would be 
provided at verification. It is Highveld's responsibility to ensure 
that all information essential to the Department's analyses of 
Highveld's U.S. sales is provided to the Department, regardless of 
whether such information must be supplied by an affiliated reseller in 
the United States. See Notice of Final Determination of Sales at Less 
Than Fair Value: Stainless Steel Sheet and Strip from Mexico, 64 FR 
30790, 30803 (June 8, 1999). It is also Highveld's responsibility to 
notify the Department, in writing, within fourteen days if it expects 
to have difficulties in submitting such information in accordance with 
section 782(c)(1) of the Act, and to suggest alternative forms in which 
it could submit the information. Highveld made no such notification, 
nor suggested any alternative reporting methodologies.
    We have also determined that Highveld has not acted to the best of 
its ability in responding to the Department's request for product-
specific cost information that takes into account physical differences 
between the products. As noted in the Case History section above, in 
our supplemental questionnaire, dated March 15, 2001, we repeated our 
instruction to Highveld to report product-specific cost information 
that accounts for cost differences for each of the physical 
characteristics. These instructions directed Highveld to rely not only 
on its existing financial and cost accounting records, but on any other 
information which would allow it to calculate a reasonable allocation 
of its costs. It is standard procedure for the Department to request 
product-specific cost data and we routinely receive such information 
from respondents. In the Department's experience, companies have 
information which allows them to calculate a reasonable estimate of the 
costs to make a given product, as such cost information is necessary to 
determine whether it is profitable to make the product. Even if a 
company does not identify product-specific costs in its normal 
financial and cost accounting records, it should be able to make 
reasonable allocations of its costs among distinct products through the 
use of other product and production information. Highveld failed to 
offer any explanation as to why it did not make such reasonable 
allocations.
    Under section 782(c) of the Act, a respondent has a responsibility 
not only to notify the Department if it is unable to provide requested 
information, but also to provide a ``full explanation and suggested 
alternative forms.'' In response to our requests for product-specific 
cost data, Highveld simply stated that it does not account for cost in 
this manner. (See Supplemental D response.) Cooperation in an 
antidumping investigation requires more than a simple statement that a 
respondent cannot provide certain information from its previously 
prepared records; the burden to establish that it has acted to the best 
of its ability rests upon the respondent. As

[[Page 22179]]

noted above, to meet that burden a respondent must explain what steps 
it has taken to comply with the information request, and propose 
alternative methodologies for getting the necessary information. See 
Allied-Signal Aerospace v. United States, 996 F.2d 1185, 1192 (Fed. 
Cir. 1993). Highveld has failed to do either.
    Moreover, we find that Highveld's claim that it is unable to 
provide cost information in the manner requested by the Department to 
be inconsistent with its other statements and information on the record 
of this case. For example, Highveld closely tracks actual production 
for yield purposes and for purposes of identifying particular coils for 
warehouse identification, as is evidenced by the yield information 
maintained by the company and the identifying tags affixed to each 
finished product. Highveld also has budgets, manufacturing standards, 
and engineering standards for specific products listed in the company's 
product brochure. Highveld likely develops production plans involving 
the identification of certain products as produced from certain raw 
materials on certain production lines using specific engineering 
standards. Further, to maintain International Organization for 
Standardization (ISO) certification, we believe that Highveld must 
maintain contemporaneous records of production and processes to insure 
the quality of the products it produces. While certain of Highveld's 
records do not contain the information requested on separate product 
costs, the company could have developed a reasonable allocation 
methodology to allocate costs to products on a control number (CONNUM)-
specific basis using the company's normal cost accounting records as a 
starting point. The Department requested that Highveld look beyond its 
financial and cost accounting records and select from a variety of 
available data using, for example, engineering standards, direct labor 
hours, machine hours, or budgeting systems for allocating costs to 
products on a CONNUM-specific basis. Highveld failed to develop any 
system to allocate costs according to these criteria.
    Given (i) Highveld's repeated failure to provide data for twelve 
expenses for the majority of its U.S. sales observations; and (ii) 
Highveld's repeated failure to provide product-specific cost data that 
takes into account physical differences in the product or to provide 
any meaningful explanation of why such data could not be provided, we 
preliminarily determine that Highveld did not cooperate to the best of 
its ability. Accordingly, we have used an adverse inference in 
selecting the facts available to determine Highveld's margin.

Iscor/Saldanha

    In this proceeding, Saldanha and Iscor declined to respond to the 
Department's antidumping questionnaire. Because Saldanha and Iscor 
provided no information, sections 782(d) and (e) of the Act are not 
relevant, and the Department must resort to the use of facts available 
for these respondents, in accordance with 776(a) of the Act.
    Furthermore, as Iscor and Saldanha declined to respond to the 
Department's antidumping questionnaire, we preliminarily determine that 
both companies failed to cooperate to the best of their abilities 
within the meaning of section 776(b) of the Act. Accordingly, we have 
used an adverse inference in selecting the facts available to determine 
the appropriate margin for Iscor and Saldanha.

Corroboration

    Section 776(c) of the Act provides that where the Department 
selects from among the facts otherwise available and relies on 
``secondary information,'' such as the petition, the Department shall, 
to the extent practicable, corroborate that information from 
independent sources reasonably at the Department's disposal. The SAA 
accompanying the URAA, H.R. Doc. No. 316, 103d Cong., 2d Sess. (1994), 
states that ``corroborate'' means to determine that the information 
used has probative value. See SAA at 870. In this proceeding, we 
considered the petition as the most appropriate information on the 
record upon which to base the dumping calculation. In accordance with 
section 776(c) of the Act, we sought to corroborate the data contained 
in the petition. We reviewed the adequacy and accuracy of the 
information in the petition during our pre-initiation analysis of the 
petition, to the extent appropriate information (e.g., import 
statistics, cost data and foreign market research reports) was 
available for this purpose. See Initiation Notice, at 77571. For 
purposes of the preliminary determination, we attempted to further 
corroborate the information in the petition. To the extent practicable, 
we reexamined the export price, home market price, and CV data provided 
for the margin calculations in the petition in light of information 
obtained during the investigation, and found that it has probative 
value (see Memorandum to the File, ``Corroboration of Secondary 
Information,'' dated April 23, 2001). As adverse facts available, we 
have preliminarily assigned Highveld, Iscor and Saldanha the rate of 
9.28 percent--the margin calculated from the petition and used for 
initiation.

Affiliation

    In accordance with section 771(33)(E) of the Act, the Department 
considers affiliated any person directly or indirectly owning, 
controlling, or holding with power to vote, five percent or more of the 
outstanding voting stock or shares of any organization and such 
organization. In the contemporaneous countervailing duty investigation 
of HR products from South Africa, the Department noted that respondent 
Iscor controls 50 percent of the voting ownership in respondent 
Saldanha. See Notice of Preliminary Affirmative Countervailing Duty 
Determination and Alignment with Final Antidumping Duty Determinations: 
Certain Hot-Rolled Carbon Steel Flat Products from South Africa, 66 FR 
20261 (April 20, 2001). Consequently, and in accordance with section 
771(33)(E) of the Act, we conclude that these companies are affiliated 
for purposes of this proceeding.

Collapsing

    Section 351.401(f)(1) of the Department's regulations provides that 
two or more affiliated producers will be treated as a single entity in 
an antidumping proceeding if: (i) the producers have production 
facilities for similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities, and (ii) the Department concludes that there 
is a significant potential for the manipulation of price or production. 
Section 351.401(f)(2) of the Department's regulations provides that in 
identifying a significant potential for the manipulation of price or 
production, the factors the Department may consider include: (i) the 
level of common ownership; (ii) the extent to which managerial 
employees or board members of one firm sit on the board of directors of 
an affiliated firm; and (iii) whether operations are intertwined, such 
as through the sharing of sales information, involvement in production 
and pricing decisions, the sharing of facilities or employees, or 
significant transactions between the affiliated producers.
    We have analyzed these criteria with respect to Iscor and Saldanha. 
According to information available on the public record of the 
contemporaneous countervailing duty investigation of HR products from 
South Africa, Iscor is a 50 percent shareholder in Saldanha, and is in 
a position to

[[Page 22180]]

exercise control of Saldanha's assets. Furthermore, both companies 
produce the subject merchandise. See the public version of Memo to 
File, ``Cross-Ownership of Iscor, Ltd., in Saldanha Steel Ltd.,'' dated 
April 13, 2001 (case number C-791-810), which has been placed on the 
record of this investigation. In light of these facts, and because 
Iscor's and Saldanha's refusal to cooperate in this investigation has 
impeded our analysis of this issue, the Department infers that there is 
significant potential for the manipulation of prices or production 
between these two companies within the meaning of section 351.401(f)(2) 
of the Department's regulations. Thus, we preliminarily determine, in 
accordance with 351.401(f)(1) of the Department's regulations, that 
Saldanha and Iscor should be treated as a single entity for purposes of 
this antidumping proceeding, and have determined one dumping margin for 
this single entity.

Verification

    In accordance with section 782(i) of the Act, we intend to verify 
information to be used in making our final determination.

All Others

    Section 735(c)(5)(B) of the Act provides that, where the estimated 
weighted-average dumping margins established for all exporters and 
producers individually investigated are zero or de minimis margins, or 
are determined entirely under section 776 of the Act, the Department 
may use any reasonable method to establish the estimated ``all others'' 
rate for exporters and producers not individually investigated. This 
provision contemplates that we weight-average margins other than facts 
available margins to establish the ``all others'' rate. Where the data 
do not permit weight-averaging such rates, the SAA, at 873, provides 
that we may use other reasonable methods. Because the petition 
contained only an estimated price-to-CV dumping margin, which the 
Department adjusted for purposes of initiation, there are no additional 
estimated margins available with which to create the ``all others'' 
rate. Therefore, we applied the published margin of 9.28 percent as the 
``all others'' rate.

Suspension of Liquidation

    In accordance with section 733(d)(2) of the Act, the Department 
will direct the Customs Service to suspend liquidation of all entries 
of HR products from South Africa that are entered, or withdrawn from 
warehouse, for consumption on or after the date of publication in the 
Federal Register. We will instruct the Customs Service to require a 
cash deposit or posting of a bond equal to the estimated preliminary 
dumping margin indicated in the chart below. This suspension of 
liquidation will remain in effect until further notice. The preliminary 
weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                                Margin
                                                              (percent)
------------------------------------------------------------------------
Exporter/Manufacturer:
  Highveld.................................................         9.28
  Iscor/Saldanha...........................................         9.28
  All Others...............................................         9.28
------------------------------------------------------------------------

ITC Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our determination. If our final determination is affirmative, 
the ITC will determine before the later of 120 days after the date of 
this preliminary determination, or 45 days after our final 
determination, whether these imports are materially injuring, or 
threaten material injury to, the U.S. industry.

Public Comment

    Case briefs for this investigation must be submitted no later than 
one week after the issuance of the verification reports. Rebuttal 
briefs must be filed within five days after the deadline for submission 
of case briefs. A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by any interested party. If a request for a 
hearing is made in an investigation, the hearing will tentatively be 
held two days after the deadline for submission of the rebuttal briefs, 
at the U.S. Department of Commerce, 14th Street and Constitution 
Avenue, NW, Washington, DC 20230. In the event that the Department 
receives requests for hearings from parties to several HR products 
cases, the Department may schedule a single hearing to encompass all 
those cases. Parties should confirm by telephone the time, date, and 
place of the hearing 48 hours before the scheduled time. Interested 
parties who wish to request a hearing, or participate if one is 
requested, must submit a written request within 30 days of the 
publication of this notice. Requests should specify the number of 
participants and provide a list of the issues to be discussed. Oral 
presentations will be limited to issues raised in the briefs. If this 
investigation proceeds normally, we will make our final determination 
no later than 75 days after the date of this preliminary determination.
    This determination is issued and published in accordance with 
sections 733(d) and 777(i)(1) of the Act. Effective January 20, 2001, 
Bernard T. Carreau is fulfilling the duties of the Assistant Secretary 
for Import Administration.

    Dated: April 23, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary, Import Administration.
[FR Doc. 01-10851 Filed 5-2-01; 8:45 am]
BILLING CODE 3510-DS-P