[Federal Register Volume 69, Number 24 (Thursday, February 5, 2004)]
[Notices]
[Pages 5493-5497]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-2528]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-428-830]


Stainless Steel Bar From Germany: Preliminary Results of 
Antidumping Duty Administrative Review

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce is conducting an administrative 
review of the antidumping duty order on stainless steel bar from 
Germany. The period of review is August 2, 2001, through February 28, 
2003. This review covers imports of stainless steel bar from one 
producer/exporter.
    We have preliminarily found that sales of subject merchandise have 
not been made at less than normal value. If these preliminary results 
are adopted in our final results, we will instruct U.S. Customs and 
Border Protection (``CBP'') to liquidate entries of stainless steel bar 
from BGH Edelstahl Freital GmbH, BGH Edelstahl Lippendorf GmbH, BGH 
Edelstahl Lugau GmbH, and BGH Edelstahl Siegen GmbH without regard to 
antidumping duties.
    We invite interested parties to comment on these preliminary 
results. We will issue the final results not later than 120 days from 
the date of publication of this notice.

EFFECTIVE DATE: February 5, 2004.

FOR FURTHER INFORMATION CONTACT: Andrew Smith, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-1276.

SUPPLEMENTARY INFORMATION:

Background

    On March 7, 2002, the Department of Commerce (``the Department'') 
published an antidumping duty order on stainless steel bar from 
Germany. See Notice of Amended Final Determination of Sales at Less 
Than Fair Value and Antidumping Duty Order: Stainless Steel Bar from 
Germany, 67 FR 10382 (March 7, 2002). On October 10, 2003, the 
Department published an amended antidumping duty order on stainless 
steel bar from Germany. See Notice of Amended Antidumping Duty Orders: 
Stainless Steel Bar from France, Germany, Italy, Korea, and the United 
Kingdom, 68 FR 58660 (October 10, 2003).
    On March 3, 2003, the Department published in the Federal Register 
an Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity to Request Administrative Review, 68 FR 9974 
(March 3, 2003). On March 27, in accordance with 19 CFR 351.213(b), the 
Department received a timely request for review from BGH Edelstahl 
Freital GmbH, BGH Edelstahl Lippendorf GmbH, BGH Edelstahl Lugau GmbH, 
and BGH Edelstahl Siegen GmbH (collectively ``BGH''), four affiliated 
German producers of the subject merchandise.
    In accordance with 19 CFR 351.221(b)(1), we published a notice of 
initiation of this antidumping duty administrative review on April 21, 
2003. See Notice of Initiation of Antidumping and Countervailing Duty 
Administrative Reviews, 68 FR 19498 (April 21, 2003). The period of 
review (``POR'') is August 2, 2001 through February 28, 2003.
    An antidumping duty questionnaire was sent to BGH on May 7, 2003. 
We received a timely response from BGH on June 13, 2003. We issued 
supplemental questionnaires to BGH on August 22, September 3, September 
24, and September 29, 2003. We received responses from BGH on September 
22, September 26, October 3, and October 8, 2003.
    On June 2, 2003, BGH requested that it be relieved from the 
requirement to report affiliated party resales because sales of the 
foreign like product to affiliated parties during the POR constituted 
less than five percent of total sales of the foreign like product. On 
June 11, 2003, we granted BGH's request in accordance with 19 CFR 
351.403(d). See Memorandum to Jeffrey May, ``Reporting of BGH's Home 
Market Sales by an Affiliated Party,'' dated June 11, 2003 which is in 
the Department's Central Records Unit, located in Room B-099 of the 
main Department building (``CRU'').
    On October 28, 2003, in accordance with 751(a)(3)(A) of the Tariff 
Act of 1930, as amended (``the Act''), we published a notice extending 
the time limit for the completion of the preliminary results in this 
case by 60 days (i.e., until no later than January 30, 2004). See 
Stainless Steel Bar from Germany and Italy: Notice of Extension of Time 
Limit for 2001-2003 Administrative Reviews, 68 FR 61398 (October 28, 
2003).
    On October 28 through November 6, and December 10-11, 2003, we 
conducted verifications of the questionnaire responses submitted by 
BGH. We issued a verification report on January 20, 2004. See 
``Verification'' section of this notice for further discussion.

Scope of the Order

    For the purposes of this order, the term ``stainless steel bar'' 
includes articles of stainless steel in straight lengths that have been 
either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise 
cold-finished, or ground, having a uniform solid cross section along 
their whole length in the shape of circles, segments of circles, ovals, 
rectangles (including squares), triangles, hexagons, octagons, or other 
convex polygons. Stainless steel bar includes cold-finished stainless 
steel bars that are turned or ground in straight lengths,

[[Page 5494]]

whether produced from hot-rolled bar or from straightened and cut rod 
or wire, and reinforcing bars that have indentations, ribs, grooves, or 
other deformations produced during the rolling process.
    Except as specified above, the term does not include stainless 
steel semi-finished products, cut length flat-rolled products (i.e., 
cut length rolled products which if less than 4.75 mm in thickness have 
a width measuring at least 10 times the thickness, or if 4.75 mm or 
more in thickness having a width which exceeds 150 mm and measures at 
least twice the thickness), products that have been cut from stainless 
steel sheet, strip or plate, wire (i.e., cold-formed products in coils, 
of any uniform solid cross section along their whole length, which do 
not conform to the definition of flat-rolled products), and angles, 
shapes and sections.
    The stainless steel bar subject to this review is currently 
classifiable under subheadings 7222.11.00.05, 7222.11.00.50, 
7222.19.00.05, 7222.19.00.50, 7222.20.00.05, 7222.20.00.45, 
7222.20.00.75, and 7222.30.00.00 of the Harmonized Tariff Schedule of 
the United States (``HTSUS''). Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the scope of the order is dispositive.

Verification

    As provided in section 782(i) of the Act, on October 28 through 
November 6, and December 10-11, 2003, we verified information provided 
by BGH using standard verification procedures, including on-site 
inspection of the manufacturers' facilities; examination of relevant 
sales, cost and financial records; and selection of original 
documentation containing relevant information. The Department reported 
its verification findings on January 20, 2004. See Memorandum to John 
Brinkmann, ``Verification of the Responses of BGH Group, Inc. in the 
First (1st) Antidumping Administrative Review of Stainless Steel Bar 
from Germany,'' dated January 20, 2004, which is in the CRU.

Fair Value Comparisons

    To determine whether sales of stainless steel bar by BGH to the 
United States were made at less than normal value (``NV''), we compared 
the export price (``EP'') to NV, as described in the ``Export Price'' 
and ``Normal Value'' sections of this notice, below.
    Pursuant to section 777A(d)(2) of the Act, we compared the EPs of 
individual U.S. transactions to the weighted-average NV of the foreign 
like product, where there were sales made in the ordinary course of 
trade, as discussed in the ``Normal Value'' section of this notice.

Product Comparisons

    In accordance with section 771(16) of the Act, we considered all 
products produced by BGH covered by the description in the ``Scope of 
the Order'' section, above, to be foreign like products for purposes of 
determining appropriate product comparisons to U.S. sales. In 
accordance with section 773(a)(1)(C)(ii) of the Act, in order to 
determine whether there was a sufficient volume of sales in the home 
market to serve as a viable basis for calculating NV, we compared BGH's 
volume of home market sales of the foreign like product to the volume 
of its U.S. sales of the subject merchandise. (For further details, see 
the ``Normal Value'' section of this notice.)
    We compared U.S. sales to sales made in the comparison market 
within the contemporaneous window period, which extends from three 
months prior to the POR until two months after the POR. Where there 
were no sales of identical merchandise in the comparison market made in 
the ordinary course of trade to compare to U.S. sales, we compared U.S. 
sales to sales of the most similar foreign like product made in the 
ordinary course of trade. In making product comparisons, consistent 
with the Notice of Final Determination of Sales at Less Than Fair 
Value: Stainless Steel Bar from Germany, 67 FR 3159 (January 23, 2002) 
and Notice of Amended Final Determination of Sales at Less Than Fair 
Value and Antidumping Duty Order: Stainless Steel Bar from Germany, 67 
FR 10382 (March 7, 2002) (collectively ``LTFV Final''), we matched 
foreign like products based on the physical characteristics reported by 
BGH in the following order: general type of finish; grade; remelting 
process; type of final finishing operation; shape; and size.

Export Price

    We calculated EP in accordance with section 772(a) of the Act 
because the merchandise was sold to the first unaffiliated purchaser in 
the United States prior to importation by the exporter or producer 
outside the United States and because constructed export price 
methodology was not otherwise warranted. We based EP on the packed ex-
works or delivered price to unaffiliated purchasers in the United 
States. We identified the correct starting price by accounting for 
billing adjustments and early payment discounts. We also made 
deductions from the starting price for movement expenses in accordance 
with section 772(c)(2)(A) of the Act. These deductions included foreign 
inland freight, international freight, marine insurance, U.S. customs 
duties (including harbor maintenance fees and merchandise processing 
fees), and U.S. inland freight.

Normal Value

A. Home Market Viability

    In order to determine whether there was a sufficient volume of 
sales in the home market to serve as a viable basis for calculating NV 
(i.e., whether the aggregate volume of home market sales of the foreign 
like product is equal to or greater than five percent of the aggregate 
volume of U.S. sales), we compared BGH's volume of home market sales of 
the foreign like product to the volume of its U.S. sales of the subject 
merchandise, in accordance with 19 CFR 351.404(b)(2) of the 
Department's regulations. Because BGH's aggregate volume of home market 
sales of the foreign like product was greater than five percent of its 
aggregate volume of U.S. sales for the subject merchandise, we 
determined that the home market was viable.

B. Affiliated-Party Transactions and Arm's-Length Test

    The Department's practice with respect to the use of home market 
sales to affiliated parties for NV is to determine whether such sales 
are at arm's-length prices. BGH made sales in the home market to 
affiliated and unaffiliated customers. To test whether the sales to 
affiliates were made at arm's-length prices, we compared the starting 
prices of sales to affiliated and unaffiliated customers net of all 
movement charges, direct selling expenses, discounts, and packing. 
Where the price to the affiliated party was, on average, within a range 
of 98 to 102 percent of the price of the same or comparable merchandise 
to the unaffiliated parties, we determined that the sales made to the 
affiliated party were at arm's length. See Antidumping Proceedings: 
Affiliated Party Sales in the Ordinary Course of Trade, 67 FR 69186 
(November 15, 2002). In accordance with the Department's practice, we 
only included in our margin analysis those sales to affiliated parties 
that were made at arm's length.

C. Cost of Production

    Because we disregarded sales below the cost of production (``COP'') 
in the

[[Page 5495]]

investigation (see LTFV Final), we had reasonable grounds to believe or 
suspect that sales of the foreign like product under consideration for 
the determination of NV in this review may have been made at prices 
below the COP, as provided by section 773(b)(2)(A)(ii) of the Act. 
Therefore, pursuant to section 773(b)(1) of the Act, we requested that 
BGH respond to section D, the cost of production/constructed value 
section of the questionnaire.
    We conducted the COP analysis described below.
1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated COP 
based on the sum of BGH's cost of materials and fabrication for the 
foreign like product, plus amounts for general and administrative 
expenses (``G&A''), interest expenses, and home market packing costs. 
We relied on the COP information provided by BGH, except in the 
following instances.
    BGH reported its G&A and interest expenses on a weighted average 
basis for the years 2001 and 2002. We recalculated BGH's G&A and 
interest expense ratios using data only from BGH's fiscal year 2002. 
See Canned Pineapple Fruit from Thailand: Notice of Final Results of 
Antidumping Duty Administrative Review, Rescission of Administrative 
Review in Part, and Final Determination to Not Revoke Order in Part, 68 
FR 65247 (November 19, 2003) and accompanying Issues and Decision 
Memorandum at Comment 12. Consistent with the LTFV Final, we also 
recalculated BGH's G&A ratio by excluding its parent companies' cost of 
goods sold from the calculation of the G&A expense ratio.
    We also recalculated BGH's interest expense ratio by including all 
of BGH's consolidated exchange gains and losses on foreign currency in 
the calculation of the interest expense ratio. See Stainless Steel Bar 
from India; Final Results of Antidumping Duty Administrative Review, 68 
FR 47543 (August 11, 2003) and accompanying Issues and Decision 
Memorandum at Comment 19.
    For further explanation about these adjustments see Memorandum from 
Case Analyst to File, ``Preliminary Results Calculation Memorandum for 
BGH Group, Inc.,'' dated January 30, 2004, located in the Department's 
CRU.
2. Test of Home Market Sales Prices
    On a product-specific basis, we compared the adjusted weighted-
average COP to the home market sales of the foreign like product during 
the POR, as required under section 773(b) of the Act, in order to 
determine whether the sale prices were below the COP. The prices were 
exclusive of any applicable movement charges, billing adjustments, 
commissions, discounts, rebates, interest revenue and indirect selling 
expenses. In determining whether to disregard home market sales made at 
prices below the COP, we examined, in accordance with sections 
773(b)(1)(A) of the Act, whether such sales were made (1) within an 
extended period of time in substantial quantities, and (2) at prices 
which did not permit the recovery of all costs within a reasonable 
period of time.
3. Results of the COP Test
    Pursuant to section 773(b)(1) of the Act, where less than 20 
percent of the respondent's sales of a given product are made at prices 
below the COP, we do not disregard any below-cost sales of that product 
because we determine that in such instances the below-cost sales were 
not made in ``substantial quantities.'' Where 20 percent or more of a 
respondent's sales of a given product are at prices less than the COP, 
we determine that in such instances the below cost sales represent 
``substantial quantities'' within an extended period of time in 
accordance with section 773(b)(1)(A) of the Act. In such cases, we also 
determine whether such sales are made at prices which would not permit 
recovery of all costs within a reasonable period of time, in accordance 
with section 773(b)(1)(B) of the Act.
    We found that, for certain specific products, more than 20 percent 
of the comparison market sales were at prices less than the COP and, 
thus, the below-cost sales were made within an extended period of time 
in substantial quantities. In addition, these sales were made at prices 
that did not provide for the recovery of costs within a reasonable 
period of time. We therefore excluded these sales and used the 
remaining sales as the basis for determining NV, in accordance with 
section 772(b)(1).

D. Level of Trade

    Section 773(a)(1)(B)(i) of the Act states that, to the extent 
practicable, the Department will calculate NV based on sales at the 
same level of trade (``LOT'') as the EP. Sales are made at different 
LOTs if they are made at different marketing stages (or their 
equivalent). See 19 CFR 351.412(c)(2). Substantial differences in 
selling activities are a necessary, but not sufficient, condition for 
determining that there is a difference in the stages of marketing. Id.; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Certain Cut-to-Length Carbon Steel Plate From South Africa, 62 
FR 61731, 61732 (November 19, 1997). In order to determine whether the 
comparison sales were at different stages in the marketing process than 
the U.S. sales, we reviewed the distribution system in each market 
(i.e., the ``chain of distribution''),\1\ including selling 
functions,\2\ class of customer (``customer category''), and the level 
of selling expenses for each sale.
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    \1\ The marketing process in the United States and comparison 
markets begins with the producer and extends to the sale to the 
final user or consumer. The chain of distribution between the two 
may have many or few links, and the respondents' sales occur 
somewhere along this chain.
    \2\ Selling functions associated with a particular chain of 
distribution help us to evaluate the level(s) of trade in a 
particular market. For purposes of these preliminary results, we 
have organized the common selling functions into four major 
categories: sales process and marketing support, freight and 
delivery, inventory and warehousing, and quality assurance/warranty 
services.
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    Pursuant to section 773(a)(1)(B)(i) of the Act, in identifying 
levels of trade for EP and comparison market sales (i.e., NV based on 
either home market or third country prices \3\), we consider the 
starting prices before any adjustments.
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    \3\ Where NV is based on CV, we determine the NV LOT based on 
the LOT of the sales from which we derive selling expenses, G&A and 
profit for CV, where possible.
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    When the Department is unable to match U.S. sales to sales of the 
foreign like product in the comparison market at the same LOT as the 
EP, the Department may compare the U.S. sale to sales at a different 
LOT in the comparison market. In comparing EP sales at a different LOT 
in the comparison market, where available data make it practical, we 
make a LOT adjustment under section 773(a)(7)(A) of the Act.
    We examined the chain of distribution and the selling activities 
associated with sales reported by BGH to its four channels of 
distribution in the home market, and where appropriate, to distinct 
customer categories within these channels. We found that distribution 
channels 1, 2, and 3, were similar with respect to sales process, 
freight services, and warranty service and, therefore, constituted a 
distinct level of trade (LOTH 1). We found that distribution channel 4 
constituted a distinct level of trade (LOTH 2) because sales in this 
channel were made from warehouse inventory and encompassed services 
similar to those of a ``service center.'' We also found that LOTH 2 
differed significantly from LOTH 1 with respect to sales process. Based 
upon our overall analysis in the home market, we found that LOTH 1 and 
LOTH 2 constituted two different levels of trade.
    BGH reported EP sales through two channels of distribution, 
produce-to-order sales to distributors (channel 1)

[[Page 5496]]

and warehouse inventory sales to distributors (channel 3). We examined 
the chain of distribution and the selling activities associated with 
sales through these channels and found them to be similar with respect 
to sales process, freight services, and warranty service. Therefore, we 
determine that the two EP channels of distribution constitute a single 
level of trade (LOTU 1).
    The EP level of trade differed considerably from LOTH 2 with 
respect to sales process and warehousing/inventory maintenance. 
However, the EP level of trade was similar to LOTH 1 with respect to 
sales process, freight services, warehouse/inventory maintenance and 
warranty service. Consequently, we matched the EP sales to sales at the 
same level of trade in the home market (LOTH 1). Where no matches at 
the same level of trade were possible, we matched to sales in LOTH 2 
and we made a level of trade adjustment. See section 773(a)(7)(A) of 
the Act.

E. Calculation of Normal Value Based on Comparison Market Prices

    We calculated NV based on the ex-works or delivered price to 
unaffiliated customers or prices to affiliated customer that we 
determined to be at arm's length. We identified the correct starting 
price by accounting for billing adjustments, early payment discounts, 
other discounts, rebates, and interest revenue. In accordance with 
section 773(a)(6)(B)(ii) of the Act, we made deductions for inland 
freight and inland insurance. We also made adjustments, in accordance 
with 19 CFR 351.410(e), for indirect selling expenses incurred in the 
home market or on U.S. sales where commissions were granted on sales in 
one market but not in the other (the commission offset).
    Furthermore, we made adjustments for differences in costs 
attributable to differences in the physical characteristics of the 
merchandise in accordance with section 773(a)(6)(C)(ii) of the Act and 
19 CFR 351.411. In addition, where appropriate, we made adjustments for 
differences in circumstances of sale (``COS'') in accordance with 
section 773(a)(6)(C)(iii) of the Act and 19 CFR 351.410 by deducting 
direct selling expenses incurred on comparison market sales (credit 
expenses), and adding U.S. direct selling expenses (credit expenses and 
commissions). Where payment dates were unreported we recalculated the 
credit expenses using the date of the preliminary determination in 
place of actual date of payment. We deducted home market packing costs 
and added U.S. packing costs in accordance with section 773(a)(6)(A) 
and (B) of the Act.
    Finally, where appropriate, we made an adjustment for differences 
in LOT under section 773(a)(7)(A) of the Act and 19 CFR 351.412(b)-(e).

Preliminary Results of the Review

    We preliminarily find that the following dumping margin exists for 
the period August 2, 2001, through February 28, 2003.

------------------------------------------------------------------------
                     Manufacturer/exporter                       Margin
------------------------------------------------------------------------
BGH...........................................................     0.43
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Assessment Rates

    Upon completion of this administrative review, the Department will 
determine, and CBP shall assess, antidumping duties on all appropriate 
entries. Pursuant to 19 CFR 351.212(b), the Department calculates an 
assessment rate for each importer of the subject merchandise. Upon 
issuance of the final results of this administrative review, if any 
importer (or customer)-specific assessment rates calculated in the 
final results are above de minimis (i.e., at or above 0.5 percent), the 
Department will issue appraisement instructions directly to CBP to 
assess antidumping duties on appropriate entries. To determine whether 
the duty assessment rates covering the period were de minimis, in 
accordance with the requirement set forth in 19 CFR 351.106(c)(1), we 
calculated importer (or customer)-specific ad valorem rates by 
aggregating the dumping margins calculated for all U.S. sales to that 
importer (or customer) and dividing this amount by the entered value of 
the sales to that importer (or customer). Where an importer (customer)-
specific ad valorem rate is greater than de minimis and the entered 
value is available, we apply the assessment rate to the entered value 
of the importer's/customer's entries during the POR. Where an importer 
(or customer)-specific ad valorem rate is greater than de minimis, and 
the entered value is not available, we calculated a per unit assessment 
rate by aggregating the dumping margins calculated for U.S. sales to 
that importer (or customer) and dividing this amount by the total 
quantity sold to that importer (or customer).
    The Department will issue appropriate assessment instructions 
directly to CBP within 15 days of publication of the final results of 
this review.

Cash Deposit Rates

    The following deposit requirements will be effective upon 
completion of the final results of this administrative review for all 
shipments of stainless steel bar from Germany entered, or withdrawn 
from warehouse, for consumption on or after the publication date of the 
final results of this administrative review, as provided by section 
751(a)(1) of the Act: (1) The cash deposit rates for the reviewed 
company will be the rate established in the final results of this 
administrative review (except no cash deposit will be required if its 
weighted-average margin is de minimis, i.e., less than 0.5 percent); 
(2) for merchandise exported by manufacturers or exporters not covered 
in this review but covered in the LTFV Final investigation, the cash 
deposit will continue to be the most recent rate published in the final 
determination for which the manufacturer or exporter received an 
individual rate; (3) if the exporter is not a firm covered in this 
review, or the original investigation, but the manufacturer is, the 
cash deposit rate will be the rate established for the most recent 
period for the manufacturer of the merchandise; and (4) if neither the 
exporter nor the manufacturer is a firm covered in this review, the 
cash deposit rate will be 16.96 percent, the ``all others'' rates 
established in the LTFV Final.

Public Comment

    Any interested party may request a hearing within 30 days of 
publication of this notice. A hearing, if requested, will be 37 days 
after the publication of this notice, or the first business day 
thereafter. Issues raised in the hearing will be limited to those 
raised in the case and rebuttal briefs. Interested parties may submit 
case briefs within 30 days of the date of publication of this notice. 
Rebuttal briefs, which must be limited to issues raised in the case 
briefs, may be filed not later than 35 days after the date of 
publication of this notice. Parties who submit case briefs or rebuttal 
briefs in this proceeding are requested to submit with each argument 
(1) a statement of the issue and (2) a brief summary of the argument 
with an electronic version included.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
such written briefs or hearing, within 120 days of publication of these 
preliminary results.

Notification to Importers

    This notice also serves as a preliminary reminder to importers of 
their responsibility under 19 CFR 351.402(f) to file a certificate 
regarding the reimbursement of antidumping duties prior to liquidation 
of the

[[Page 5497]]

relevant entries during this review period. Failure to comply with this 
requirement could result in the Secretary's presumption that 
reimbursement of antidumping duties occurred and the subsequent 
assessment of double antidumping duties.
    We are issuing and publishing these results in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: January 29, 2004.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 04-2528 Filed 2-4-04; 8:45 am]
BILLING CODE 3510-DS-P