[Federal Register Volume 73, Number 61 (Friday, March 28, 2008)]
[Rules and Regulations]
[Pages 16517-16518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-6499]


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DEPARTMENT OF COMMERCE

International Trade Administration

19 CFR Part 351

[Docket No. 080225304-8463-01]
RIN 0625-AA77


Import Administration, Withdrawal of Regulations Governing the 
Treatment of Subcontractors (``Tolling'' Operations)

ACTION: Interim final rule.

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SUMMARY: Import Administration issues this interim final rule for the 
purpose of withdrawing its regulation governing the treatment of 
tollers or subcontractors for purposes of determining export price, 
constructed export price, fair value, and normal value in antidumping 
duty proceedings.

DATES: This interim final rule is effective on March 28, 2008. Although 
the amendment made by this Interim Final Rule is effective on March 28, 
2008, Import Administration seeks public comments. To be assured of 
consideration, written comments must be received not later than April 
28, 2008.

ADDRESSES: Comments on this Interim Final Rule must be sent to David M. 
Spooner, Assistant Secretary for Import Administration, Central Records 
Unit, Room 1870, U.S. Department of Commerce, Pennsylvania Avenue.

FOR FURTHER INFORMATION CONTACT: Michael Rill, telephone 202-482-3058.

SUPPLEMENTARY INFORMATION: The Department promulgated the regulation 
governing the treatment of tollers or subcontractors in antidumping 
duty proceedings on May 19, 1997 (``Antidumping Duties; Countervailing 
Duties; Final Rule'') (62 FR 27296, 27411 (May 19, 1997)). The 
Department regulation, 19 CFR 351.401(h), was intended to ensure, in 
calculating a dumping margin on merchandise determined to be within the 
scope of an antidumping order, that the Department's analysis is 
focused on the party setting the price of subject merchandise when the 
manufacture of such merchandise is subcontracted to another company. 
However, the regulation has been interpreted by the Court of 
International Trade as having the unintended effect of bestowing the 
status of ``foreign manufacturer'' or ``producer'' upon parties in the 
United States that otherwise would have assumed the status of 
purchasers of subject merchandise. See USEC Inc. v. United States, 281 
F. Supp. 2d 1334 (2003), aff'd on other grounds Eurodif v. United 
States, 411 F.3d 1355, 1364 (Fed. Cir. 2005). This interpretation could 
restrict the Department's exercise of its discretion and could require 
the Department to identify the incorrect entity as the seller of 
subject merchandise, which would adversely affect the Department's 
antidumping determinations.
    If a party that customarily assumes the status of a ``purchaser'' 
is bestowed with the status of ``foreign manufacturer'' or 
``producer'', the proper application of the law is thwarted in a 
variety of ways. First, in some cases, the Department may have no basis 
upon which to make antidumping duty determinations because the 
customers who obtain the status of ``foreign producer'' make no sales 
of subject merchandise, but instead consume the merchandise themselves. 
In such cases, the Department would be unable to calculate a dumping 
margin. In other cases, the Department's determination of the margin of 
dumping could be distorted or miscalculated because the incorrect U.S. 
sales were identified as the relevant sales under the regulation. 
Second, the right to appeal Department antidumping determinations is a 
right limited to interested parties as defined under 19 U.S.C. 1677(9). 
Purchasers of subject merchandise do not qualify as interested parties 
under the provision. Purchasers who have obtained the status of 
``foreign producers'' under the regulation, however, become interested 
parties in error, and are afforded the right to appeal Department 
antidumping determinations where no such right was intended under the 
law.
    These effects are contrary to the Department's intention in 
promulgating the regulation, and inconsistent with the Department's 
statutory mandate to provide relief to domestic industries suffering 
material injury from unfairly traded imports. The Department has a 
statutory duty under the Tariff Act of 1930, as amended, to determine 
instances of dumping by examining the price at which the merchandise is 
first sold in the United States. The regulation at issue, as recently 
interpreted, confounds the Department's ability to make such a 
determination. Because the regulation is applicable to on-going 
antidumping investigations and administrative reviews, and because the 
application of the regulation can act to deny relief to domestic 
industries suffering material injury from unfairly traded imports, 
immediate revocation is necessary to ensure the proper and efficient 
operation of the antidumping law and to provide the relief intended by 
Congress.
    The Department is not replacing this regulation with a new 
regulation. Instead, the Department is returning to a case-by-case 
adjudication, until additional experience allows the Department to gain 
greater understanding of the problem.
    Parties are invited to comment on the Department's withdrawal of 
the regulation governing the treatment of tollers or subcontractors in 
antidumping duty proceedings. Parties should submit to the address 
under the ADDRESSES heading, a signed original and two copies of each 
set of comments including reasons for any recommendation, along with a 
cover letter identifying the commenter's name and address. To be 
assured of consideration, written comments must be received not later 
than April 28, 2008.

[[Page 16518]]

Classification

Executive Order 12866

    It has been determined that this interim final rule is not 
significant for purposes of Executive Order 12866 of September 30, 1993 
(``Regulatory Planning and Review'') (58 FR 51735 (October 4, 1993)).

Paperwork Reduction Act

    This interim final rule contains no new collection of information 
subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35.

Executive Order 13132

    This rule does not contain policies with federalism implications as 
that term is defined in section 1(a) of Executive Order 13132, dated 
August 4, 1999 (64 FR 43255 (August 10, 1999)).

Administrative Procedure Act

    The Assistant Secretary for Import Administration finds good cause 
to waive the requirement to provide prior notice and opportunity for 
public comment, pursuant to the authority set forth at 5 U.S.C. 
553(b)(B), as such requirement is impracticable and contrary to the 
public interest.
    The regulation has been interpreted to restrict the Department's 
exercise of its discretion and, in such cases, requires the Department 
to identify the incorrect entity as the seller of subject merchandise, 
which adversely affects the Department's antidumping determinations. 
The Department's antidumping regulation, 19 CFR 351.401(h), is intended 
to ensure that the antidumping analysis is focused on the party setting 
the price of subject merchandise when the manufacture of such 
merchandise is subcontracted to another company. The regulation has 
been construed to have the unintended effect of bestowing the status of 
``foreign manufacturer'' or ``foreign producer'' on parties in the 
United States that would have otherwise assumed the status of 
``purchasers''. As described in the preamble, if a party that 
customarily assumes the status of a ``purchaser'' is bestowed the 
status of ``foreign manufacturer'' or ``foreign producer'', the proper 
application of the law is thwarted. This effect is contrary to the 
Department's intention in promulgating the regulation, and inconsistent 
with the Department's statutory mandate to provide relief to domestic 
industries suffering material injury from unfairly traded imports. 
Courts have determined that notice and comment is impracticable when 
``the agency could both follow section 553 and execute its statutory 
duties.'' Lavesque v. Block, 723 F.2d 175, 184 (5th Cir. 1980). It went 
further to clarify that the Administrative Procedure Act good cause 
waiver authorizes departures from the requirements ``only when 
compliance would interfere with the agency's ability to carry out its 
mission.'' Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1485. Here, 
the Department has a statutory duty under the Tariff Act of 1930, as 
amended, to determine instances of dumping by examining the price at 
which the merchandise is first sold in the United States. The 
regulation at issue confounds the Department's ability to make such a 
determination. Because the regulation is applicable to on-going 
antidumping investigations and administrative reviews, and because the 
application of the regulation can act to deny relief to domestic 
industries suffering material injury from unfairly traded imports, 
immediate revocation is necessary to ensure the proper and efficient 
operation of the antidumping law and to provide the relief intended by 
Congress.
    The Assistant Secretary for Import Administration also finds good 
cause to waive the 30-day delay in effectiveness, pursuant to the 
authority set forth at 5 U.S.C. 553(e) for the reasons given above. As 
described in the preamble, if a party that customarily assumes the 
status of a ``purchaser'' is bestowed the status of ``foreign 
manufacturer'' or ``foreign producer'', the proper application of the 
law is thwarted. This effect is contrary to the Department's intention 
in promulgating the regulation, and inconsistent with the Department's 
statutory mandate to provide relief to domestic industries suffering 
material injury from unfairly traded imports. The regulation at issue 
confounds the Department's ability to make such a determination. 
Because the regulation is applicable to on-going antidumping 
investigations and administrative reviews, and because the application 
of the regulation can act to deny relief to domestic industries 
suffering material injury from unfairly traded imports, immediate 
revocation is necessary to ensure the proper and efficient operation of 
the antidumping law and to provide the relief intended by Congress.

Regulatory Flexibility Act

    Because a notice and an opportunity for public comment are not 
required to be given for this rule under the Administrative Procedure 
Act or by any other law, the analytical requirements of the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.) are not applicable. Therefore, a 
regulatory flexibility analysis has not been prepared.

List of Subjects in 19 CFR Part 351

    Administrative practice and procedure, Antidumping duties, Business 
and industry, Cheese, Confidential business information, 
Investigations, Reporting and recordkeeping requirements.

    For the reasons stated above, amend 19 CFR part 351 as follows:

PART 351--ANTIDUMPING AND COUNTERVAILING DUTIES

    1. The authority citation for part 351 continues to read as 
follows:

    Authority: 5 U.S.C. 301; 19 U.S.C. 1202 note; 19 U.S.C. 1303 
note; 19 U.S.C. 1671 et seq.; and 19 U.S.C. 3538.


Sec.  351.401  [Amended]

    2. Amend Sec.  351.401 by removing and reserving paragraph (h).

    Dated: March 21, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
 [FR Doc. E8-6499 Filed 3-27-08; 8:45 am]
BILLING CODE 3510-DS-P