[Federal Register Volume 75, Number 81 (Wednesday, April 28, 2010)]
[Notices]
[Pages 22372-22383]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9858]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-956]


Certain Seamless Carbon and Alloy Steel Standard, Line, and 
Pressure Pipe From the People's Republic of China: Preliminary 
Determination of Sales at Less Than Fair Value, Affirmative Preliminary 
Determination of Critical Circumstances, in Part, and Postponement of 
Final Determination

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

DATES: Effective Date: April 28, 2010.
SUMMARY: The Department of Commerce (the ``Department'') preliminarily 
determines that certain seamless carbon and alloy steel standard, line, 
and pressure pipe from the People's Republic of China (``PRC'') is 
being, or is likely to be, sold in the United States at less than fair 
value (``LTFV''), as provided in section 733 of the Tariff Act of 1930, 
as amended (the ``Act''). The estimated dumping margins are shown

[[Page 22373]]

in the ``Preliminary Determination'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Magd Zalok or Zev Primor, AD/CVD 
Operations, Office 4, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC, 20230; telephone: (202) 482-
4162 or 482-4114, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On September 16, 2009, the Department received an antidumping duty 
(``AD'') petition concerning imports of certain seamless carbon and 
alloy steel standard, line, and pressure pipe (``seamless pipe'') from 
the PRC filed in proper form by United States Steel Corporation (``U.S. 
Steel'') and V&M Star L.P. See Petition for the Imposition of 
Antidumping Duties: Certain Seamless Carbon and Alloy Steel Standard, 
Line, and Pressure Pipe from the People's Republic of China, dated 
September 16, 2009 (``Petition''). On September 28, 2009, TMK IPSCO and 
the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, 
Allied Industrial and Service Workers International Union also entered 
the proceeding as petitioners (collectively, together with U.S. Steel 
and V&M Star L.P., ``Petitioners''). The Department initiated the AD 
investigation on seamless pipe from the PRC on October 6, 2009. See 
Certain Seamless Carbon and Alloy Steel Standard, Line, and Pressure 
Pipe From the People's Republic of China: Initiation of Antidumping 
Duty Investigation, 74 FR 52744 (October 14, 2009) (``Initiation 
Notice'').
    In the Initiation Notice, the Department stated its intent to 
select respondents based on responses to quantity and value (``Q&V'') 
questionnaires. See Initiation Notice, 75 FR at 52747. On October 7, 
2009, the Department requested Q&V information from the 84 companies 
identified in the petition as potential producers or exporters of 
seamless pipe from the PRC. See ``Respondent Selection in the 
Antidumping Duty Investigation of Certain Seamless Carbon and Alloy 
Steel Standard, Line, and Pressure Pipe from the People's Republic of 
China,'' dated November 5, 2009 (``Respondent Selection Memorandum''). 
The Department received timely responses to its Q&V questionnaire from 
the following companies: (1) Tianjin Pipe International Economic and 
Trading Corporation (``TPCO''); (2) Hengyang Steel Tube Group Int'l 
Trading Inc. (``Hengyang''); (3) Pangang Group Chengdu Iron & Steel 
Co., Ltd.; (4) Zhejiang Jianli Company Limited; (5) Yangzhou Chengde 
Steel Tube Co., Ltd.; (6) Xigang Seamless Steel Tube Co., Ltd.; (7) 
HeBei Hongling Seamless Steel Pipes Manufacturing Co., Ltd.; (8) 
Jiangyin City Changjiang Steel Pipe Co., Ltd.; and (9) Yangzhou Lontrin 
Steel Tube Co., Ltd. The Department confirmed that 77 of the 84 
companies received the Q&V questionnaire, while the results from the 
international courier service's shipment tracking showed that two Q&V 
questionnaires were ``arranged for delivery,'' and five were returned 
to the Department or not delivered due to incorrect addresses provided 
by Petitioners. See Respondent Selection Memorandum.
    On November 2, 2009, the International Trade Commission (``ITC'') 
preliminarily determined that there is a reasonable indication that an 
industry in the United States is threatened with material injury by 
reason of imports of certain seamless carbon and alloy steel standard, 
line, and pressure pipe from the PRC. See Certain Seamless Carbon and 
Alloy Steel Standard, Line, and Pressure Pipe From China, Investigation 
Nos. 701-TA-469 and 731-TA-1168 (Preliminary), 74 FR 57521 (November 6, 
2009).
    On November 5, 2009, the Department selected TPCO and Hengyang as 
the mandatory respondents. See Respondent Selection Memorandum. On 
November 6, 2009, the Department issued an antidumping questionnaire to 
both companies. On November 10, 2009, U.S. Steel submitted comments to 
the Department regarding the physical characteristics of subject 
merchandise that it argued should be used in comparing sales prices 
with normal value (``NV'').
    TPCO and Hengyang submitted timely responses to the Department's 
questionnaires and supplemental questionnaires between December 2009 
and April 2010. Hengyang responded to the Department's questionnaire on 
behalf of itself, Xigang Seamless Steel Tube Co., Ltd., and Wuxi 
Seamless Special Pipe Co., Ltd. (collectively ``Xigang''), exporters/
producers of subject merchandise, claiming that the companies are 
affiliated and should be treated as a single entity. The Department 
received properly filed separate-rate applications for Jiangyin City 
Changjiang Steel Pipe Co., Ltd. (``Jiangyin City''), Pangang Group 
Chengdu Iron & Steel Co., Ltd. (``Pangang Group''), Yangzhou Lontrin 
Steel Tube Co., Ltd. (``Yangzhou Lontrin''), and Yangzhou Chengde Steel 
Tube Co., Ltd. (``Yangzhou Chengde'') from November 7, 2009, through 
December 14, 2009.
    The Department issued supplemental questionnaires to, and received 
responses from, TPCO, Hengyang, Yangzhou Chengde, and Yangzhou Lontrin 
between October 2009 and April 2010. U.S. Steel submitted comments to 
the Department on the questionnaire and/or supplemental questionnaire 
responses of TPCO, Hengyang and the separate rate applicant Yangzhou 
Chengde between February and March 2010.
    On January 7, 2010, the Department released a memorandum to 
interested parties which listed potential surrogate countries and 
invited interested parties to comment on surrogate country and 
surrogate value selection. See Memorandum to Howard Smith, Program 
Manager, AD/CVD Operations Office 4, from Kelly Parkhill, Acting 
Director for Policy, Office of Policy, ``Request for A List of 
Surrogate Countries for an Antidumping Duty Investigation of Certain 
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from 
the People's Republic of China,'' dated January 7, 2010 (``Office of 
Policy Surrogate Country List Memorandum''). The countries identified 
in that memorandum as being at a level of economic development 
comparable to the PRC for the specified period of investigation 
(``POI'') are India, the Philippines, Indonesia, Thailand, Ukraine, and 
Peru. On January 20, 2010, the Department received comments on 
surrogate country selection and surrogate value information from 
Petitioners. On February 16, 2010, TPCO and Hengyang submitted 
surrogate value and surrogate country comments. Petitioners, TPCO and 
Hengyang stated that the Department should select India as the 
surrogate country for this investigation. No other interested parties 
commented on the selection of a surrogate country. For a detailed 
discussion of the selection of the surrogate country, see the 
``Surrogate Country'' section below.
    On January 22, 2010, Petitioners requested postponement of the 
preliminary determination. On February 8, 2010, the Department 
postponed this preliminary determination by fifty days pursuant to 
section 733(c)(1)(A) of the Tariff Act. See Certain Seamless Carbon and 
Alloy Steel Standard, Line, and Pressure Pipe from the People's 
Republic of China: Postponement of Preliminary Determination of 
Antidumping Duty Investigation, 75 FR 6183 (February 8, 2010). 
Moreover, as explained in the memorandum from the Deputy Assistant 
Secretary for Import

[[Page 22374]]

Administration, the Department exercised its discretion to toll 
deadlines for the duration of the closure of the Federal Government 
from February 5, through February 12, 2010. Thus, all deadlines in this 
segment of the proceeding have been extended by seven days. See 
Memorandum to the Record from Ronald Lorentzen, DAS for Import 
Administration, regarding ``Tolling of Administrative Deadlines As a 
Result of the Government Closure During the Recent Snowstorm,'' dated 
February 12, 2010. Based on this memorandum, the revised deadline for 
the preliminary determination in this investigation is April 21, 2010.
    On January 7, 2010, U.S. Steel made a critical circumstances 
allegation with respect to TPCO and Hengyang. On March 3, 2010, U.S. 
Steel supplemented its critical circumstances allegation. Based on U.S. 
Steel's critical circumstances allegation, between March 4 and March 
22, 2010, we requested and received shipment data from TPCO and 
Hengyang. Moreover, on March 18, 2010, U.S. Steel submitted a targeted 
dumping allegation with respect to TPCO and Hengyang.
    Given record information indicating that TPCO is affiliated with 
one of its U.S. customers, on March 3, 2010, we requested that TPCO 
submit to the Department a section C database which includes all 
downstream sales of subject merchandise made by TPCO's affiliated U.S. 
customer during the POI. In response to this request, on March 15, 
2010, TPCO stated that it was unable to provide such downstream sales. 
Moreover, on March 25, 2010, we requested once again that TPCO submit 
to the Department the downstream sales for the customer in question, 
and provide additional information pertaining to TPCO's corporate 
structure and affiliations. On March 26, 2010, TPCO requested an 
extension of time, until April 9, 2010, to submit the downstream sales 
of its U.S. customer. In response to TPCO's request, the Department 
granted TPCO the aforementioned extension of time for submitting the 
downstream sales, until April 9, 2010. In response to the Department's 
request, on March 29 and April 5, 2010, TPCO submitted additional 
information regarding its corporate structure and affiliations, and 
reported that it asked its U.S. customer with which the Department 
considered it to be affiliated to provide the downstream sales in 
question.
    On April 9, 2010, instead of reporting the downstream sales 
requested by the Department, TPCO submitted a letter stating that it 
would be able to report the downstream sales of its U.S. customer, but 
it needed an additional extension of time to report the sales. On April 
16, 2010, the Department rejected TPCO's second request for an 
extension of time to submit the downstream sales of the U.S. customer 
in question. Despite the Department's decision not to grant TPCO an 
extension of time to submit the downstream sales data, on April 19, 
2010, TPCO submitted that data and requested that the Department 
reconsider its decision not to extend the deadline for supplying the 
data. On April 21, the Department rejected the downstream sales data 
and removed the data from the record.
    On March 26, 2010, TPCO, Hengyang, and U.S. Steel submitted pre-
preliminary comments on the selection of surrogate values and other 
issues discussed in the relevant sections of this Federal Register 
notice, below.
    Moreover, on April 9, 2010, TPCO and Hengyang requested that the 
Department postpone the final determination in this case. See the 
``Postponement of Final Determination'' section of this notice below.

Period of Investigation

    The POI is January 1, 2009, through June 30, 2009. This period 
corresponds to the two most recently completed fiscal quarters prior to 
the month in which the petition was filed (i.e., September 2009). See 
19 CFR 351.204(b)(1).

Scope of the Investigation

    The merchandise covered by this investigation is certain seamless 
carbon and alloy steel (other than stainless steel) pipes and redraw 
hollows, less than or equal to 16 inches (406.4 mm) in outside 
diameter, regardless of wall-thickness, manufacturing process (e.g., 
hot-finished or cold-drawn), end finish (e.g., plain end, beveled end, 
upset end, threaded, or threaded and coupled), or surface finish (e.g., 
bare, lacquered or coated). Redraw hollows are any unfinished carbon or 
alloy steel (other than stainless steel) pipe or ``hollow profiles'' 
suitable for cold finishing operations, such as cold drawing, to meet 
the American Society for Testing and Materials (``ASTM'') or American 
Petroleum Institute (``API'') specifications referenced below, or 
comparable specifications. Specifically included within the scope are 
seamless carbon and alloy steel (other than stainless steel) standard, 
line, and pressure pipes produced to the ASTM A-53, ASTM A-106, ASTM A-
333, ASTM A-334, ASTM A-335, ASTM A-589, ASTM A-795, ASTM A-1024, and 
the API 5L specifications, or comparable specifications, and meeting 
the physical parameters described above, regardless of application, 
with the exception of the exclusion discussed below. Specifically 
excluded from the scope of the investigation are unattached couplings. 
The merchandise covered by the investigation is currently classified in 
the Harmonized Tariff Schedule of the United States (``HTSUS'') under 
item numbers: 7304.19.1020, 7304.19.1030, 7304.19.1045, 7304.19.1060, 
7304.19.5020, 7304.19.5050, 7304.31.6050, 7304.39.0016, 7304.39.0020, 
7304.39.0024, 7304.39.0028, 7304.39.0032, 7304.39.0036, 7304.39.0040, 
7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056, 7304.39.0062, 
7304.39.0068, 7304.39.0072, 7304.51.5005, 7304.51.5060, 7304.59.6000, 
7304.59.8010, 7304.59.8015, 7304.59.8020, 7304.59.8025, 7304.59.8030, 
7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, 7304.59.8055, 
7304.59.8060, 7304.59.8065, and 7304.59.8070.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, our written description of the merchandise subject to 
this scope is dispositive.

Scope Comments

    In accordance with the preamble to the Department's regulations, we 
set aside a period of time in our Initiation Notice for parties to 
raise issues regarding product coverage, and encouraged all parties to 
submit comments within 20 calendar days of the signature date of that 
notice. See Antidumping Duties; Countervailing Duties; Final Rule, 62 
FR 27296, 27323 (May 19, 1997). See also Initiation Notice, 75 FR at 
52744-45.
    On October 27, 2009, the Department received comments from Wyman-
Gordon Inc. (``Wyman-Gordon''), a U.S. manufacturer of extruded 
seamless pipe for oil and gas and power generation applications. Wyman-
Gordon maintained that Petitioners do not produce seamless pipe made to 
ASTM-335 specifications, which is covered by the scope of this 
investigation, and that it is the only U.S. manufacturer of seamless 
pipe with nominal wall-thickness greater than 1.594 inches. In 
response, on November 9, 2009, Petitioners refuted Wyman-Gordon's 
allegations, asserting that there are at least five other U.S. 
companies producing seamless steel pipe made to ASTM-335 
specifications; namely, Mach Industrial Group, Rockwell Collins 
Rollmet, Timken, U.S. Steel, and Michigan Seamless Tube. Petitioners

[[Page 22375]]

also refuted Wyman-Gordon's contention that it is the only U.S. 
producer of seamless pipe with a wall thickness greater than 1.594 
inches. In support of their argument, Petitioners provided 
documentation indicating that they produce seamless standard and line 
pipe of less than 16 inches in outside diameter that has a wall-
thickness equal to or greater than 1.594 inches. See Exhibit 3 of 
Petitioners' November 9, 2009, submission. Petitioners further argued 
that Wyman-Gordon's contention that it is the only U.S. producer of 
seamless steel pipe manufactured through use of the extrusion process, 
does not comport with the fact that U.S. producers, such as Michigan 
Seamless Tube, use a draw bench and stationary die to control the 
diameter in very close tolerance. Moreover, citing Light-Walled 
Rectangular Pipe and Tube from Mexico: Notice of Final Determination of 
Sales at Less than Fair Value, 69 FR 53677 (September 2, 2004) and the 
accompanying Issues and Decision Memorandum at Comment 5 (``Light-
Walled from Mexico''), Petitioners argued that the Department has 
repeatedly stated that ``the statute does not require that petitioners 
currently produce every type of product that is encompassed by the 
scope of the investigation.'' According to Petitioners, the product is 
included in the scope if it is part of the same like product. Finally, 
Petitioners maintained that Wyman-Gordon's proposed alterations to the 
scope of the investigation would pose a significant risk of 
circumvention of the AD order (if imposed) and should, therefore, be 
rejected by the Department.
    On February 3, 2010, Sumitomo Corporation of America (``SCOA'') 
argued that mechanical tubing produced to ASTM A-519 specifications 
should not be covered by the scope of the investigation because such 
mechanical tubing is not similar to any of the products covered by the 
scope. SCOA further argued that this type of mechanical tubing was 
excluded from an AD investigation covering products from Japan that are 
identical to the products covered in this investigation. Thus, SCOA 
argued that mechanical tubing should be excluded from the scope of this 
investigation.
    On April 5, 2010, one of the Petitioners, V&M Star L.P. objected to 
SCOA's request to exclude its mechanical tubing from the scope of the 
investigation. V&M Star L.P contended that: (1) Mechanical tubing is 
not specifically excluded from the scope; (2) SCOA's product meets the 
physical parameters described in the scope; and (3) products can be 
certified to multiple specifications. Thus, products conforming to the 
specifications listed in the scope, or comparable specifications, that 
otherwise meet the physical parameters identified in the scope should 
be considered covered by the scope even if they are certified to a 
specification not specifically listed in the language of the scope of 
the investigation.
    The Department finds that Wyman-Gordon's argument, with respect to 
seamless pipe produced to ASTM-335 specifications, involves the 
question of whether the petition was filed by or on behalf of the 
domestic industry. See section 732(c)(4) of the Act. Pursuant to 
section 732(c)(4)(E) of the Act, interested parties may submit comments 
regarding industry support before initiation, and a determination 
regarding industry support shall not be reconsidered after the 
Department's initiation of an investigation. In this case, Wyman-
Gordon's comments were submitted after initiation and therefore we will 
not reconsider our determination as to industry support at this stage 
of the proceeding. Moreover, we agree with Petitioners that the statute 
does not require the petitioners to currently produce every type of 
product that is encompassed by the scope of the investigation. See 
Light-Walled from Mexico at Comment 5. Accordingly, the Department has 
not reconsidered Petitioners' standing with respect to seamless pipe 
produced to ASTM-335 specifications, and made no changes to the scope 
of the investigation based on Wyman-Gordon's allegation.
    With respect to SCOA's argument regarding mechanical tubing, the 
Department agrees with Petitioners that if a product conforms to the 
specifications in the scope or a comparable specification, and it meets 
the physical parameters identified in the scope, it is covered by the 
scope of the investigation. SCOA has failed to demonstrate that's its 
product does not conform to the scope of this investigation. See 
``Scope of the Investigation'' section above.

Separate Treatment for Hengyang and Xigang

    As indicated above, the Department selected Hengyang as one of the 
mandatory respondents in this investigation. In responding to the 
Department's antidumping questionnaire, Hengyang independently treated 
itself and Xigang as a single entity, i.e., collapsed itself with 
Xigang. Hengyang primarily based its decision to collapse itself with 
Xigang on the fact that a third party, the holding company Hunan Valin 
Iron and Steel Group Co., Ltd., maintains common ownership in both 
Hengyang and Xigang.
    Pursuant to 19 CFR 351.401(f)(1), the Department will treat 
producers as a single entity, or ``collapse'' them, where: (1) Those 
producers are affiliated; (2) the producers have production facilities 
for producing similar or identical products that would not require 
substantial retooling of either facility in order to restructure 
manufacturing priorities; and (3) there is a significant potential for 
manipulation of price or production. In determining whether a 
significant potential for manipulation exists, 19 CFR 351.401(f)(2) 
states that the Department may consider various factors, including: (1) 
The level of common ownership; (2) the extent to which managerial 
employees or board members of one firm sit on the board of directors of 
an affiliated firm; and (3) whether the operations of the affiliated 
firms 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.
    The Department preliminarily concludes that the totality of the 
record evidence does not support collapsing Hengyang and Xigang into a 
single entity, pursuant to 19 CFR 351.401(f)(1). Accordingly, the 
Department preliminarily based its margin calculation only on the 
information submitted pertaining to Hengyang. For further discussion on 
the Department's decision not to collapse Hengyang with Xigang, see the 
memorandum to John M. Andersen, Acting Deputy Assistant Secretary for 
Antidumping and Countervailing Operations ``Affiliation and Single 
Entity Status of Certain Respondents in the Antidumping Duty 
Investigation of Seamless Carbon and Alloy Steel Standard, Line, and 
Pressure Pipe (``Seamless Pipe'') from the People's Republic of China 
(``PRC''), dated April 19, 2010.

Targeted Dumping Allegation

    As noted above, on March 18, 2010, U.S. Steel submitted targeted 
dumping allegations with respect to Hengyang and TPCO, requesting that 
the Department apply the average-to-transaction methodology in 
calculating the margin for these companies.\1\ For Hengyang, U.S. Steel 
maintained that there are patterns of export prices (``EP'') for 
comparable merchandise that differ significantly among regions and time

[[Page 22376]]

periods. Petitioners relied on the Department's targeted-dumping test 
in the Notice of Final Determination of Sales at Less Than Fair Value: 
Coated Free Sheet Paper from the Republic of Korea, 72 FR 60630 
(October 25, 2007) (``CFS''). Alternatively, in the event the 
Department determines not to use the targeted dumping test employed in 
CFS, Petitioners applied the Department's test in Certain Steel Nails 
from the United Arab Emirates: Notice of Final Determination of Sales 
at Not Less Than Fair Value, 73 FR 33985 (June 16, 2008), and Certain 
Steel Nails from the People's Republic of China: Final Determination of 
Sales at Less Than Fair Value and Partial Affirmative Determination of 
Critical Circumstances, 73 FR 33977 (June 16, 2008) (collectively, 
``Nails''). Petitioners alleged that under this test, there is a 
pattern of EPs for comparable merchandise that differ significantly 
among regions.
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    \1\ See U.S. Steel's targeted-dumping allegation regarding 
``Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe 
from the People's Republic of China Seamless'' dated March 18, 2010.
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    The statute allows the Department to employ the average-to-
transaction margin calculation methodology in an investigation under 
the following circumstances: (1) There is a pattern of export prices 
that differ significantly among purchasers, regions, or periods of 
time; and (2) the Department explains why such differences cannot be 
taken into account using the average-to-average or transaction-to-
transaction methodology. See section 777A(d)(1)(B) of the Act.
    The Department notes that its current methodology for determining 
whether targeted dumping exists is based on the methodology applied in 
Nails. Consequently, the Department has, preliminarily, considered only 
the part of Petitioners' allegation which is based on the Department's 
methodology in Nails. See Certain Oil Country Tubular Goods From the 
People's Republic of China: Notice of Preliminary Determination of 
Sales at Less Than Fair Value, Affirmative Preliminary Determination of 
Critical Circumstances and Postponement of Final Determination, 74 FR 
59117, 59118 (November 17, 2009), as amended in Certain Oil Country 
Tubular Goods From the People's Republic of China: Notice of Amended 
Preliminary Determination of Sales at Less Than Fair Value, 74 FR 69065 
(December 30, 2009). Since the Department has preliminarily determined 
not to collapse Hengyang and Xigang, the Department's evaluation of 
Petitioners' targeted dumping allegation regarding Hengyang was based 
solely on Hengyang's U.S. sales during the POI. After analyzing 
Hengyang's U.S. sales, we found no evidence of a pattern of EPs for 
comparable merchandise that differ significantly among regions. See 
Analysis Memorandum for Hengyang, dated April 21, 2010.
    Petitioners also alleged targeted dumping with respect to TPCO. 
Applying the P/2 test, Petitioners alleged a clear pattern of price 
differences among regions. Additionally, using the Nails test, 
Petitioners alleged a pattern of prices for comparable merchandise that 
differ significantly by time period.\2\ As stated above, the current 
methodology for determining whether targeted-dumping exists is based on 
the methodology applied in Nails. Consequently, the Department has, 
preliminarily, considered only the part of Petitioners' allegation 
which is based on the Department's methodology in Nails.
---------------------------------------------------------------------------

    \2\ Id. at Exhibit 3b.
---------------------------------------------------------------------------

    Petitioners divided the POI into six separate months and submitted 
each month to the Nails test. Petitioners contend that the results of 
this test show a pattern of prices for TPCO's sales in a certain time 
period that differ significantly from its prices of comparable 
merchandise in other months of the POI.\3\
---------------------------------------------------------------------------

    \3\ Id.
---------------------------------------------------------------------------

    After analyzing TPCO's U.S. sales, we found no evidence of a 
pattern of prices for comparable merchandise that differ significantly 
among time periods. See Analysis Memorandum for TPCO, dated April 21, 
2010.

Critical Circumstances

    As stated above, on January 7, 2010, U.S. Steel made a critical 
circumstances allegation with respect to TPCO and Hengyang, which it 
supplemented on March 3, 2010. After reviewing the record evidence, the 
Department preliminarily finds that there is reason to believe or 
suspect that critical circumstances exist for imports of subject 
merchandise from Hengyang and the PRC-wide entity but not for TPCO or 
the separate rate companies, which includes Xigang. Specifically, the 
Department finds that: (A) In accordance with section 733(e)(1)(A)(ii) 
of the Act, the person by whom, or for whose account, the merchandise 
was imported knew or should have known that the exporter was selling 
the subject merchandise at less than its fair value and that there was 
likely to be material injury by reason of such sales; and (B) in 
accordance with section 733(e)(1)(B) of the Act, Hengyang and the PRC-
wide entity had massive imports during a relatively short period. See 
Memorandum to John M. Andersen, Acting Deputy Assistant Secretary for 
Antidumping and Countervailing Duty Operations from Abdelali 
Elouaradia, Director, Office 4, ``Antidumping Duty Investigation of 
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from 
the People's Republic of China: Preliminary Affirmative Determination 
of Critical Circumstances,'' dated April 21, 2010.

Non-Market Economy Treatment

    The Department considers the PRC to be a non-market economy 
(``NME'') country. In accordance with section 771(18)(C)(i) of the Act, 
any determination that a country is an NME country shall remain in 
effect until revoked by the administering authority. See, e.g., Tapered 
Roller Bearings and Parts Thereof, Finished and Unfinished, From the 
People's Republic of China: Preliminary Results of 2001-2002 
Administrative Review and Partial Rescission of Review, 68 FR 7500 
(February 14, 2003), unchanged in Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, from the People's Republic of China: 
Final Results of 2001-2002 Administrative Review and Partial Rescission 
of Review, 68 FR 70488 (December 18, 2003). No party has challenged the 
designation of the PRC as an NME country, and the Department has not 
revoked the PRC's status as an NME country. Therefore, in this 
preliminary determination, we have treated the PRC as an NME country 
and applied our current NME methodology.

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base NV, in most 
circumstances, on the NME producer's factors of production (``FOP'') 
valued in a surrogate market-economy country or countries considered to 
be appropriate by the Department. In accordance with section 773(c)(4) 
of the Act, in valuing the FOP, the Department shall utilize, to the 
extent possible, the prices or costs of the FOP in one or more market-
economy countries that are at a level of economic development 
comparable to that of the NME country and are significant producers of 
comparable merchandise. The sources of the surrogate values we have 
used in this investigation are discussed in the ``Normal Value'' 
section below.
    The Department determined that India, the Philippines, Indonesia, 
Thailand, Ukraine and Peru are countries comparable to the PRC in terms 
of economic development. See Office of Policy Surrogate Country List 
Memorandum. Once countries that are economically comparable to the PRC

[[Page 22377]]

have been identified, we select an appropriate surrogate country by 
determining whether an economically comparable country is a significant 
producer of comparable merchandise and whether the data for valuing FOP 
is both available and reliable. See id. On January 20, 2010, 
Petitioners filed comments urging the Department to select India as a 
surrogate country and claiming that India is a significant producer of 
merchandise comparable to the merchandise under investigation. 
Specifically, Petitioners noted that the Simdex Steel Tube 
Manufacturers Worldwide Guide identifies no less than 76 Indian 
producers of tubular products and the Steel Statistical Yearbook 2008 
reported that in 2007 India exported 1.36 million metric tons of 
tubular products. See Petitioners' January 20, 2010 submission at 6 and 
Exhibits A and B. Petitioners, TPCO, and Hengyang also submitted 
information on the record demonstrating that the Department can value 
the major FOP for subject merchandise using reliable, publicly 
available data from Indian sources. See Petitioner's January 20, 2010, 
surrogate country and surrogate value comments. See also TPCO's and 
Hengyang's February 16, 2010, surrogate value and surrogate country 
comments, respectively. No other party provided comments on the record 
concerning the appropriate surrogate country.
    Based on evidence placed on the record, we have determined that it 
is appropriate to use India as a surrogate country pursuant to section 
773(c)(4) of the Act based on the following: (1) It is at a level of 
economic development comparable to the PRC; (2) it is a significant 
producer of comparable merchandise; and (3) we have reliable data from 
India that we can use to value the FOP. See Petitioner's January 20, 
2010, surrogate country and surrogate value comments. See also, 
surrogate value and surrogate country comments from TPCO and Hengyang, 
dated February 16, 2010. Thus, to calculate NV, we are using Indian 
prices, when available and appropriate, to value the FOP of TPCO and 
Hengyang. We have obtained and relied upon publicly available 
information wherever possible. See Surrogate Value Memorandum, dated 
April 21, 2010 (``Surrogate Value Memorandum'').
    In accordance with 19 CFR 351.301(c)(3)(i), for the final 
determination in an AD investigation, interested parties may submit 
publicly available information to value the FOP within 40 days after 
the date of publication of the preliminary determination.\4\
---------------------------------------------------------------------------

    \4\ In accordance with 19 CFR 351.301(c)(1), for the final 
determination of this investigation, interested parties may submit 
factual information to rebut, clarify, or correct factual 
information submitted by an interested party less than ten days 
before, on, or after, the applicable deadline for submission of such 
factual information. However, the Department notes that 19 CFR 
351.301(c)(1) permits new information only insofar as it rebuts, 
clarifies, or corrects information recently placed on the record. 
The Department generally will not accept the submission of 
additional, previously absent-from-the-record alternative surrogate 
value information pursuant to 19 CFR 351.301(c)(1). See Glycine from 
the People's Republic of China: Final Results of Antidumping Duty 
Administrative Review and Final Rescission, in Part, 72 FR 58809 
(October 17, 2007), and accompanying Issues and Decision Memorandum 
at Comment 2.
---------------------------------------------------------------------------

Separate Rates

    In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate-rate status in NME investigations. The process requires 
exporters and producers to submit a separate-rate status 
application.\5\
---------------------------------------------------------------------------

    \5\ See Policy Bulletin 05.1: Separate-Rates Practice and 
Application of Combination Rates in Antidumping Investigations 
involving Non-Market Economy Countries (April 5, 2005), available at 
http://ia.ita.doc.gov, which states: ``while continuing the practice 
of assigning separate rates only to exporters, all separate rates 
that the Department will now assign in its NME investigations will 
be specific to those producers that supplied the exporter during the 
period of investigation. Note, however, that one rate is calculated 
for the exporter and all of the producers which supplied subject 
merchandise to it during the period of investigation. This practice 
applied both to mandatory respondents receiving an individually 
calculated separate rate as well as the pool of non-investigated 
firms receiving the weighted-average of the individually calculated 
rates. This practice is referred to as the application of 
``combination rates'' because such rates apply to specific 
combinations of exporters and one or more producers. The cash-
deposit rate assigned to an exporter will apply only to merchandise 
both exported by the firm in question and produced by a firm that 
supplied the exporter during the period of investigation.''
---------------------------------------------------------------------------

    In proceedings involving NME countries, the Department has a 
rebuttable presumption that all companies within the country are 
subject to government control and thus should be assessed a single AD 
rate. It is the Department's policy to assign all exporters of subject 
merchandise in an NME country this single rate unless an exporter can 
demonstrate that it is sufficiently independent so as to be entitled to 
a separate rate. Exporters can demonstrate this independence through 
the absence of both de jure and de facto governmental control over 
export activities. The Department analyzes each entity exporting the 
subject merchandise under a test arising from the Notice of Final 
Determination of Sales at Less Than Fair Value: Sparklers from the 
People's Republic of China, 56 FR 20588 (May 6, 1991) (``Sparklers''), 
as further developed in Notice of Final Determination of Sales at Less 
Than Fair Value: Silicon Carbide from the People's Republic of China, 
59 FR 22585 (May 2, 1994) (``Silicon Carbide''). However, if the 
Department determines that a company is wholly foreign-owned or located 
in a market economy, then a separate-rate analysis is not necessary to 
determine whether it is independent from government control.

Separate Rate Recipients \6\
---------------------------------------------------------------------------

    \6\ All separate rate applicants receiving a separate rate are 
hereby referred to collectively as the ``SR Recipients.''
---------------------------------------------------------------------------

Joint Ventures Between Chinese and Foreign Companies or Wholly Chinese-
Owned Companies

    The mandatory respondents, TPCO and Hengyang, and the separate rate 
applicants, Jiangyin City, Pangang Group, Yangzhou Lontrin, Yangzhou 
Chengde, and Xigang (collectively, ``Chinese SR Applicants'') provided 
evidence that they are wholly Chinese-owned companies. The Department 
has analyzed whether TPCO, Hengyang and the Chinese SR Applicants have 
demonstrated the absence of de jure and de facto governmental control 
over their respective export activities.
a. Absence of De Jure Control
    The Department considers the following de jure criteria in 
determining whether an individual company may be granted a separate 
rate: (1) An absence of restrictive stipulations associated with an 
individual exporter's business and export license; (2) legislative 
enactments decentralizing control of companies; and (3) other formal 
measures by the government decentralizing control of companies. See 
Sparklers, 56 FR at 20589.
    The evidence provided by TPCO, Hengyang and the Chinese SR 
Applicants supports a preliminary finding of absence of de jure 
governmental control based on the following: (1) An absence of 
restrictive stipulations associated with the individual exporters' 
business and export licenses; (2) the existence of applicable 
legislative enactments decentralizing control of Chinese companies; and 
(3) the implementation of formal measures by the government 
decentralizing control of Chinese companies.
b. Absence of De Facto Control
    Typically, the Department considers four factors in evaluating 
whether each respondent is subject to de facto

[[Page 22378]]

governmental control of its export functions: (1) Whether the export 
prices are set by or are subject to the approval of a governmental 
agency; (2) whether the respondent has authority to negotiate and sign 
contracts and other agreements; (3) whether the respondent has autonomy 
from the government in making decisions regarding the selection of 
management; and (4) whether the respondent retains the proceeds of its 
export sales and makes independent decisions regarding disposition of 
profits or financing of losses. See Silicon Carbide, 59 FR at 22586-87; 
see also Notice of Final Determination of Sales at Less Than Fair 
Value: Furfuryl Alcohol From the People's Republic of China, 60 FR 
22544, 22545 (May 8, 1995). The Department has determined that an 
analysis of de facto control is critical in determining whether 
respondents are, in fact, subject to a degree of governmental control 
which would preclude the Department from assigning separate rates.
    The evidence provided by TPCO, Hengyang and the Chinese SR 
Applicants supports a preliminary finding of de facto absence of 
governmental control based on record statements and supporting 
documentation showing that the companies: (1) Set their own export 
prices independent of the government and without the approval of a 
government authority; (2) have the authority to negotiate and sign 
contracts and other agreements; (3) maintain autonomy from the 
government in making decisions regarding the selection of management; 
and (4) retain the proceeds of their respective export sales and make 
independent decisions regarding disposition of profits or financing of 
losses.
    Therefore, the evidence placed on the record of this investigation 
by TPCO, Hengyang, and the Chinese SR Applicants demonstrates an 
absence of de jure and de facto government control under the criteria 
identified in Sparklers and Silicon Carbide. Accordingly, the 
Department has preliminarily granted a separate rate to TPCO, Hengyang 
and the Chinese SR Applicants. See ``Preliminary Determination'' 
section below.

Margins for Separate Rate Applicants Not Individually Examined

    Through the evidence in their applications, the Chinese SR 
Applicants have demonstrated their eligibility for a separate rate. See 
the ``Separate Rates'' section above. Normally, the separate rate is 
determined based on the estimated weighted-average dumping margins 
established for exporters and producers individually investigated, 
excluding zero and de minimis margins or margins based entirely on 
adverse facts available (``AFA''). See section 735(c)(5)(A) of the Act. 
In this case, we have applied an average of the rates calculated for 
TPCO and Hengyang to the Chinese SR Applicants for purposes of the 
preliminary determination.

Partial Adverse Facts Available for TPCO

    As discussed above, the Department selected TPCO as a mandatory 
respondent. Based on record information, we have preliminarily 
determined that TPCO is affiliated with a U.S. customer to which it 
sold subject merchandise during the POI pursuant to sections 
771(33)(E), (F) and (G) of the Act. For a full discussion of the 
affiliation issue, the details of which are proprietary, see the 
memorandum from Abdelali Elouaradia to John M. Andersen, dated 
concurrently with this notice (``Affiliation Memorandum'').
    In the antidumping questionnaire issued to TPCO in the instant 
investigation on November 6, 2009, the Department explained the 
definition of affiliation, pursuant to Section 771(33) of the Act, and 
requested that TPCO state whether it made shipments or sales to 
unaffiliated parties, affiliated parties or both, during the POI, and 
whether it had any affiliates located in the United States or that 
exported merchandise to the United States which would fall under the 
description of merchandise covered by the scope of the proceeding. See 
the Department's November 6, 2009, questionnaire (``Antidumping 
Questionnaire''). In its Antidumping Questionnaire, the Department also 
instructed TPCO to exclude its U.S. sales to affiliated resellers, and 
report instead the resales to the first unaffiliated customer. Id. 
However, despite the fact that as early as November 17, 2009, TPCO 
should have been aware that the downstream sales in question may need 
to be reported given that it faced a parallel issue in the oil country 
tubular goods AD investigation, and notwithstanding the Department's 
instructions to TPCO in the instant investigation not to report sales 
to affiliated customers in its response to the Department's Antidumping 
Questionnaire, TPCO reported subject merchandise sales to the 
affiliated U.S. customer in question instead of reporting the 
downstream sales of that affiliated U.S. customer. See Certain Oil 
Country Tubular Goods from the People's Republic of China: Final 
Determination of Sales at Less Than Fair Value, Affirmative Final 
Determination of Critical Circumstances and Final Determination of 
Targeted Dumping, 75 FR 20335 (April 19, 2010) and accompanying Issues 
and Decision Memorandum at Comment 9.
    As noted above, given record information indicating that TPCO is 
affiliated with one of its U.S. customers, on March 3, 2010, we 
requested that TPCO submit to the Department a section C database which 
includes all downstream sales of subject merchandise made by TPCO's 
affiliated U.S. customer during the POI. In the aforementioned request, 
the Department also alerted TPCO to the fact that if it failed to 
submit the downstream sales of its U.S. customer, the Department may 
apply AFA to TPCO. Nevertheless, in response to the Department's 
request, on March 16, 2010, TPCO stated that it was unable to provide 
such downstream sales because the records for the customer were not 
available to TPCO. On March 25, 2010, we placed additional information 
on the record regarding the U.S. customer at issue (see the Affiliation 
Memorandum) and once again requested that TPCO submit to the Department 
the downstream sales of the customer in question. We again notified 
TPCO that if it failed to submit the downstream sales of the customer 
in question, the Department may base TPCO's dumping margin on AFA. As 
indicated above, TPCO requested an extension of time, until April 9, 
2010, to submit the downstream sales of its U.S. customer. In response 
to TPCO's request, the Department granted it the full extension of time 
to submit such downstream sales. On March 29, 2010, TPCO informed the 
Department that it had ``officially requested'' that its customer 
provide its downstream sales. In response to the Department's latest 
request for the downstream sales of TPCO's affiliated U.S. customer, on 
April 9, 2010, TPCO reported that it would be able to provide the 
downstream sales but needed an extension of time until two days before 
the fully-extended due date of the preliminary determination to provide 
them. On April 16, 2010, the Department rejected TPCO's request for an 
additional extension of time to submit the downstream sales of the U.S. 
customer in question.
    Section 776(a) of the Act provides that the Department shall apply 
``facts otherwise available'' (``FA'') if (1) necessary information is 
not on the record, or (2) an interested party or any other person (A) 
withholds information that has been requested, (B) fails to provide 
information within the deadlines established, or in the form and manner 
requested by the

[[Page 22379]]

Department, subject to subsections (c)(1) and (e) of section 782 of the 
Act, (C) significantly impedes a proceeding, or (D) provides 
information that cannot be verified as provided by section 782(i) of 
the Act.
    Section 776(b) of the Act further provides that the Department may 
use an adverse inference in applying the facts otherwise available when 
a party has failed to cooperate by not acting to the best of its 
ability to comply with a request for information. See SAA at 870. See 
also, Notice of Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from the 
Russian Federation, 65 FR 5510, 5518 (February 4, 2000) (``Certain 
Cold-Rolled Flat-Rolled Carbon-Quality Steel Products''). Such an 
adverse inference may include reliance on information derived from the 
petition, the final determination, a previous administrative review, or 
other information placed on the record. See section 776(b) of the Act.
    Although TPCO and its affiliated U.S. customer indicated they can 
provide the requested downstream sales two days before the due date for 
this preliminary determination, their repeated failure to provide the 
downstream sales, despite the Department's multiple requests for the 
data, means that all the information necessary for the Department to 
calculate an accurate dumping margin for TPCO is not on the record and 
available for use in the preliminary determination. Moreover, before 
such information is used by the Department, the Department requires 
time to analyze the data and has to have an opportunity to issue 
supplemental questionnaires and allow interested parties to comment on 
the data. TPCO and its affiliated U.S. customer have foreclosed these 
steps by their actions. Section 772(a) and (b) of the Act requires the 
Department to base its margin calculations on the price at which 
subject merchandise is first sold to unaffiliated U.S. purchasers. 
Since TPCO failed to provide the requested downstream sales to 
unaffiliated U.S. customers by the (extended) deadlines, this necessary 
information was not available on the record and thus, we have 
determined, pursuant to section 776(a)(1) and (2)(B) of the Act, that 
it is appropriate to base TPCO's preliminary dumping margin, in part, 
on FA.
    Furthermore, in selecting from among the FA, we have determined, 
pursuant to section 776(b) of the Act, that it is appropriate to use an 
adverse inference because TPCO failed to cooperate by not acting to the 
best of its ability to comply with a request for information. 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.'' \7\ The Court of Appeals Federal Circuit (``CAFC''), in 
Nippon, provided an explanation of the ``failure to act to the best of 
its ability'' standard, stating that the ordinary meaning of ``best'' 
means ``one's maximum effort,'' and that the statutory mandate that a 
respondent act to the ``best of its ability'' requires the respondent 
to do the maximum it is able to do.\8\ The CAFC indicated that 
inadequate responses to agency inquiries ``would suffice'' as a basis 
for finding that a respondent has failed to cooperate to the best of 
its ability.\9\ Compliance with the ``best of its ability'' standard is 
determined by assessing whether a respondent has put forth its maximum 
effort to provide the Department with full and complete answers to all 
inquiries in an investigation.\10\
---------------------------------------------------------------------------

    \7\ See SAA at 870.
    \8\ See Nippon Steel Corporation v. United States, 337 F.3d 
1373, 1382 (Fed. Cir. 2003) (``Nippon'').
    \9\ Id. at 1380.
    \10\ Id. at 1382.
---------------------------------------------------------------------------

    TPCO's response to the Department's initial request for the 
downstream sales was simply to state that it has no control over the 
U.S. customer and no access to the customer's records. Based on TPCO's 
later submissions, it appears that TPCO did not officially request that 
its customer provide the requested information until as late as March 
29, 2010, or 26 days after the Department requested this information. 
Within 11 days thereafter, on April 9, 2010, TPCO informed the 
Department that its customer had agreed to provide the requested 
information, and that such information could be submitted to the 
Department in 10 days, on April 19, 2010. The record indicates that 
TPCO's delay in seeking the requested information accounts for as much 
as 26 days, which has prevented the Department from timely receiving 
the requested information. Once TPCO made the request, TPCO's customer 
agreed to provide the information and could have done so within as 
little as 21 days. Accordingly, we have preliminarily determined that 
TPCO failed to cooperate by putting forth its maximum effort to obtain 
the data and, hence, has not acted to the best of its ability to comply 
with a request for information. This has prevented the timely 
submission of the information such that even if the Department had 
further extended the deadline, such submission would have been too late 
for the Department to examine it for purposes of this preliminary 
determination. Therefore, for the preliminary determination, we have 
determined that it is appropriate to use adverse inferences in 
selecting the FA on which to base TPCO's dumping margin, in part. We 
have selected, as partial AFA, the highest control number-specific 
dumping margin calculated for TPCO. No corroboration of this rate is 
necessary because the information we are relying on as partial AFA was 
obtained in the course of this investigation and is not secondary 
information.

The PRC-Wide Entity

    The Department has data indicating that there were more exporters 
of seamless pipe from the PRC than those responding to our request for 
Q&V information during the POI. See Respondent Selection Memorandum. We 
issued our request for Q&V information to 84 potential Chinese 
exporters of the merchandise under investigation, in addition to 
posting the Q&V questionnaire on the Department's Web site. While 
information on the record of this investigation indicates that there 
are other producers/exporters of seamless pipe in the PRC, we received 
only nine timely filed Q&V responses. See id. Although all exporters 
were given an opportunity to provide Q&V information, not all exporters 
provided a response to the Department's Q&V letter. Therefore, the 
Department has preliminarily determined that there were exporters/
producers of the merchandise under investigation during the POI from 
the PRC that did not respond to the Department's request for 
information. We have treated these PRC producers/exporters as part of 
the PRC-wide entity because they did not qualify for a separate rate. 
See, e.g., Preliminary Determination of Sales at Less Than Fair Value, 
Postponement of Final Determination, and Preliminary Partial 
Determination of Critical Circumstances: Diamond Sawblades and Parts 
Thereof From the People's Republic of China, 70 FR 77121, 77128 
(December 29, 2005), unchanged in Final Determination of Sales at Less 
Than Fair Value and Final Partial Affirmative Determination of Critical 
Circumstances: Diamond Sawblades and Parts Thereof from the People's 
Republic of China, 71 FR 29303 (May 22, 2006).
    Section 776(a)(2) of the Act provides that the Department shall, 
subject to subsection 782(d) of the Act, use facts otherwise available 
in reaching the applicable determination if an interested party 
withholds information that has been requested by the Department. As 
noted above, the PRC-

[[Page 22380]]

wide entity withheld information requested by the Department. As a 
result, pursuant to section 776(a)(2)(A) of the Act, we find it 
appropriate to base the PRC-wide dumping margin on facts otherwise 
available. See Notice of Preliminary Determination of Sales at Less 
Than Fair Value, Affirmative Preliminary Determination of Critical 
Circumstances and Postponement of Final Determination: Certain Frozen 
Fish Fillets From the Socialist Republic of Vietnam, 68 FR 4986 
(January 31, 2003), unchanged in Notice of Final Antidumping Duty 
Determination of Sales at Less Than Fair Value and Affirmative Critical 
Circumstances: Certain Frozen Fish Fillets from the Socialist Republic 
of Vietnam, 68 FR 37116 (June 23, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the facts otherwise available, the Department may employ an adverse 
inference if an interested party fails to cooperate by not acting to 
the best of its ability to comply with requests for information. See 
SAA at 870. See also, Certain Cold-Rolled Flat-Rolled Carbon-Quality 
Steel Products, 65 FR 5510, 5518 (February 4, 2000). Since the PRC-wide 
entity did not respond to the Department's requests for information, 
the Department has concluded that the PRC-wide entity has failed to 
cooperate to the best of its ability. Therefore, the Department 
preliminarily finds that, in selecting from among the facts available, 
an adverse inference is appropriate.
    Section 776(b) of the Act authorizes the Department to rely upon, 
as AFA: (1) Information derived from the petition; (2) the final 
determination from the LTFV investigation; (3) a previous 
administrative review; or (4) any other information placed on the 
record. In selecting a rate for AFA, the Department selects one that is 
sufficiently adverse ``as to effectuate the purpose of the facts 
available rule to induce respondents to provide the Department with 
complete and accurate information in a timely manner.'' See Notice of 
Final Determination of Sales at Less Than Fair Value: Static Random 
Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 
1998). It is the Department's practice to select, as AFA, the higher 
of: (a) the highest margin alleged in the petition or (b) the highest 
calculated rate for any respondent in the investigation, to the extent 
that it can be corroborated (assuming the rate is based on secondary 
information). See Final Determination of Sales at Less Than Fair Value: 
Certain Cold-Rolled Carbon Quality Steel Products From the People's 
Republic of China, 65 FR 34660 (May 31, 2000), and accompanying Issues 
and Decisions Memorandum at ``Facts Available.'' In the instant 
investigation, as AFA, we have preliminarily assigned to the PRC-wide 
entity, the highest corroborated margin alleged in the Petition, which 
is 98.37 percent. The dumping margin for the PRC-wide entity applies to 
all entries of the merchandise under investigation except for entries 
of subject merchandise produced and exported by the SR Recipients.

Corroboration of Information

    Section 776(c) of the Act provides that, when the Department relies 
on secondary information as facts available rather than on information 
obtained in the course of an investigation, it must, to the extent 
practicable, corroborate that information from independent sources 
reasonably at its disposal. Secondary information is described as 
``information derived from the petition that gave rise to the 
investigation or review, the final determination concerning merchandise 
subject to this investigation, or any previous review under section 751 
concerning the merchandise subject to this investigation.'' \11\ To 
``corroborate'' means that the Department will satisfy itself that the 
secondary information to be used has probative value. Independent 
sources used to corroborate may include, for example, published price 
lists, official import statistics and customs data, and information 
obtained from interested parties during the particular investigation. 
To corroborate secondary information, the Department will, to the 
extent practicable, examine the reliability and relevance of the 
information used.\12\
---------------------------------------------------------------------------

    \11\ See Final Determination of Sales at Less Than Fair Value: 
Sodium Hexametaphosphate From the People's Republic of China, 73 FR 
6479, 6481 (February 4, 2008), quoting SAA at 870.
    \12\ See Tapered Roller Bearings and Parts Thereof, Finished and 
Unfinished, From Japan, and Tapered Roller Bearings, Four Inches or 
Less in Outside Diameter, and Components Thereof, From Japan; 
Preliminary Results of Antidumping Duty Administrative Reviews and 
Partial Termination of Administrative Reviews, 61 FR 57391, 57392 
(November 6, 1996), unchanged in Tapered Roller Bearings and Parts 
Thereof, Finished and Unfinished, From Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, From Japan; Final Results of Antidumping Duty 
Administrative Reviews and Termination in Part, 62 FR 11825 (March 
13, 1997).
---------------------------------------------------------------------------

    The AFA rate that the Department used for the PRC-wide entity is 
from the Petition. Based on our examination of information on the 
record, including U.S. prices and NVs, we find that there is a 
sufficient basis to find that the Petition margin selected as the AFA 
rate, 98.37 percent, has probative value. In addition, since we have 
selected a margin that is within the range of CONNUM-specific margins 
calculated for the mandatory respondents in this proceeding, it can be 
considered to have probative value. See Hengyang and TPCO Analysis 
Memoranda. Petitioners' methodology for calculating the U.S. price and 
NV in the Petition is discussed in the Initiation Notice. Accordingly, 
we conclude that the highest Petition margin that can be corroborated 
within the meaning of the statute is 98.37 percent, which is 
sufficiently adverse so as to induce cooperation as an uncooperative 
party does not benefit from its failure to cooperate.\13\
---------------------------------------------------------------------------

    \13\ See Wire Decking from the People's Republic of China: 
Notice of Preliminary Determination of Sales at Less Than Fair Value 
and Postponement of Final Determination 75 FR 1597, 1603 (January 
12, 2010).
---------------------------------------------------------------------------

Fair Value Comparisons

    In accordance with section 777A(d)(1)(A)(i) of the Act, to 
determine whether the mandatory respondents TPCO and Hengyang sold 
seamless pipe to the United States at LTFV, we compared the weighted-
average EP or constructed export price (``CEP'') of seamless pipe, as 
appropriate, to the NV of seamless pipe, as described in the ``U.S. 
Price,'' and ``Normal Value'' sections of this notice.

U.S. Price

TPCO

    In accordance with section 772(b) of the Act, we based the U.S. 
price for TPCO's sales on CEP because these sales were made by TPCO's 
U.S. affiliates. In accordance with section 772(c)(2)(A) of the Act, we 
calculated CEP by deducting, where applicable, the following expenses 
from the starting price (gross unit price) charged to the first 
unaffiliated customer in the United States: Foreign movement expenses, 
international freight, marine insurance, and U.S. movement expenses, 
including brokerage and handling, U.S. duty, stevedore and inspection 
expenses. Further, in accordance with section 772(d)(1) of the Act and 
19 CFR 351.402(b), where appropriate, we deducted from the starting 
price the following selling expenses associated with economic 
activities occurring in the United States: Credit expenses and indirect 
selling expenses. In addition, pursuant to section 772(d)(3) of the 
Act, we made an adjustment to the starting price for CEP profit. We 
based movement expenses on either surrogate values or actual expenses. 
For a detailed description of all adjustments, see TPCO

[[Page 22381]]

Analysis Memorandum, dated April 21, 2010.

Hengyang

    In accordance with section 772(a) of the Act, we based the U.S. 
price for Hengyang's sales on EP because the subject merchandise was 
sold directly to the unaffiliated customers in the United States prior 
to importation, and the use of constructed export price was not 
otherwise warranted.
    We calculated EP based on the packed cost and freight or delivered 
prices to unaffiliated purchasers in, or for exportation to, the United 
States. We made deductions, as appropriate, for the following movement 
expenses: Domestic inland freight, domestic brokerage and handling, 
international freight, and marine insurance. For details regarding our 
EP calculations, and for a complete discussion of the calculation of 
the U.S. price for Hengyang, see ``Antidumping Duty Investigation of 
Seamless Carbon and Alloy Steel Standard, Line, and Pressure Pipe from 
the People's Republic of China: Hengyang Steel Tube Group Int'l Trading 
Inc., Hengyang Valin Steel Tube Co., Ltd., and Hengyang Valin MPM Tube 
Co., Ltd., Analysis Memorandum for the Preliminary Determination (April 
21, 2010) (``Hengyang Analysis Memorandum'').

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine NV using an FOP methodology if the merchandise is exported 
from a NME country and the information does not permit the calculation 
of NV using home-market prices, third-country prices, or constructed 
value under section 773(a) of the Act. Thus, in accordance with section 
773(c)(1)(B) of the Act, because NV could not be determined under 
section 773(a) of the Act, we valued FOP based on the inputs employed 
by Hengyang to manufacture subject merchandise during the POI. 
Specifically, we calculated NV by adding together the value of the FOP, 
general expenses, profit, and packing costs.
    In accordance with section 773(c) of the Act, we calculated NV 
based on the FOP reported by TPCO and Hengyang. We valued the FOP using 
prices and financial statements from the surrogate country, India. If 
market economy suppliers, who were paid in a market economy currency, 
supplied over 33 percent of the total volume of a material input 
purchased from all sources during the POI, pursuant to Department 
practice, we based the input value on the actual price charged by the 
supplier. See Antidumping Methodologies: Market Economy Inputs, 
Expected Non-Market Economy Wages, Duty Drawback; and Request for 
Comments, 71 FR 61716 (October 19, 2006); Certain Cut-to-Length Carbon 
Steel Plate From the People's Republic of China: Final Results of the 
2007-2008 Administrative Review of the Antidumping Duty Order, 75 FR 
8301 (Feb. 24, 2010) and accompanying Issues and Decision Memorandum at 
Comment 7. See also TPCO Analysis Memorandum and Hengyang Analysis 
Memorandum.
    In selecting surrogate values, we followed, to the extent 
practicable, the Department's practice of choosing values which are 
non-export average values, contemporaneous with, or closest in time to, 
the POI, product-specific, and tax-exclusive. See e.g., Notice of 
Preliminary Determination of Sales at Less Than Fair Value, Negative 
Preliminary Determination of Critical Circumstances and Postponement of 
Final Determination: Certain Frozen and Canned Warmwater Shrimp From 
the Socialist Republic of Vietnam, 69 FR 42672, 42682 (July 16, 2004), 
unchanged in Final Determination of Sales at Less Than Fair Value: 
Certain Frozen and Canned Warmwater Shrimp from the Socialist Republic 
of Vietnam, 69 FR 71005 (December 8, 2004). We also considered the 
quality of the source of surrogate information in selecting surrogate 
values. See, e.g., Tapered Roller Bearings and Parts Thereof, Finished 
or Unfinished, from the People's Republic of China: Preliminary Results 
of the 2007-2008 Administrative Review of the Antidumping Duty Order, 
74 FR 32539 (July 8, 2009), unchanged in Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from the People's Republic of 
China: Final Results of the 2007-2008 Administrative Review of the 
Antidumping Duty Order, 75 FR 844 (January 6, 2010).
    We valued material inputs and packing materials by multiplying the 
amount of the factor consumed in producing subject merchandise by the 
average unit value (``AUV'') of the factor. We derived the AUV of the 
factor from Indian import statistics. In addition, we added Chinese 
domestic freight costs to the surrogate costs that we calculated for 
material inputs. We calculated freight costs by multiplying surrogate 
freight rates by the shorter of the reported distance from the domestic 
supplier to the factory that produced the subject merchandise or the 
distance from the nearest seaport to the factory that produced the 
subject merchandise, as appropriate. This adjustment is in accordance 
with the CAFC's decision in Sigma Corp. v. United States, 117 F.3d 
1401, 1407-1408 (Fed. Cir.1997). See Surrogate Value Memorandum. Where 
we could only obtain surrogate values that were not contemporaneous 
with the POI, we inflated (or deflated) the surrogate values using the 
Indian Wholesale Price Index (WPI) as published in the International 
Financial Statistics of the International Monetary Fund.
    Further, in calculating surrogate values from Indian imports, we 
disregarded imports from Indonesia, South Korea, and Thailand because 
in other proceedings the Department found that these countries maintain 
broadly available, non-industry-specific export subsidies. See Notice 
of Amended Final Determination of Sales at Less Than Fair Value: 
Certain Automotive Replacement Glass Windshields from the People's 
Republic of China, 67 FR 11670 (March 15, 2002); see also Notice of 
Final Determination of Sales at Less Than Fair Value and Negative Final 
Determination of Critical Circumstances: Certain Color Television 
Receivers From the People's Republic of China, 69 FR 20594 and 
accompanying Issues and Decision Memorandum at Comment 7 (April 16, 
2004).\14\ Therefore, it is reasonable to infer based on information 
available that all exports to all markets from these countries may be 
subsidized, and we have not used prices from these countries in 
calculating the Indian import-based surrogate values.
---------------------------------------------------------------------------

    \14\ In addition, we note that legislative history explains that 
the Department is not required to conduct a formal investigation to 
ensure that such prices are not subsidized. See Omnibus Trade and 
Competitiveness Act of 1988, Conference Report to accompany H.R. 
Rep. 100-576 at 590 (1988) reprinted in U.S.C.C.A.N. 1547, 1623-24. 
As such, it is the Department's practice to base its decision on 
information that is available to it at the time it makes its 
determination. See e.g., Polyethylene Terephthalate Film, Sheet, and 
Strip from the People's Republic of China: Preliminary Determination 
of Sales at Less than Fair Value, 73 FR 24552 (May 5, 2008), 
unchanged in Polyethylene Terephthalate Film, Sheet, and Strip from 
the People's Republic of China: Final Determination of Sales at Less 
than Fair Value, 73 FR 55039 (September 24, 2008).
---------------------------------------------------------------------------

    We valued electricity using price data for small, medium, and large 
industries, as published by the Central Electricity Authority of the 
Government of India in its publication entitled ``Electricity Tariff & 
Duty and Average Rates of Electricity Supply in India'', dated March 
2008. These electricity rates represent actual country-wide, publicly 
available information on tax-exclusive electricity rates charged to 
industries in India. As the rates listed in this source became 
effective on a variety of different dates, we are not adjusting the 
average

[[Page 22382]]

value for inflation. See Surrogate Value Memorandum.
    We valued natural gas using 2008-2009 data from the Gas Authority 
of India Ltd. Since the data are contemporaneous with the POI, we did 
not adjust the data for inflation.
    For direct labor, indirect labor, and packing labor, consistent 
with 19 CFR 351.408(c)(3), we valued labor using the PRC regression-
based wage rate as reported on Import Administration's home page, 
Import Library, Expected Wages of Selected NME Countries, revised in 
December 2009, available at http://ia.ita.doc.gov/wages/index.html. 
Since this regression-based wage rate does not separate the labor rates 
into different skill levels or types of labor, we have applied the same 
wage rate to all skill levels and types of labor reported by Hengyang. 
See Surrogate Value Memorandum.
    We valued truck freight expenses using a per-unit average rate 
calculated from data on the infobanc Web site: http://www.infobanc.com/logistics/logtruck.htm. The logistics section of this Web site contains 
inland freight truck rates between many large Indian cities. The value 
is contemporaneous with the POI. See Surrogate Value Memorandum.
    We valued brokerage and handling using a simple average of the 
brokerage and handling costs reported in public submissions filed in 
three antidumping duty cases. Specifically, we averaged the public 
brokerage and handling expenses reported by Navneet Publications 
(India) Ltd. in the 2007-2008 administrative review of certain lined 
paper products from India, Essar Steel Limited in the 2006-2007 
antidumping duty administrative review of hot-rolled carbon steel flat 
products from India, and Himalaya International Ltd. in the 2005-2006 
administrative review of certain preserved mushrooms from India. Since 
the resulting value is not contemporaneous with the POI, we inflated 
the rate using the WPI. See Surrogate Value Memorandum.
    We valued international freight using purchase prices.
    To value marine insurance, the Department used data from RGJ 
Consultants (http://www.rjgconsultants.com/). This source provides 
information regarding the per-value rates of marine insurance of 
imports and exports to/from various countries. See Surrogate Value 
Memorandum.
    We valued factory overhead, selling, general, and administrative 
(``SG&A'') expenses, and profit using the financial statements of ISMT 
(FY 2008-2009), provided in Exhibit SV-44 of TPCO's February 16, 2010, 
submission, OCTL (FY 2008-2009), provided in Exhibit 1 of Hengyang's 
February 12, 2010, submission, and Tata (FY 2008-2009), provided in 
Exhibit SV-1 of Petitioners' January 20, 2010. See Surrogate Value 
Memorandum. As discussed below, we found all three financial statements 
to be complete, legible, publicly-available, contemporaneous with the 
POI, and from producers of either identical or comparable merchandise. 
However, while all three of the financial statements at issue are 
contemporaneous, none of them meet all of the Department's criteria. 
For example, while Hengyang and TPCO are not as integrated as Tata in 
that neither conduct their own mining, both are much more integrated 
than OCTL, whose primary input is formed pipes and tubes. Further, we 
found that two of the three potential surrogate companies, ISMT and 
Tata, benefitted from actionable subsidies during this period. When the 
Department has reason to believe or suspect that a company may have 
received countervailable subsidies, financial ratios derived from that 
company's financial statements may not constitute the best available 
information with which to calculate surrogate financial ratios. 
Nevertheless, the Department has used financial statements with some 
evidence of subsidies when the circumstances of the particular case 
warranted. See e.g., Freshwater Crawfish Tail Meat from the People's 
Republic of China: Notice of Final Results And Rescission, In Part, of 
2004/2005 Antidumping Duty Administrative and New Shipper Reviews, 72 
FR 19174 (April 17, 2007) and accompanying Issues and Decision 
Memorandum at Comment 1. In this case, we have determined that solely 
relying on the financial statement of OCTL, a statement that does not 
evidence actionable subsidies, would not constitute the best available 
information in selecting surrogate financial ratios since it would not 
reflect expenses incurred to produce steel. Therefore, given the 
Department's preference for using multiple financial statements in 
order to determine surrogate financial ratios for manufacturing 
overhead, SG&A expenses, and profit, the Department has used the 
average of the audited financial statements of all three Indian 
producers, ISMT, OCTL and Tata, to calculate surrogate financial ratios 
for TPCO and Hengyang for purposes of the preliminary determination.
    In accordance with 19 CFR 351.301(c)(3)(i), interested parties may 
submit publicly available information with which to value FOP in the 
final determination within 40 days after the date of publication of the 
preliminary determination.

Verification

    As provided in section 782(i)(1) of the Act, we intend to verify 
the information upon which we will rely in making our final 
determination.

Combination Rates

    In the Initiation Notice, the Department stated that it would 
calculate combination rates for certain respondents that are eligible 
for a separate rate in this investigation. See Initiation Notice, 75 FR 
at 52748. This change in practice is described in Policy Bulletin 05.1: 
Separate Rates Practice and Application of Combination Rates in 
Antidumping Investigations Involving Non-Market Economy Countries, 
available at http://ia.ita.doc.gov/.

Preliminary Determination

    The Department preliminarily determines that the weighted-average 
dumping margins are as follows:

------------------------------------------------------------------------
                                                             Weighted-
                  Exporter and producer                   average margin
                                                             (percent)
------------------------------------------------------------------------
Tianjin Pipe International Economic and Trading                    32.39
 Corporation. Produced by: Tianjin Pipe (Group)
 Corporation............................................
Hengyang Steel Tube Group Int'l Trading Inc. Produced              91.93
 by: Hengyang Valin Steel Tube Co., Ltd., and Hengyang
 Valin MPM Tube Co., Ltd................................
Xigang Seamless Steel Tube Co., Ltd. Produced by: Xigang           62.16
 Seamless Steel Tube Co., Ltd., and Wuxi Seamless
 Special Pipe Co., Ltd..................................
Jiangyin City Changjiang Steel Pipe Co., Ltd. Produced             62.16
 by: Jiangyin City Changjiang Steel Pipe Co., Ltd.......
Pangang Group Chengdu Iron & Steel Co., Ltd. Produced              62.16
 by: Pangang Group Chengdu Iron & Steel Co., Ltd........
Yangzhou Lontrin Steel Tube Co., Ltd. Produced by:                 62.16
 Yangzhou Lontrin Steel Tube Co., Ltd...................

[[Page 22383]]

 
Yangzhou Chengde Steel Tube Co., Ltd. Produced by:                 62.16
 Yangzhou Chengde Steel Tube Co., Ltd...................
PRC-Wide Rate...........................................           98.37
------------------------------------------------------------------------

Disclosure

    We will disclose the calculations performed within five days of the 
date of publication of this notice to parties in this proceeding in 
accordance with 19 CFR 351.224(b).

Suspension of Liquidation

    As noted above, the Department has found that critical 
circumstances exist with respect to imports of subject merchandise from 
Hengyang and the PRC-wide entity, but not with respect to TPCO and the 
separate rate applicants, including Xigang. Therefore, in accordance 
with section 733(d) of the Act, we will instruct U.S. Customs and 
Border Protection (``CBP'') to suspend liquidation of all entries of 
seamless pipe from Hengyang and the PRC-wide entity entered, or 
withdrawn from warehouse, for consumption on or after 90 days prior to 
the date of publication of this notice in the Federal Register. We will 
instruct CBP to suspend liquidation of all entries of seamless pipe 
from TPCO and the Chinese SR Applicants \15\ entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of this 
notice in the Federal Register. Also, we will instruct CBP to require a 
cash deposit or the posting of a bond equal to the weighted-average 
amount by which the NV exceeds U.S. price, as indicated above.
---------------------------------------------------------------------------

    \15\ As noted above, the Chinese SR Applicants are Jiangyin City 
Changjiang Steel Pipe Co., Ltd., Pangang Group Chengdu Iron & Steel 
Co., Ltd., Yangzhou Lontrin Steel Tube Co., Ltd., Yangzhou Chengde 
Steel Pipe Co., Ltd. and the Xigang companies (Xigang Seamless Steel 
Tube Co., Ltd., and Wuxi Seamless Special Pipe Co., Ltd.).
---------------------------------------------------------------------------

    Additionally, as the Department has determined that the merchandise 
under investigation, exported by TPCO and Hengyang, benefitted from an 
export subsidy, we will instruct CBP to require an AD cash deposit or 
posting of a bond equal to the weighted-average amount by which the NV 
exceeds the U.S. export price, as indicated above, reduced by the 
export subsidy determined for TPCO and Hengyang in the companion 
countervailing duty investigation. See Certain Seamless Carbon and 
Alloy Steel Standard, Line, and Pressure Pipe From the People's 
Republic of China: Preliminary Affirmative Countervailing Duty 
Determination, Preliminary Affirmative Critical Circumstances 
Determination, 75 FR 9163 (March 1, 2010) (``CVD Prelim''); also see, 
e.g., Notice of Final Determination of Sales at Less Than Fair Value: 
Carbazole Violet Pigment 23 From India, 69 FR 67306, 67307 (November 
17, 2007). We will assign the average cash deposit rate, adjusted for 
the export subsidies from the CVD Prelim, to the Chinese SR Applicants. 
The suspension of liquidation instructions will remain in effect until 
further notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we will notify the 
ITC of our preliminary affirmative determination of sales at LTFV. 
Section 735(b)(2) of the Act requires the ITC to make its final 
determination as to whether the domestic industry in the United States 
is materially injured, or threatened with material injury, by reason of 
imports of seamless pipe, or sales (or the likelihood of sales) for 
importation, of the subject merchandise under investigation within 45 
days of our final determination.

Public Comment

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than seven days 
after the date the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, no later than five days after the deadline for submitting case 
briefs. See 19 CFR 351.309(c)(1)(i) and (d)(1). A list of authorities 
used and an executive summary of issues should accompany any briefs 
submitted to the Department. This summary should be limited to five 
pages total, including footnotes.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. If a request 
for a hearing is made, we intend to hold the hearing three days after 
the deadline of submission of rebuttal briefs at the U.S. Department of 
Commerce, 14th Street and Constitution Ave, NW., Washington, DC 20230, 
at a time and in a room to be determined. Parties should confirm by 
telephone the date, time, and location of the hearing two days before 
the scheduled date.
    Interested parties that wish to request a hearing, or to 
participate if one is requested, must submit a written request to the 
Assistant Secretary for Import Administration, U.S. Department of 
Commerce, Room 1870, within 30 days after the date of publication of 
this notice. See 19 CFR 351.310(c). Requests should contain the party's 
name, address, and telephone number, the number of participants, and a 
list of the issues to be discussed. At the hearing, each party may make 
an affirmative presentation only on issues raised in that party's case 
brief and may make rebuttal presentations only on arguments included in 
that party's rebuttal brief.

Postponement of Final Determination and Extension of Provisional 
Measures

    Pursuant to section 735(a)(2) of the Act, on April 9, 2010, TPCO 
and Hengyang requested that in the event of an affirmative preliminary 
determination in this investigation, the Department postpone its final 
determination by 60 days and extend the application of the provisional 
measures prescribed under 19 CFR 351.210(e)(2) from a 4-month period to 
a 6-month period. In accordance with section 733(d) of the Act and 19 
CFR 351.210(b), we are granting the request and are postponing the 
final determination until no later than 135 days after the publication 
of this notice in the Federal Register because: (1) Our preliminary 
determination is affirmative, (2) the requesting exporter accounts for 
a significant proportion of exports of the subject merchandise, and (3) 
no compelling reasons for denial exist. Suspension of liquidation will 
be extended accordingly.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: April 21, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-9858 Filed 4-27-10; 8:45 am]
BILLING CODE 3510-DS-P