[Federal Register Volume 75, Number 159 (Wednesday, August 18, 2010)]
[Notices]
[Pages 51004-51014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-20512]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-965]


Drill Pipe From the People's Republic of China: Preliminary 
Determination of Sales at Less Than Fair Value and Affirmative 
Determination of Critical Circumstances, and Postponement of Final 
Determination

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

DATES: Effective Date: August 18, 2010.
SUMMARY: The Department of Commerce (``Department'') preliminarily 
determines that drill 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 (``Act''), for the period of 
investigation (``POI'') April 1, 2009, through September 30, 2009. The 
estimated margins of sales at LTFV are shown in the ``Preliminary 
Determination'' section of this notice. Interested parties are invited 
to comment on this preliminary determination.

FOR FURTHER INFORMATION CONTACT: Toni Dach, Susan Pulongbarit, or 
Matthew Renkey, AD/CVD Operations, Office 9, Import Administration, 
International Trade Administration, U.S. Department of Commerce, 14th 
Street and Constitution Avenue, NW., Washington, DC 20230; telephone: 
(202) 482-1655, (202) 482-4031, or (202) 482-2312, respectively.

SUPPLEMENTARY INFORMATION: 

Initiation

    On December 31, 2009, the Department received a petition concerning 
imports of drill pipe from the PRC filed on behalf of VAM Drilling USA, 
Inc., Texas Steel Conversion, Inc., Rotary Drilling Tools, TMK IPSCO, 
and the United Steel, Paper and Forestry, Rubber, Manufacturing, 
Energy, Allied Industrial and Service Workers International Union, AFL-
CIO-CLC (collectively, ``Petitioners''). See ``Petitions for the 
Imposition of Antidumping and Countervailing Duties: Drill Pipe from 
the People's Republic of China,'' dated December 31, 2009 
(``Petition''). The Department initiated this investigation on January 
28, 2010. See Drill Pipe from the People's Republic of China: 
Initiation of Antidumping Duty Investigation, 75 FR 4531 (January 28, 
2010) (``Initiation''). On March 2, 2010, the United States 
International Trade Commission (``ITC'') issued its affirmative 
preliminary determination that there is a reasonable indication that an 
industry in the United States is materially injured by reason of 
imports from the PRC of drill pipe and drill collars. See Drill Pipe 
and Drill Collars from China: Investigation Nos. 701-TA-474 and 731-TA-
1176 (Preliminary), USITC Publication 4127 (March 2010).

Respondent Selection

    In the Initiation, the Department stated that it intended to select 
respondents based on quantity and value (``Q&V'') questionnaires. See 
Initiation, 75 FR at 4534. On February 22, 2010, the Department 
requested Q&V information from 71 companies with complete addresses 
that the Petitioners identified as potential exporters, or producers, 
of drill pipe from the PRC. Additionally, the Department also posted 
the Q&V questionnaire for this investigation on its Web site at http://ia.ita.doc.gov/ia-highlights-and-news.html.
    The Department received timely Q&V responses from seven exporters/
producers that shipped merchandise under investigation to the United 
States during the POI.
    On March 25, 2010, the Department selected DP-Master Manufacturing 
Co., Ltd. (the ``DP-Master Group''), Baoshan Iron & Steel Co., Ltd. 
(``Baoshan''), and Shanxi Yida Special Steel Imp. & Exp. Co., Ltd. 
(``Yida'') as individually reviewed respondents in this investigation, 
because, based on the Q&V responses received by the Department, these 
companies accounted for the largest volume of drill pipe from the PRC 
during the POI. See Memorandum to James Doyle, Office Director, Office 
9, from Susan Pulongbarit, International Trade Analyst, through Scot T. 
Fullerton, Program Manager, regarding the ``Investigation of Drill Pipe 
from the People's Republic of China: Respondent Selection,'' dated 
March 25, 2010 (``Respondent Selection Memo''). The Department issued 
Section A of the antidumping duty questionnaire to the individually 
reviewed respondents on April 1, 2010, and Sections C and D on April 7, 
2010. Between April 22, 2010, and July 30, 2010, these companies 
responded to the Department's original and supplemental questionnaires.

Separate Rate Applications

    Between March 24, 2010, and April 5, 2010, in addition to those 
filed by the DP-Master Group, Baoshan, and Yida, we also received 
timely filed separate-rate applications (``SRAs'') from three 
companies: Shanxi Fenglei Drilling Tools Co., Ltd.; Jiangsu Shuguang 
Huayang Drilling Tool Co., Ltd.; and Jiangyin Long-Bright Drill Pipe 
Manufacturing Co., Ltd. (collectively, the ``Separate Rate 
Respondents'').

Surrogate Country and Surrogate Value Comments

    On April 20, 2010, the Department determined that India, the 
Philippines, Indonesia, Thailand, Ukraine, and Peru are countries 
comparable to the PRC in terms of economic development. See April 20, 
2010, Letter to All Interested Parties, regarding ``Antidumping Duty 
Investigation of Drill Pipe from the People's Republic of China,'' 
attaching the April 14, 2010, Memorandum to Scot T. Fullerton, Program 
Manager, Office 9, AD/CVD Operations, from Kelly Parkhill, Acting 
Director, Office for Policy, regarding ``Request for List of Surrogate 
Countries for an Antidumping Duty Investigation of Drill Pipe from the 
People's Republic of China'' (``Surrogate Country List'').

[[Page 51005]]

    On May 5, 2010, Baoshan submitted surrogate country comments. No 
other interested parties commented on the selection of a surrogate 
country. For a detailed discussion of the selection of the surrogate 
country, see ``Surrogate Country'' section below.
    Based on requests from the interested parties, the Department twice 
extended the deadline for interested parties to submit surrogate value 
information for consideration for the preliminary determination. 
Surrogate value comments were due no later than June 11, 2010, with 
rebuttals due on June 21, 2010. Between June 11, 2010, and June 30, 
2010, interested parties submitted surrogate value comments and 
rebuttal comments.

Postponement of Preliminary Determination

    Pursuant to section 733(c) of the Act and 19 CFR 351.205(f)(1), the 
Department extended the preliminary determination by 50 days. The 
Department published a postponement of the preliminary determination on 
June 3, 2010. See Drill Pipe from the People's Republic of China: 
Postponement of Preliminary Determination of Antidumping Duty 
Investigation, 75 FR 31425 (June 3, 2010).
    As explained in the memorandum from the Deputy Assistant Secretary 
for Import 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 were extended by seven 
days. The revised deadline for the preliminary determination of this 
investigation is now August 5, 2010. See Memorandum to the Record 
regarding ``Tolling of Administrative Deadlines As a Result of the 
Government Closure During the Recent Snowstorm,'' dated February 12, 
2010.

Postponement of Final Determination

    Section 735(a)(2) of the Act provides that a final determination 
may be postponed until not later than 135 days after the date of the 
publication of the preliminary determination if, in the event of an 
affirmative preliminary determination, a request for such postponement 
is made by exporters, who account for a significant proportion of 
exports of the subject merchandise, or in the event of a negative 
preliminary determination, a request for such postponement is made by 
the petitioner. The Department's regulations, at 19 CFR 351.210(e)(2), 
require that requests by respondents for postponement of a final 
determination be accompanied by a request for extension of provisional 
measures from a four-month period to not more than six months.
    On June 17, 2010, and on July 7, 2010, Yida and the DP-Master 
Group, respectively, requested that in the event of an affirmative 
preliminary determination in this investigation, the Department 
postpone its final determination by 60 days. At the same time, Yida and 
the DP-Master Group requested that the Department extend the 
application of the provisional measures prescribed under section 733(d) 
of the Act and 19 CFR 351.210(e)(2), from a four-month period to a six-
month period. In accordance with section 735(a)(2) of the Act and 19 
CFR 351.210(b)(2), because (1) our preliminary determination is 
affirmative, (2) the requesting exporters account for a significant 
proportion of exports of the subject merchandise, and (3) no compelling 
reasons for denial exist, we are granting this request and are 
postponing the final determination until no later than 135 days after 
the publication of this notice in the Federal Register. Suspension of 
liquidation will be extended accordingly. We note that Yida's request 
is not applicable as it received a zero margin in this preliminary 
determination.

Period of Investigation

    The POI is April 1, 2009, through September 30, 2009. See 19 CFR 
351.204(b)(1).

Scope of Investigation

    The products covered by the investigation are steel drill pipe, and 
steel drill collars, whether or not conforming to American Petroleum 
Institute (``API'') or non-API specifications, whether finished or 
unfinished (including green tubes suitable for drill pipe), without 
regard to the specific chemistry of the steel (i.e., carbon, stainless 
steel, or other alloy steel), and without regard to length or outer 
diameter. The scope does not include tool joints not attached to the 
drill pipe, nor does it include unfinished tubes for casing or tubing 
covered by any other antidumping or countervailing duty order.
    The subject products are currently classified in the following 
Harmonized Tariff Schedule of the United States (``HTSUS'') categories: 
7304.22.0030, 7304.22.0045, 7304.22.0060, 7304.23.3000, 7304.23.6030, 
7304.23.6045, 7304.23.6060, 8431.43.8040 and may also enter under 
8431.43.8060, 8431.43.4000, 7304.39.0028, 7304.39.0032, 7304.39.0036, 
7304.39.0040, 7304.39.0044, 7304.39.0048, 7304.39.0052, 7304.39.0056, 
7304.49.0015, 7304.49.0060, 7304.59.8020, 7304.59.8025, 7304.59.8030, 
7304.59.8035, 7304.59.8040, 7304.59.8045, 7304.59.8050, and 
7304.59.8055.\1\
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    \1\ Prior to February 2, 2007, these imports entered under 
different tariff classifications, including HTSUS 7304.21.3000, 
7304.21.6030, 7304.21.6045, and 7304.21.6060.
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    While HTSUS subheadings are provided for convenience and U.S. 
Customs and Border Protection (``CBP'') purposes, the written 
description of the scope of the investigation is dispositive.

Scope Comments

    In accordance with the preamble to our regulations, we set aside a 
period of time for parties to raise issues regarding product coverage 
and encouraged all parties to submit comments within 20 calendar days 
of publication of the Initiation. See Antidumping Duties; 
Countervailing Duties; Final Rule, 62 FR 27296, 27323 (May 19, 1997); 
see also Initiation, 75 FR at 4532.
    On February 12, 2010, the DP-Master Group, along with Downhole Pipe 
& Equipment, L.P. (``Downhole''), and Command Energy Services 
International, Ltd. (``Command''), who are U.S. importers of drill pipe 
from the PRC, filed comments concerning the scope of the antidumping 
and concurrent countervailing duty investigations. Petitioners also 
filed scope comments on February 12, 2010. The DP-Master Group, 
Downhole, and Command submitted rebuttal comments on February 22, 2010. 
In their submissions, the DP-Master Group, Downhole, and Command 
requested that the Department amend the scope of these investigations 
to exclude green tubes, arguing that there is significant overlap 
between the green tubes that would be used for drill pipe and those 
that would be used for casing and tubing covered under the scope of the 
existing antidumping and countervailing duty orders on oil country 
tubular goods (``OCTGs'') from the PRC. Therefore, they contend that 
all green tubes are subject to the AD and CVD orders on OCTGs from 
China. See Certain Oil Country Tubular Goods From the People's Republic 
of China: Amended Final Determination of Sales at Less Than Fair Value 
and Antidumping Duty Order, 75 FR 28551 (May 21, 2010); and Certain Oil 
Country Tubular Goods From the People's Republic of China: Amended 
Final Affirmative Countervailing Duty Determination and Countervailing 
Duty Order, 75 FR 3203 (January 20, 2010).

[[Page 51006]]

Petitioners concede that there is some overlap between green tubes that 
would be used for drill pipe and those that would be used for casing 
and tubing covered under the orders on OCTGs from the PRC, but argue 
that this overlap is minimal. Petitioners state that there are physical 
and chemical differences between green tube for drill pipe and green 
tube for OCTG casing and tubing, but these physical characteristics 
should not be used to distinguish the merchandise due to the risk of 
circumvention of the orders. They further argue that CBP would be able 
to determine the intended use of the products by the importer, as only 
a few companies in the U.S. process green tubes into drill pipe.
    Given the comments submitted by parties, the Department has 
concerns regarding the imprecision of the definition of ``green tubes 
suitable for drill pipe'' currently contained in the scope of the 
antidumping and concurrent countervailing duty investigations, and how 
to distinguish upon entry into the United States green tube for drill 
pipe from green tube covered under the orders on OCTGs from the PRC. At 
this time, the Department will continue to include ``green tubes 
suitable for drill pipe'' in the antidumping and concurrent 
countervailing duty investigations. However, subsequent to these 
preliminary results, the Department will request additional information 
regarding characteristics distinguishing green tube for drill pipe from 
green tube for casing and tubing covered under the orders on OCTGs from 
the PRC.\2\ Unless specific characteristics are provided which 
distinguish between green tube for drill pipe and green tube for casing 
and tubing, all green tubes (other than green tube drill collars) will 
be removed from the scope of the antidumping and countervailing duty 
investigations on drill pipe from the PRC and will instead be 
considered as covered under the existing antidumping and countervailing 
duty orders on OCTGs from the PRC.
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    \2\ This serves as a reminder to all interested parties 
submitting scope comments to file their scope comments on the record 
of both this antidumping duty investigation (A-570-965) and the 
concurrent countervailing duty investigation (C-570-966).
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Non-Market Economy Country

    For purposes of initiation, Petitioners submitted LTFV analyses for 
the PRC as a non-market economy (``NME''). See Initiation, 75 FR 4533-
4534. The Department considers the PRC to be a NME country. See, e.g., 
Preliminary Determination of Sales at Less Than Fair Value and 
Postponement of Final Determination: Coated Free Sheet Paper from the 
People's Republic of China, 72 FR 30758, 30760 (June 4, 2007), 
unchanged in Final Determination of Sales at Less Than Fair Value: 
Coated Free Sheet Paper from the People's Republic of China, 72 FR 
60632 (October 25, 2007) (``CFS Paper''). In accordance with section 
771(18)(C)(i) of the Act, any determination that a foreign country is 
an NME country shall remain in effect until revoked by the 
administering authority. No party has challenged the designation of the 
PRC as an NME country in this investigation. Therefore, we continue to 
treat the PRC as an NME country for purposes of this preliminary 
determination and calculated normal value (``NV'') in accordance with 
Section 773(c) of the Act, which applies to all NME countries.

Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to calculate NV, in most 
circumstances, on the NME producer's factors of production (``FOPs'') 
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 FOPs, the Department shall utilize, to the 
extent possible, the prices or costs of FOPs 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. As noted above, the Department determined that 
India, the Philippines, Indonesia, Thailand, Ukraine, and Peru are 
countries comparable to the PRC in terms of economic development. See 
Surrogate Country List. The sources of the surrogate values we have 
used in this investigation are discussed under the ``Normal Value'' 
section below.
    Based on publicly available information placed on the record, the 
Department determines India to be a reliable source for surrogate 
values because, pursuant to section 773(c)(4), India is at a comparable 
level of economic development, is a significant producer of subject 
merchandise, and has publicly available and reliable data. Moreover, we 
note that Baoshan argued in its surrogate country comments that India 
should be selected as the surrogate country and no other interested 
parties commented on this issue. Accordingly, the Department has 
preliminarily determined that it is appropriate to select India as the 
surrogate country for purposes of valuing the FOPs because India meets 
all of the Department's criteria for surrogate country selection.

Affiliations

    Section 771(33) of the Act, provides that: The following persons 
shall be considered to be ``affiliated'' or ``affiliated persons'':
    (A) Members of a family, including brothers and sisters (whether by 
the whole or half blood), spouse, ancestors, and lineal descendants.
    (B) Any officer or director of an organization and such 
organization.
    (C) Partners.
    (D) Employer and employee.
    (E) Any person directly or indirectly owning, controlling, or 
holding with power to vote, five percent or more of the outstanding 
voting stock or shares of any organization and such organization.
    (F) Two or more persons directly or indirectly controlling, 
controlled by, or under common control with, any person.
    (G) Any person who controls any other person and such other person.
    Additionally, section 771(33) of the Act states that: ``For 
purposes of this paragraph, a person shall be considered to control 
another person if the person is legally or operationally in a position 
to exercise restraint or direction over the other person.''
    Based on the DP-Master Group's statements \3\ that it is affiliated 
with Jiangyin Liangda Drill Pipe Co., Ltd. (``Liangda''), who produced 
and supplied drill collars exported by the DP-Master Group, and based 
on the evidence presented in the DP-Master Groups's questionnaire 
responses, we preliminarily find that the DP-Master Group is affiliated 
with Liangda, which was involved in the DP-Master Group's production 
process, pursuant to section 771(33)of the Act and 19 CFR 
351.102(b)(3).
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    \3\ See, e.g., the DP-Master Group's April 29, 2010, section A 
questionnaire response at 5.
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Separate Rates

    In proceedings involving NME countries, there is a rebuttable 
presumption that all companies within the country are subject to 
government control and thus should be assessed a single antidumping 
duty rate. See, e.g., 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, 55040 (September 24, 2008) (``PET 
Film''). It is the Department's policy to assign all exporters of 
merchandise subject to investigation in an NME country this single rate 
unless an exporter can demonstrate that it is

[[Page 51007]]

sufficiently independent so as to be entitled to a separate rate. See, 
e.g., Final Determination of Sales at Less Than Fair Value: Sparklers 
From the People's Republic of China, 56 FR 20588 (May 6, 1991) 
(``Sparklers''); see also, 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''), and 19 CFR 
351.107(d). However, if the Department determines that a company is 
wholly foreign-owned or located in a market economy country, then a 
separate rate analysis is not necessary to determine whether it is 
independent from government control. See, e.g., PET Film.
    In the Initiation, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate rate status in NME investigations. See Initiation, 75 FR at 
4534-4535. The process requires exporters and producers to submit a 
separate-rate status application. The Department's practice is 
discussed further in Policy Bulletin 05.1: Separate-Rates Practice and 
Application of Combination Rates in Antidumping Investigations 
involving Non-Market Economy Countries, (April 5, 2005), (``Policy 
Bulletin''), available at http://ia.ita.doc.gov/policy/bull05-1.pdf.\4\
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    \4\ The Policy Bulletin states: ``{w{time} hile 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 applies 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.'' See Policy Bulletin at 6.
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    We have considered whether each PRC company that submitted a 
complete SRA, or a complete Section A Response as a mandatory 
respondent, is eligible for a separate rate. Because the Separate Rate 
Respondents and the three individually-reviewed respondents, the DP-
Master Group, Baoshan, and Yida, have all stated that they are either 
joint ventures between Chinese and foreign companies, or are wholly 
Chinese-owned companies, the Department must analyze whether these 
companies can demonstrate the absence of both de jure and de facto 
governmental control over export activities.

1. 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 licenses; (2) any 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 the DP-Master Group, Baoshan, Yida, and 
the Separate Rate Respondents supports a preliminary finding of de jure 
absence of governmental control based on the following: (1) An absence 
of restrictive stipulations associated with the individual exporter's 
business and export licenses; (2) applicable legislative enactments 
decentralizing control of the companies; and (3) other formal measures 
by the government decentralizing control of companies, i.e., each 
company's SRA and/or Section A response, dated March 24, 2010, through 
May 4, 2010, where each individually-reviewed or separate-rate 
respondent stated that it had no relationship with any level of the PRC 
government with respect to ownership, internal management, and business 
operations.

2. Absence of De Facto Control

    Typically the Department considers four factors in evaluating 
whether each respondent is subject to de facto 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.
    We determine that, for the individually-reviewed respondents and 
Separate Rate Repondents, the evidence on the record supports a 
preliminary finding of de facto absence of governmental control based 
on record statements and supporting documentation showing the 
following: (1) Each exporter sets its own export prices independent of 
the government and without the approval of a government authority; (2) 
each exporter retains the proceeds from its sales and makes independent 
decisions regarding disposition of profits or financing of losses; (3) 
each exporter has the authority to negotiate and sign contracts and 
other agreements; and (4) each exporter has autonomy from the 
government regarding the selection of management. See, e.g., each 
company's SRA and/or Section A response, dated March 24, 2010, through 
May 4, 2010.
    The evidence placed on the record of this investigation by the 
individually-reviewed respondents and the Separate Rate Respondents 
demonstrates an absence of de jure and de facto government control with 
respect to each of the exporter's exports of the merchandise under 
investigation, in accordance with the criteria identified in Sparklers 
and Silicon Carbide. As a result, we have preliminarily determined that 
it is appropriate to grant the Separate Rate Respondents a margin based 
on the experience of the individually-reviewed respondents. In 
calculating this margin, for the purposes of this preliminary 
determination we are excluding any de minimis or zero rates or rates 
based on total adverse facts available (``AFA'').

Application of Adverse Facts Available, the PRC-Wide Entity, and PRC-
Wide Rate

    We issued our request for Q&V information to the 71 potential 
Chinese exporters of the merchandise under investigation identified in 
the petition, in addition to posting the Q&V questionnaire on the 
Department's website. However, although all exporters/producers were 
given an opportunity to submit Q&V responses, we only received seven 
timely filed Q&V responses in response to our request. 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 and that it is appropriate to treat these non-responsive 
PRC exporters/producers as part of the PRC-

[[Page 51008]]

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, if an interested party 
(A) withholds information that has been requested by the Department, 
(B) fails to provide such information in a timely manner or in the form 
or manner requested, subject to subsections 782(c)(1) and (e) of the 
Act, (C) significantly impedes a proceeding under the antidumping 
statute, or (D) provides such information but the information cannot be 
verified, the Department shall, subject to subsection 782(d) of the 
Act, use facts otherwise available (``FA'') in reaching the applicable 
determination.
    Because certain potential exporters/producers of merchandise under 
investigation did not respond to our questionnaire requesting Q&V 
information, or the Department's request for more information, we have 
determined that the PRC-wide entity has withheld information requested 
by the Department and has failed to provide such information by the 
deadlines for these submissions. As a result, pursuant to sections 
776(a)(2)(A) and (B) of the Act, we find that the use of FA is 
appropriate to determine the PRC-wide rate. See, e.g., 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, 4991 (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, 37120 
(June 23, 2003).
    Section 776(b) of the Act provides that, in selecting from among 
the FA, 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 the agency's requests for information. See Statement of 
Administrative Action, accompanying the Uruguay Round Agreements Act 
(``URAA''), H.R. Rep. No. 103-316, 870 (1994) (``SAA''); 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). We find that, because 
the PRC-wide entity did not respond to our requests for information, it 
has failed to cooperate to the best of its ability. Therefore, the 
Department preliminarily finds that, in selecting from among the FA, an 
adverse inference is appropriate.
    When employing an adverse inference, section 776(b) of the Act 
indicates that the Department may rely upon information derived from 
the petition,, a previous administrative review, or any other 
information placed on the record. In selecting a rate for AFA, the 
Department selects a rate that is sufficiently adverse to ensure that 
the uncooperative party does not obtain a more favorable result by 
failing to cooperate than if it had fully cooperated. It is the 
Department's practice to select, as AFA, the higher of the (a) highest 
margin alleged in the petition, or (b) the highest calculated rate of 
any respondent in the investigation. See, e.g., 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 Decision Memorandum at Comment 1. As 
AFA, we have preliminarily assigned to the PRC-wide entity a rate of 
496.69 percent, a rate calculated in the petition which is higher than 
the highest rate calculated for either of the cooperative respondents. 
See Initiation at 4534. The Department preliminarily determines that 
this information is the most appropriate from the available sources to 
effectuate the purposes of AFA.

Corroboration

    Section 776(c) of the Act provides that, when the Department relies 
on secondary information rather than on information obtained in the 
course of an investigation as FA, 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.'' \5\ To ``corroborate'' 
means simply 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.\6\
---------------------------------------------------------------------------

    \5\ 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.
    \6\ 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 is from the Petition; 
however, we have updated the labor wage rate used to calculate the 
Petition rates. The Department's practice is not to recalculate dumping 
margins provided in petitions, but rather to corroborate the applicable 
petition rate when applying that rate as adverse facts available. In 
the instant case, however, the surrogate wage rate used in the Petition 
was based upon the Department's methodology that the Federal Circuit 
found unlawful in Dorbest II. In light of the Federal Circuit decision 
to invalidate the wage rate methodology, the Department has adjusted 
the petition rate using the surrogate value for labor used in this 
preliminary determination.
    Petitioners' methodology for calculating the U.S. price and NV in 
the Petition is discussed in the Initiation. See Initiation, 75 FR at 
4533-4534. Based on our examination of information on the record, 
including examination of the petition export prices and NVs, we find 
that, for purposes of this investigation, there is not a sufficient 
basis to consider that certain petition margins have probative value. 
However, there is a sufficient basis to determine that the petition 
margin selected does have probative value. In this case, we have 
selected a margin that is not so much greater than the highest CONNUM-
specific margin

[[Page 51009]]

calculated for one of the mandatory respondents in this proceeding that 
it can be considered to not have probative value. This method of 
selecting an AFA dumping margin is consistent with the recent 
preliminary and final determinations involving kitchen appliance 
shelving and racks from the PRC, prestressed concrete steel wire strand 
from the PRC, and wire decking from the PRC.\7\
---------------------------------------------------------------------------

    \7\ See Certain Kitchen Appliance Shelving and Racks from the 
People's Republic of China: Final Determination of Sales at Less 
than Fair Value, 74 FR 37012 (July 27, 2009); Prestressed Concrete 
Steel Wire Strand From the People's Republic of China: Final 
Determination of Sales at Less Than Fair Value, 75 FR 28560 (May 21, 
2010); and 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 32905 (June 10, 2010).
---------------------------------------------------------------------------

    The Department's practice, when selecting an AFA rate from among 
the possible sources of information, has been to ensure that the margin 
is sufficiently adverse ``as to effectuate the statutory purposes of 
the adverse 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 and 
Final Negative Critical Circumstances: Carbon and Certain Alloy Steel 
Wire Rod from Brazil, 67 FR 55792, 55796 (Aug. 30, 2002); see also 
Notice of Final Determination of Sales at Less Than Fair Value: Static 
Random Access Memory Semiconductors From Taiwan, 63 FR 8909, 8932 (Feb. 
23, 1998). As guided by the SAA, the information used as AFA should 
ensure an uncooperative party does not benefit more by failing to 
cooperate than if it had cooperated fully. See SAA at 870. We conclude 
that using the DP-Master Group's highest transaction-specific margin as 
a limited reference point, the highest petition margin that can be 
corroborated within the meaning of the statute is 429.29 percent, which 
is sufficiently adverse so as to induce cooperation such that the 
uncooperative companies do not benefit from their failure to cooperate. 
Accordingly, we find that the rate of 429.29 percent is corroborated 
within the meaning of section 776(c) of the Act.

Margin for the Separate Rate Companies

    The Department received timely and complete SRAs from the Separate 
Rate Respondents, who are exporters/producers of drill pipe from the 
PRC, and were not selected for individual review in this investigation. 
Through the evidence in their applications, these companies have 
demonstrated their eligibility for a separate rate. See the ``Separate 
Rates'' section above. Consistent with the Department's practice, as 
the separate rate, we have established a margin for the Separate Rate 
Respondents based on the rates we calculated for the individually 
reviewed respondents, excluding any rates that are zero, de minimis, or 
based entirely on AFA.\8\ The companies receiving this rate are listed 
in the ``Preliminary Determination'' section of this notice.
---------------------------------------------------------------------------

    \8\ See, e.g., Preliminary Determination of Sales at Less Than 
Fair Value and Partial Affirmative Determination of Critical 
Circumstances: Certain Polyester Staple Fiber from the People's 
Republic of China, 71 FR 77373, 77377 (December 26, 2006) (``PSF''), 
unchanged in Final Determination of Sales at Less Than Fair Value 
and Partial Affirmative Determination of Critical Circumstances: 
Certain Polyester Staple Fiber from the People's Republic of China, 
72 FR 19690 (April 19, 2007).
---------------------------------------------------------------------------

Date of Sale

    Section 351.401(i) of the Department's regulations state that, 
``{i{time} n identifying the date of sale of the merchandise under 
consideration or foreign like product, the Secretary normally will use 
the date of invoice, as recorded in the exporter or producer's records 
kept in the normal course of business.'' The Court of International 
Trade (``CIT'') has noted that a party seeking to establish a date of 
sale other than invoice date bears the burden of producing sufficient 
evidence to ``satisf{y{time} '' the Department that ``a different date 
better reflects the date on which the exporter or producer establishes 
the material terms of sale.'' See Allied Tube & Conduit Corp. v. United 
States, 132 F. Supp. 2d 1087, 1090 (CIT 2001) (quoting 19 CFR 
351.401(i)) (``Allied Tube''). Additionally, the Secretary may use a 
date other than the date of invoice if the Secretary is satisfied that 
a different date better reflects the date on which the exporter or 
producer establishes the material terms of sale. See 19 CFR 351.401(i); 
see also Allied Tube, 132 F. Supp. 2d at 1090-1092. The date of sale is 
generally the date on which the parties agree upon all substantive 
terms of the sale. This normally includes the price, quantity, delivery 
terms and payment terms. See, e.g., Carbon and Alloy Steel Wire Rod 
from Trinidad and Tobago: Final Results of Antidumping Duty 
Administrative Review, 72 FR 62824 (November 7, 2007) and accompanying 
Issue and Decision Memorandum at Comment 1; see also, Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Cold-Rolled 
Flat-Rolled Carbon Quality Steel Products from Turkey, 65 FR 15123 
(March 21, 2000) and accompanying Issues and Decision Memorandum at 
Comment 2.
    Baoshan reported that the date of sale was determined by the 
contract signed between its affiliated importer and its unaffiliated 
U.S. customer and provided an affidavit from the unaffiliated customer 
confirming that the contract date was in fact the date of sale, as the 
material terms of sale were set at that time. Therefore, the Department 
has preliminarily determined that Baoshan met its burden to establish 
that contract date, rather than invoice date, should be used as the 
date of sale. See, e.g., Baoshan's April 23, 2010, submission.
    Yida reported that the date of sale was determined by the date of 
shipment to its unaffiliated U.S. customer, as there either may be 
changes to the material terms of sale or cancellations up to that 
point. In this case, because the Department found no evidence contrary 
to Yida's claims that shipment date was the appropriate date of sale, 
the Department has preliminarily determined that Yida met its burden to 
establish that shipment date, rather than invoice date, should be used 
as the date of sale. See, e.g., Yida's June 2, 2010, supplemental 
Section A response at 7.
    The DP-Master Group reported that the date of sale was determined 
by the invoice issued to its unaffiliated U.S. customer. In this case, 
as the Department found no evidence contrary to the DP-Master Group's 
claims that invoice date was the appropriate date of sale, the 
Department used invoice date as the date of sale for this preliminary 
determination. See, e.g., The DP-Master Group's April 29, 2010, Section 
A response at 26.

Fair Value Comparison

    To determine whether sales of drill pipe to the United States by 
the DP-Master Group, Baoshan, and Yida were made at less than fair 
value, we compared the export price (``EP'') or constructed export 
price (``CEP''), as appropriate, to NV, as described in the ``U.S. 
Price,'' and ``Normal Value'' sections of this notice.

U.S. Price

A. EP

    For the DP-Master Group and Yida, in accordance with section 772(a) 
of the Act, we based the U.S. price for certain sales on EP because the 
first sale to an unaffiliated purchaser in the United States was made 
prior to importation, and the use of CEP was not otherwise warranted. 
In accordance with section 772(c) of the Act, we calculated EP by 
deducting the applicable movement expenses and adjustments from the 
gross unit price. We based these movement expenses on surrogate values

[[Page 51010]]

where a PRC company provided the service and was paid in Renminbi 
(``RMB'') (see ``Factors of Production'' section below for further 
discussion). For details regarding our EP calculations, see the 
company-specific preliminary analysis memoranda.

B. CEP

    In accordance with section 772(b) of the Act, we based the U.S. 
price for Baoshan's sales on CEP because the first sale to an 
unaffiliated customer was made by Baoshan's U.S. affiliate. In 
accordance with section 772(c)(2)(A) of the Act, we calculated CEP by 
deducting, where applicable, the following expenses from the gross unit 
price charged to the first unaffiliated customer in the United States: 
Foreign movement expenses, international freight, U.S. transportation 
expenses, and U.S. customs duties. 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: 
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 details regarding our CEP calculations, and for a 
complete discussion of the calculation of the U.S. price for Baoshan, 
see the Baoshan Analysis Memo.

Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine NV using a FOP methodology if the merchandise is exported 
from an NME 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. The Department bases NV on FOPs 
because the presence of government controls on various aspects of NMEs 
renders price comparisons and the calculation of production costs 
invalid under the Department's normal methodologies. See, e.g., 
Preliminary Determination of Sales at Less Than Fair Value, Affirmative 
Critical Circumstances, In Part, and Postponement of Final 
Determination: Certain Lined Paper Products from the People's Republic 
of China, 71 FR 19695, 19703 (April 17, 2006) (``CLPP'') unchanged in 
Notice of Final Determination of Sales at Less Than Fair Value, and 
Affirmative Critical Circumstances, In Part: Certain Lined Paper 
Products From the People's Republic of China, 71 FR 53079 (September 8, 
2006).
    In its questionnaire responses, DP-Master indicated that it self-
produces certain packing materials used to pack drill pipe, stating 
that it owned a company that produced thread protectors and pallet 
racks, Jiangyin Sanliang Petroleum Machinery Co., Ltd. (``SPM''). In 
response to the Department's request for all valid business licenses 
held by DP-Master during the POI, DP-Master provided a separate license 
for SPM. See DP-Master's June 3, 2010 submission at Exhibit 4. Because 
DP-Master indicated that it self-produces its own pallet racks and a 
portion of its own thread protectors, it reported the FOPs consumed at 
SPM in lieu of reporting the total consumption of thread protectors and 
pallet racks, or the intermediate inputs, SPM generated. However, the 
Department requested that DP-Master report its total consumption of 
thread protectors and pallet racks. See DP-Master's June 8, 2010 
submission.
    We do not find that record evidence sufficiently supports the claim 
that DP-Master produced its own thread protectors and pallet racks 
because SPM operates as a distinct legal entity. Pursuant to 19 CFR 
351.401(f), the Department will collapse producers and treat them as a 
single entity 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. For example, the Department did not collapse a respondent 
with an affiliated input producer when the affiliate did not have the 
ability to produce or export similar or identical products, and could 
not produce such products without substantial retooling. See Certain 
Frozen Fish Fillets From the Socialist Republic of Vietnam: Final 
Results of Antidumping Duty Administrative Review and Partial 
Rescission, 73 FR 15479 (March 24, 2008) (``Fish Fillets'') and 
accompanying Issues and Decision Memorandum at Comment 5C. As a 
consequence, when valuing the intermediate input to the merchandise 
under investigation in its calculation of the NV in Fish Fillets, the 
Department employed a surrogate value, rather than the FOPs used to 
produce the intermediate input. See id. Similarly, because SPM 
represents a distinct legal entity which is not involved in the 
production of merchandise under investigation at issue, for this 
preliminary determination, we are applying a surrogate value, rather 
than FOPs, to the amount of thread protectors and pallet racks consumed 
by DP-Master. Because these calculations are proprietary, see 
Memorandum to the File, through Scot T. Fullerton, Program Manager, 
Office 9, from Toni Dach, Analyst, ``Investigation of Drill Pipe from 
the People's Republic of China: DP-Master Manufacturing Co., Ltd.,'' 
dated concurrently with this notice (``DP-Master Analysis Memo'').

Factor Valuation Methodology

    In accordance with section 773(c) of the Act, we calculated NV 
based on FOP data reported by the respondents. To calculate NV, we 
multiplied the reported per-unit factor-consumption rates by publicly 
available surrogate values. In selecting surrogate values, the 
Department is tasked with using the best available information on the 
record. See section 773(c) of the Act. To satisfy this statutory 
requirement, we compared the quality, specificity, and contemporaneity 
of the potential surrogate value data. See, e.g., Fresh Garlic From the 
People's Republic of China: Final Results of Antidumping Duty New 
Shipper Review, 67 FR 72139 (December 4, 2002) and accompanying Issues 
and Decision Memorandum at Comment 6; and Final Results of First New 
Shipper Review and First Antidumping Duty Administrative Review: 
Certain Preserved Mushrooms From the People's Republic of China, 66 FR 
31204 (June 11, 2001) and accompanying Issues and Decision Memorandum 
at Comment 5. The Department's practice is to select, to the extent 
practicable, surrogate values which are: Publicly available; 
representative of non-export, broad market average values; 
contemporaneous with the POI; product-specific; and exclusive of taxes 
and import duties. 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). As appropriate, we adjusted input prices by 
including freight costs to make them delivered prices. Specifically, we 
added to the surrogate values derived from Indian Import Statistics a 
surrogate freight cost using the shorter of the

[[Page 51011]]

reported distance from the domestic supplier to the factory or the 
distance from the nearest seaport to the factory where appropriate. 
This adjustment is in accordance with the Court of Appeals for the 
Federal Circuit's decision in Sigma Corp. v. United States, 117 F.3d 
1401, 1407-08 (Fed. Cir. 1997). For a detailed description of all 
surrogate values selected in this preliminary determination, see 
Memorandum to the File through Scot Fullerton, Program Manager, Office 
9, from Susan Pulongbarit, Analyst, ``Investigation of Drill Pipe from 
the People's Republic of China: Surrogate Values for the Preliminary 
Results,'' dated concurrently with this notice (``Surrogate Values 
Memo'').
    For this preliminary determination, we concluded that data from 
Indian Import Statistics and other publicly available Indian sources 
constitute the best available information on the record for the 
surrogate values for respondents' raw materials, packing, by-products, 
and energy. The record shows that data in the Indian Import Statistics, 
as well as those from the other publicly available Indian sources, are 
contemporaneous with the POI, product-specific, tax-exclusive, and 
represent a broad market average. See Surrogate Values Memo. In those 
instances where we could not obtain publicly available information 
contemporaneous with the POI, consistent with our practice, we adjusted 
the surrogate values using, where appropriate, the Indian Wholesale 
Price Index (``WPI'') as published in the International Financial 
Statistics of the International Monetary Fund. See, e.g., PSF, 71 FR at 
77380 and CLPP, 71 FR at 19704.
    As a consequence of the CAFC's ruling in Dorbest Limited et al. v. 
United States, 2009-1257, -1266, CAFC (May 14, 2010), the Department is 
no longer relying on the regression-based wage rate described in 19 CFR 
351.408(c)(3). The Department is continuing to evaluate options for 
determining labor values in light of the recent CAFC decision. For this 
preliminary determination, we have calculated an hourly wage rate to 
use in valuing respondents' reported labor input by averaging earnings 
and/or wages in countries that are economically comparable to the PRC 
and that are significant producers of comparable merchandise. For an 
explanation of the Department's calculation of the surrogate value for 
labor, see the Surrogate Values Memo.
    In accordance with the OTCA 1988 legislative history, the 
Department continues to apply its long-standing practice of 
disregarding surrogate values if it has a reason to believe or suspect 
the source data may be subsidized.\9\ In this regard, the Department 
has previously found that it is appropriate to disregard such prices 
from Indonesia, South Korea and Thailand because we have determined 
that these countries maintain broadly available, non-industry specific 
export subsidies.\10\ Based on the existence of these subsidy programs 
that were generally available to all exporters and producers in these 
countries at the time of the POI, the Department finds that it is 
reasonable to infer that all exporters from Indonesia, South Korea and 
Thailand may have benefitted from these subsidies.
---------------------------------------------------------------------------

    \9\ Omnibus Trade and Competitiveness Act of 1988, Conf. Report 
to Accompany H.R. 3, H.R. Rep. No. 576, 100th Cong., 2nd Sess. 
(1988) (``OTCA 1988'') at 590.
    \10\ See, e.g., Expedited Sunset Review of the Countervailing 
Duty Order on Carbazole Violet Pigment 23 from India, 75 FR 13257 
(March 19, 2010) and accompanying Issues and Decision Memorandum at 
pages 4-5; Expedited Sunset Review of the Countervailing Duty Order 
on Certain Cut-to-Length Carbon Quality Steel Plate from Indonesia, 
70 FR 45692 (August 8, 2005) and accompanying Issues and Decision 
Memorandum at page 4; See Corrosion-Resistant Carbon Steel Flat 
Products from the Republic of Korea: Final Results of Countervailing 
Duty Administrative Review, 74 FR 2512 (January 15, 2009) and 
accompanying Issues and Decision Memorandum at pages 17, 19-20; See 
Certain Hot-Rolled Carbon Steel Flat Products from Thailand: Final 
Results of Countervailing Duty Determination, 66 FR 50410 (October 
3, 2001) and accompanying Issues and Decision Memorandum at page 23.
---------------------------------------------------------------------------

    Additionally, we disregarded prices from NME countries. Finally, 
imports that were labeled as originating from an ``unspecified'' 
country were excluded from the average value, because the Department 
could not be certain that they were not from either an NME country or a 
country with general export subsidies.

Use of Facts Otherwise Available

    Section 776(a) of the Act mandates that the Department use FA if 
necessary information is not available on the record of an antidumping 
proceeding or if an interested party or any other person: (A) Withholds 
information requested by the Department; (B) fails to provide 
information by the deadlines for submission or in the form and manner 
requested, subject to sections 782(c)(1) and (e) of the Act; (C) 
significantly impedes a proceeding; or (D) provides such information 
but the information cannot be verified as provided by section 782(i) of 
the Act.
    In this review, the DP-Master Group and Baoshan each reported 
tolling for certain portions of their production processes. See, e.g., 
June 1, 2010, DP-Master Group section D questionnaire response at 5-6; 
and May 25, 2010, Baoshan section D questionnaire response at 7 and 19. 
Furthermore, although requested to do so by the Department, the DP-
Master Group and Baoshan were unable to obtain the data from the 
unaffiliated tolling companies (the tollers declined to provide the 
data), and thus did not report the FOPs consumed by these companies for 
all tolling processes during the production process, which are 
necessary to the Department's calculation of NV. Therefore, pursuant to 
section 776(a)(2)(B) of the Act, we have preliminarily determined that 
the DP-Master Group and Baoshan failed to provide information relevant 
to the Department's analysis. Thus, the Department has determined that 
it is necessary to apply FA to value the tolling processes for which 
factors were not provided by the DP-Master Group and Baoshan. Although 
the DP-Master Group and Baoshan were unable to obtain actual FOP data 
for these tolling processes, both respondents submitted estimated FOPs 
based on their knowledge of the production process. The Department has 
reviewed these estimated FOPs and believes them to be a reasonable 
proxy to account for the processing costs associated with the DP-Master 
Group's and Baoshan's tolled merchandise sold to the United States 
during the POI, the Department has preliminarily determined to utilize, 
as FA, the estimated FOPs for the tolled merchandise provided by the 
DP-Master Group and Baoshan. See DP-Master Analysis Memo and Baoshan 
Analysis Memo.

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, the Department stated that it would calculate 
combination rates for certain respondents that are eligible for a 
separate rate in this investigation. See Initiation, 75 FR at 4535. 
This practice is described in the Policy Bulletin.

Critical Circumstances

    On June 21, 2010, Petitioners filed a timely critical circumstances 
allegation, pursuant to 19 CFR 351.206, alleging that critical 
circumstances exist with respect to imports of the merchandise under 
investigation. See letter from Petitioners, regarding ``Allegation of 
Critical Circumstances,'' dated June 21, 2010 (``Petitioners' 
Allegation''). Between July 8, 2010, and July 14, 2010,

[[Page 51012]]

the DP-Master Group, Baoshan, and Yida submitted information on its 
exports from June 2009 through June 2010, as requested by the 
Department.
    In accordance with 19 CFR 351.206(c)(1), when a critical 
circumstances allegation is filed 30 days or more before the scheduled 
date of the final determination (as was done in this case), the 
Department will issue a preliminary finding whether there is a 
reasonable basis to believe or suspect that critical circumstances 
exist. Because the critical circumstances allegation in this case was 
submitted 20 days or more before the date of the preliminary 
determination, the Department will issue its preliminary findings of 
critical circumstances not later than the date of the preliminary 
determination. See 19 CFR 351.206(c)(2)(i).

Legal Framework

    Section 733(e)(1) of the Act provides that the Department, upon 
receipt of a timely allegation of critical circumstances, will 
determine whether there is a reasonable basis to believe or suspect 
that: (A)(i) There is a history of dumping and material injury by 
reason of dumped imports in the United States or elsewhere of the 
subject merchandise, or (ii) 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) there have been massive imports of the subject 
merchandise over a relatively short period.
    Further, 19 CFR 351.206(h)(1) provides that, in determining whether 
imports of the merchandise under investigation have been ``massive,'' 
the Department normally will examine: (i) The volume and value of the 
imports; (ii) seasonal trends; and (iii) the share of domestic 
consumption accounted for by the imports. In addition, 19 CFR 
351.206(h)(2) provides that, ``{i{time} n general, unless the imports 
during the `relatively short period' * * * have increased by at least 
15 percent over the imports during an immediately preceding period of 
comparable duration, the Secretary will not consider the imports 
massive.'' 19 CFR 351.206(i) defines ``relatively short period'' 
generally as the period starting on the date the proceeding begins 
(i.e., the date the petition is filed) and ending at least three months 
later. This section of the Regulations further provides that, if the 
Department ``finds that importers, or exporters or producers, had 
reason to believe, at some time prior to the beginning of the 
proceeding, that a proceeding was likely,'' then the Department may 
consider a period of not less than three months from that earlier time. 
See 19 CFR 351.206(i).

Allegation

    In their allegation, Petitioners contend that there is a history of 
dumping of the merchandise under investigation, as indicated by a 
European Union finding of dumping and injury, resulting in the 
imposition of a definitive antidumping duty. See Certain Seamless Pipes 
and Tubes, including Drill Pipe, of Iron or Steel Originating in the 
People's Republic of China, Council Regulation (EC) No. 926/2009, OJ L 
269/19 (October 6, 2009). Petitioners also contend that, based on the 
dumping margins assigned by the Department in the Initiation, importers 
knew or should have known that the merchandise under investigation was 
being sold at LTFV. Petitioners further included import statistics for 
the eight HTSUS subheadings most specific to drill pipe provided in the 
scope of this investigation for the period October 2009 through March 
2010.

Analysis

    In determining whether the above statutory criteria have been 
satisfied in this case, we examined: (1) The evidence presented in 
Petitioners' Allegation and (2) evidence obtained since the initiation 
of this investigation.

History of Dumping

    In determining whether a history of dumping and material injury 
exists, the Department generally has considered current or previous 
antidumping duty orders on the merchandise under investigation from the 
country in question in the United States and current orders in any 
other country.\11\ In their allegation, Petitioners attached a copy of 
a European Union antidumping duty order that includes drill pipe. 
Therefore, the Department finds that there is a history of injurious 
dumping of the merchandise under investigation from the PRC pursuant to 
section 733(e)(1)(A)(i) of the Act. As such, an analysis pursuant to 
733(e)(1)(A)(ii) of the Act, of whether the importer knew or should 
have known of dumping and likely injury, is not necessary.
---------------------------------------------------------------------------

    \11\ See, e.g., 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, 59119 (November 17, 2009) (``OCTG Prelim''), unchanged 
in 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).
---------------------------------------------------------------------------

Massive Imports Over a Relatively Short Period

    Pursuant to 19 CFR 351.206(h)(2), the Department will not consider 
imports to be massive unless imports in the comparison period have 
increased by at least 15 percent over imports in the base period. The 
Department normally considers a ``relatively short period'' as the 
period beginning on the date the proceeding begins and ending at least 
three months later. See 19 CFR 351.206(i). For this reason, the 
Department normally compares the import volumes of the merchandise 
under investigation for at least three months immediately preceding the 
filing of the petition (i.e., the ``base period'') to a comparable 
period of at least three months following the filing of the petition 
(i.e., the ``comparison period''). See id.
    In their allegation, Petitioners noted that they filed the petition 
on December 31, 2009. Petitioners included in their allegation U.S. 
import data, which used a three-month base period (October 2009 through 
December 2009) and a three-month comparison period (January 2010 
through March 2010) in showing whether imports were massive. The 
Department, however, has used a six-month base and comparison period in 
its analysis, the maximum amount of data which could be collected.\12\
---------------------------------------------------------------------------

    \12\ See, e.g., Final Determination of Sales at Less Than Fair 
Value and Partial Affirmative Determination of Critical 
Circumstances: Certain Polyester Staple Fiber from the People's 
Republic of China, 72 FR 19690, 19692 (April 19, 2007).
---------------------------------------------------------------------------

    The Department agrees with Petitioners that importers, exporters, 
or producers had knowledge of an antidumping duty investigation at the 
date the petition was filed (i.e., December 31, 2009). Therefore, 
December falls within the base period. We note that the DP-Master Group 
has submitted information attempting to show that importers, exporters 
and producers had reason to believe that an antidumping proceeding was 
likely at an earlier date, June 2009. The DP-Master Group submitted a 
declaration from the partner and owner of a company involved with drill 
pipe, drill collar, and other drilling equipment. See the DP-Master 
Group's July 12, 2010, letter in response to the Department's request 
for shipment data. The declaration references conversations that this 
individual had with others in the industry regarding fundraising in 
order to pay for antidumping and countervailing duty investigations.

[[Page 51013]]

Although in prior proceedings the Department has found that an earlier 
knowledge date should apply, because importers, producers and exporters 
had reason to believe that a proceeding was likely prior to a petition 
being filed,\13\ the evidence put forth by the DP-Master Group in this 
case does not rise to the level of that provided in those other cases, 
which included specific, widely available publications. The single 
declaration submitted by the DP-Master Group, unlike the information 
the Department has relied on in other cases,\14\ is speculative in that 
it centered on fundraising which might result in a case and does not 
demonstrate that any action was taken by the DP-Master Group during 
this alleged early knowledge date. In fact, as described below, the 
record shows the contrary--massive increases in shipments to the United 
States after the petition was filed. Therefore, we find that the DP-
Master Group has not demonstrated that importers, exporters, or 
producers, had reason to believe, at some time prior to the filing of 
the petition that a proceeding covering drill pipe from the PRC was 
likely.
---------------------------------------------------------------------------

    \13\  See, e.g., 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), and accompanying 
Issues and Decision Memorandum at Comment 7 (finding reason to 
believe a case was likely based upon widely disseminated newspaper 
articles stating: ``America's catfish industry, stung by dropping 
prices triggered by a flood of cheaper fish from Vietnam, is gearing 
up for a possible antidumping campaign'' and ``Vietnamese seafood 
exporters are entering a new war on the U.S. market, as American 
rivals are lobbying on an anti-dumping taxation''); and Notice of 
Final Determination of Sales at Less Than Fair Value: Carbon and 
Certain Alloy Steel Wire Rod From Germany, 67 FR 55802 (August 30, 
2002), and accompanying Issues and Decision Memorandum at Comment 6 
(finding reason to believe a case was likely based upon trade 
publication which ``alerted steel wire rod importers, exporters, and 
producers the proceedings concerning the subject merchandise were 
likely in a number of countries'').
    \14\ See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Certain Frozen and Canned Warmwater Shrimp From the 
People's Republic of China, 69 FR 70997 (December 8, 2004) at 
Comment 7A. See also 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 the final determination, 
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).
---------------------------------------------------------------------------

A. The DP-Master Group, Baoshan, and Yida
    The Department requested monthly shipment information from the 
three individually reviewed respondents in this investigation. We 
determine that, based on six-month base and comparison periods (July 
2009-December 2009, and January 2010-June 2010), imports from the DP-
Master Group were massive, while those from Baoshan and Yida were not. 
Specifically, the DP-Master Group's data show an increase of greater 
than 15 percent of drill pipe from the PRC from the base to the 
comparison period, while the data from Baoshan and Yida do not.\15\ 
Thus, pursuant to 19 CFR 351.206(h), we determine that this increase, 
being greater than 15 percent, shows that imports in the comparison 
period were massive for the DP-Master Group.
---------------------------------------------------------------------------

    \15\ See Memo to The File, from Matthew Renkey, Senior Analyst, 
through Scot T. Fullerton, Program Manager, regarding 
``Investigation of Drill Pipe form the People's Republic of China: 
Critical Circumstances Analysis,'' dated concurrently with this 
notice (``Critical Circumstances Memo'').
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B. Separate Rate Applicants
    As noted above, we used six-month base and comparison periods for 
the individually investigated companies. Because it has been the 
Department's practice to conduct its massive imports analysis of 
separate rate companies based on the experience of investigated 
companies,\16\ we did not request monthly shipment information from the 
separate rate applicants. The Department has relied upon import data 
from the three individually investigated companies in determining 
whether there have been massive imports for the separate rate 
companies. Accordingly, based on the weighted-average of these data, we 
find that imports in the post-petition period were massive for those 
companies because the weighted-average increase in volume is greater 
than 15 percent when comparing the base period to the comparison 
period. See Critical Circumstances Memo. Thus, pursuant to 19 CFR 
351.206(h), we determine that this increase, being greater than 15 
percent, shows that imports in the comparison period were massive for 
the separate rate companies.
---------------------------------------------------------------------------

    \16\ See, e.g., OCTG, 74 FR at 59121.
---------------------------------------------------------------------------

C. PRC-Wide Entity
    Because the PRC-wide entity did not cooperate with the Department 
by not responding to the Department's antidumping questionnaire, we 
were unable to obtain shipment data from the PRC-wide entity for 
purposes of our critical circumstances analysis, and thus there is no 
verifiable information on the record with respect to its export 
volumes.
    Section 776(a)(2) of the Act provides that, if an interested party 
or any other person (A) withholds information that has been requested 
by the administering authority or the Commission under this title, (B) 
fails to provide such information by the deadlines for submission of 
the information or in the form and manner requested, subject to 
subsections (c)(1) and (e) of section 782 of the Act, (C) significantly 
impedes a proceeding under the Act, or (D) provides such information 
but the information cannot be verified as provided in section 782(i) of 
the Act, the Department shall, subject to section 782(d) of the Act, 
use the FA in reaching the applicable determination under this title.
    Furthermore, section 776(b) of the Act provides that, if a party 
has failed to act to the best of its ability, the Department may apply 
an adverse inference. The PRC-wide entity did not respond to the 
Department's request for information. Thus, we are using FA, in 
accordance with section 776(a) of the Act, and, pursuant to section 
776(b) of the Act, we also find that AFA is warranted because the PRC-
wide entity has not acted to the best of its ability in not responding 
to the request for information. Accordingly, as AFA we preliminarily 
find that there were massive imports of merchandise from the PRC-wide 
entity.\17\
---------------------------------------------------------------------------

    \17\ See OCTG, 74 FR at 59121.
---------------------------------------------------------------------------

Preliminary Critical Circumstances Determination

    Record evidence indicates that there is a history of dumping 
causing material injury. In addition, record evidence indicates that 
the DP-Master Group, the separate rate applicants, and the PRC-wide 
entity had massive imports during a relatively short period. Therefore, 
in accordance with section 733(e)(1) of the Act, we preliminarily find 
that there is a reasonable basis to believe or suspect that critical 
circumstances exist for imports of the merchandise under investigation 
from the DP-Master Group, the separate rate applicants and the PRC-wide 
entity in this antidumping duty investigation.

Preliminary Determination

    Preliminary weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                              Weighted-
              Exporter                      Producer           Average
                                                                margin
------------------------------------------------------------------------
DP-Master Group....................  DP-Master Group.......       206.00
Baoshan Iron & Steel Co., Ltd......  Baoshan Iron & Steel           7.64
                                      Co., Ltd.

[[Page 51014]]

 
Shanxi Yida Special Steel Imp. &     Shanxi Yida Special            0.00
 Exp. Co., Ltd.                       Steel Group Co., Ltd.
Shanxi Fenglei Drilling Tools Co.,   Shanxi Fenglei               106.82
 Ltd.                                 Drilling Tools Co.,
                                      Ltd.
Jiangsu Shuguang Huayang Drilling    Jiangsu Shuguang             106.82
 Tool, Co. Ltd.                       Huayang Drilling
                                      Tool, Co. Ltd.
Jiangyin Long-Bright Drill Pipe      Jiangyin Long-Bright         106.82
 Manufacturing Co., Ltd.              Drill Pipe
                                      Manufacturing Co.,
                                      Ltd.
PRC-wide Entity....................  ......................       429.29
------------------------------------------------------------------------

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

    In accordance with section 733(d) of the Act, we will instruct CBP 
to suspend liquidation of all entries of drill pipe from the PRC as 
described in the ``Scope of Investigation'' section, entered, or 
withdrawn from warehouse, for consumption from the DP-Master Group, 
Baoshan, the Separate Rate Respondents, and the PRC-wide entity on or 
after the date of publication of this notice in the Federal Register. 
For Yida, we will not instruct CBP to suspend liquidation of any 
entries of drill pipe from the PRC as described in the ``Scope of 
Investigation'' section that are entered, or withdrawn from warehouse, 
for consumption on or after the date of publication of this notice in 
the Federal Register.
    The Department has determined in Drill Pipe From the People's 
Republic of China: Preliminary Affirmative Countervailing Duty 
Determination, 75 FR 33245 (June 11, 2010) (``CVD PRC Drill Pipe 
Prelim''), that the merchandise under investigation, exported and 
produced by the DP-Master Group, benefitted from an export subsidy. 
Where the merchandise under investigation is also subject to a 
concurrent countervailing duty investigation, we instruct CBP to 
require an antidumping cash deposit or posting of a bond equal to the 
weighted-average amount by which the NV exceeds the EP, minus the 
amount determined to constitute an export subsidy in the companion 
countervailing duty investigation. 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, 2004). In this 
case, because the DP-Master Group benefitted from an export subsidy, we 
will instruct CBP to require an antidumping cash deposit or posting of 
a bond equal to the weighted-average amount by which the NV exceeds the 
CEP for the DP-Master Group, minus the amount determined to constitute 
an export subsidy.
    Because Baoshan, Yida, and Separate Rate Companies did not benefit 
from any export subsidy, we will instruct CBP to require an antidumping 
cash deposit or the posting of a bond for each entry equal to the 
weighted-average amount by which the NV exceeds U.S. price, as 
indicated above.
    For all other entries of drill pipe from the PRC, the following 
cash deposit/bonding instructions apply: (1) For all PRC exporters of 
drill pipe which have not received their own rate, the cash-deposit or 
bonding rate will be the PRC-wide rate; (2) for all non-PRC exporters 
of drill pipe from the PRC which have not received their own rate, the 
cash-deposit or bonding rate will be the rate applicable to the 
exporter/producer combinations that supplied that non-PRC exporter. 
This suspension of liquidation will remain in effect until further 
notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified 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 drill pipe, or sales (or the likelihood of sales) for 
importation, of the 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 
business days after the date on which the final verification report is 
issued in this proceeding. Rebuttal briefs limited to issues raised in 
case briefs must be received no later than five business days after the 
deadline date for case briefs. See 19 CFR 351.309(c)(i) and (d). 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, and if requested, we 
will hold a public hearing, 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 shortly 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 location to be determined. Parties should confirm by 
telephone the date, time, and location of the hearing two days before 
the scheduled date.
    Interested parties who 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.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: August 5, 2010.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 2010-20512 Filed 8-17-10; 8:45 am]
BILLING CODE P