[Federal Register Volume 76, Number 110 (Wednesday, June 8, 2011)]
[Notices]
[Pages 33239-33242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-14042]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-570-978]


High Pressure Steel Cylinders From the People's Republic of 
China; Initiation of Countervailing Duty Investigation

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

DATES: Effective Date: June 8, 2011.

FOR FURTHER INFORMATION CONTACT: Scott Holland and Yasmin Nair, AD/CVD 
Operations, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., 
Washington, DC 20230; telephone: (202) 482-1279 and (202) 482-3813, 
respectively.

SUPPLEMENTARY INFORMATION: 

The Petition

    On May 11, 2011, the Department of Commerce (``Department'') 
received a countervailing duty (``CVD'') petition concerning imports of 
high pressure steel cylinders (``steel cylinders'') from the People's 
Republic of China (``PRC'') filed in proper form by Norris Cylinder 
Company (``Petitioner''). See The Petitions for the Imposition of 
Antidumping and Countervailing Duties Against High Pressure Steel 
Cylinders from the People's Republic of China, dated May 11, 2011 
(``the Petition''). On May 17, 2011, the Department issued requests to 
Petitioner for additional information and for clarification of certain 
areas of the CVD Petition. Based on the Department's requests, 
Petitioner filed a supplement to the Petition regarding general issues 
on May 20, 2011 (``Supplement to the AD/CVD Petitions'').
    In accordance with section 702(b)(1) of the Tariff Act of 1930, as 
amended (``Act''), Petitioner alleges that producers/exporters of steel 
cylinders from the PRC received countervailable subsidies within the 
meaning of sections 701 and 771(5) of the Act, and that imports from 
these producers/exporters materially injure, and threaten further 
material injury to, an industry in the United States.
    The Department finds that Petitioner filed the Petition on behalf 
of the domestic industry because Petitioner is an interested party, as 
defined in section 771(9)(C) of the Act, and has demonstrated 
sufficient industry support with respect to the investigation that it 
requests the Department to initiate (see ``Determination of Industry 
Support for the Petition'' below).

Period of Investigation

    The period of investigation is January 1, 2010, through December 
31, 2010.

Scope of Investigation

    The products covered by the scope of this investigation are steel 
cylinders from the PRC. For a full description of the scope of the 
investigation, see the ``Scope of the Investigation,'' in Appendix I of 
this notice.

Comments on Scope of the Investigation

    During our review of the Petition, we discussed the scope with 
Petitioner to ensure that it is an accurate reflection of the products 
for which the domestic industry is seeking relief. As a result, the 
``Scope of Investigation'' language has been modified from the language 
in the Petition to reflect these clarifications. See Memorandum to the 
File from Meredith A.W. Rutherford regarding Petitions for the 
Imposition of Antidumping Duties and Countervailing Duties on High 
Pressure Steel Cylinders from the People's Republic of China; 
Conference Call with Petitioner, May 24, 2011.
    Moreover, as discussed in the preamble to the regulations (see 
Antidumping Duties; Countervailing Duties, 62 FR 27296, 27323 (May 19, 
1997)), we are setting aside a period of time for interested parties to 
raise issues regarding product coverage. The Department encourages 
interested parties to submit such comments by Monday, June 20, 2011, 
which is twenty calendar days from the signature date of this notice. 
All comments must be filed on the records of both the PRC antidumping 
duty investigation as well as the PRC CVD investigation. Comments 
should be addressed to Import Administration's APO/Dockets Unit, Room 
1870, U.S. Department of Commerce, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. The period of scope consultations is 
intended to provide the Department with ample opportunity to consider 
all comments and to consult with parties prior to the issuance of the 
preliminary determination.

Consultations

    Pursuant to section 702(b)(4)(A)(ii) of the Act, on May 16, 2011, 
the Department invited representatives of the Government of the PRC 
(``GOC'') for consultations with respect to the CVD petition. On May 
25, 2011, the Department held consultations with representatives of the 
GOC via conference call. See Ex-Parte Memorandum on Consultations 
regarding the Petition for Imposition of Countervailing Duties on High 
Pressure

[[Page 33240]]

Steel Cylinders from the People's Republic of China, dated May 27, 
2011.

Determination of Industry Support for the Petition

    Section 702(b)(1) of the Act requires that a petition be filed on 
behalf of the domestic industry. Section 702(c)(4)(A) of the Act 
provides that a petition meets this requirement if the domestic 
producers or workers who support the petition account for: (i) At least 
25 percent of the total production of the domestic like product; and 
(ii) more than 50 percent of the production of the domestic like 
product produced by that portion of the industry expressing support 
for, or opposition to, the petition. Moreover, section 702(c)(4)(D) of 
the Act provides that, if the petition does not establish support of 
domestic producers or workers accounting for more than 50 percent of 
the total production of the domestic like product, the Department 
shall: (i) Poll the industry or rely on other information in order to 
determine if there is support for the petition, as required by 
subparagraph (A); or (ii) determine industry support using a 
statistically valid sampling method to poll the industry.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers as a whole of a domestic like product. Thus, to determine 
whether a petition has the requisite industry support, the statute 
directs the Department to look to producers and workers who produce the 
domestic like product. The U.S. International Trade Commission 
(``ITC''), which is responsible for determining whether ``the domestic 
industry'' has been injured, must also determine what constitutes a 
domestic like product in order to define the industry. While both the 
Department and the ITC must apply the same statutory definition 
regarding the domestic like product (see section 771(10) of the Act), 
they do so for different purposes and pursuant to a separate and 
distinct authority. In addition, the Department's determination is 
subject to limitations of time and information. Although this may 
result in different definitions of the like product, such differences 
do not render the decision of either agency contrary to law. See USEC, 
Inc. v. United States, 132 F. Supp. 2d 1, 8 (CIT 2001) (citing Algoma 
Steel Corp., Ltd. v. United States, 688 F. Supp. 639, 644 (CIT 1988), 
aff'd 865 F.2d 240 (Fed. Cir. 1989), cert. denied 492 U.S. 919 (1989)). 
Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation'' (i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition).
    With regard to the domestic like product, Petitioner does not offer 
a definition of domestic like product distinct from the scope of the 
investigation.
    Based on our analysis of the information submitted on the record, 
we have determined that steel cylinders constitute a single domestic 
like product and we have analyzed industry support in terms of that 
domestic like product. For a discussion of the domestic like product 
analysis in this case, see Countervailing Duty Investigation Initiation 
Checklist: High Pressure Steel Cylinders from the People's Republic of 
China (``Initiation Checklist''), at Attachment II, Analysis of 
Industry Support for the Petitions Covering High Pressure Steel 
Cylinders from the People's Republic of China, dated concurrently with 
this notice and on file in the CRU.
    In determining whether Petitioner has standing under section 
702(c)(4)(A) of the Act, we considered the industry support data 
contained in the Petition with reference to the domestic like product 
as defined in the ``Scope of Investigation'' section in Appendix I of 
this notice. To establish industry support, Petitioner provided its 
production of the domestic like product in 2010. See Supplement to the 
AD/CVD Petitions, at 4. Petitioner maintains that it was the sole 
remaining producer of the domestic like product in 2010 and, therefore, 
alleges that it represents the total production of the domestic like 
product. See Volume I of the Petition, at 3, and Supplement to the AD/
CVD Petitions, at 4. To demonstrate that it was the sole producer, 
Petitioner provided an affidavit from the President of Norris Cylinder 
Company, who has many years of professional experience in the steel 
cylinders industry. See Supplement to the AD/CVD Petitions, at 4, and 
Exhibit III-64. We have relied upon data Petitioner provided for 
purposes of measuring industry support. For further discussion, see 
Initiation Checklist at Attachment II.
    Our review of the data provided in the Petition, supplemental 
submissions, and other information readily available to the Department 
indicates that Petitioner has established industry support. First, the 
Petition established support from domestic producers (or workers) 
accounting for more than 50 percent of the total production of the 
domestic like product and, as such, we find that the Department is not 
required to take further action in order to evaluate industry support 
(e.g., polling). See Section 702(c)(4)(D) of the Act, and Initiation 
Checklist at Attachment II. Second, we find that the domestic producers 
(or workers) have met the statutory criteria for industry support under 
section 702(c)(4)(A)(i) of the Act because the domestic producers (or 
workers) who support the Petition account for at least 25 percent of 
the total production of the domestic like product. See Initiation 
Checklist at Attachment II. Finally, we find that the domestic 
producers (or workers) have met the statutory criteria for industry 
support under section 702(c)(4)(A)(ii) of the Act because the domestic 
producers (or workers) who support the Petition account for more than 
50 percent of the production of the domestic like product produced by 
that portion of the industry expressing support for, or opposition to, 
the Petition. Accordingly, the Department determines that the Petition 
was filed on behalf of the domestic industry within the meaning of 
section 702(b)(1) of the Act.
    The Department finds that Petitioner filed the Petition on behalf 
of the domestic industry because it is an interested party as defined 
in section 771(9)(C) of the Act and it has demonstrated sufficient 
industry support with respect to the CVD investigation that it is 
requesting the Department initiate. For further discussion, see 
Initiation Checklist at Attachment II.

Injury Test

    Because the PRC is a ``Subsidies Agreement Country'' within the 
meaning of section 701(b) of the Act, section 701(a)(2) of the Act 
applies to this investigation. Accordingly, the ITC must determine 
whether imports of subject merchandise from the PRC materially injure, 
or threaten material injury to, a U.S. industry.

Allegations and Evidence of Material Injury and Causation

    Petitioner alleges that imports of steel cylinders from the PRC are 
benefitting from countervailable subsidies and that such imports are 
causing, or threaten to cause, material injury to the domestic industry 
producing steel cylinders. In addition, Petitioner alleges that subject 
imports exceed the negligibility threshold provided for under section 
771(24)(A) of the Act.
    Petitioner contends that the industry's injured condition is 
illustrated by reduced market share, reduced shipments, reduced 
capacity,

[[Page 33241]]

underselling and price depression or suppression, reduced employment, a 
decline in financial performance, lost sales and revenue, and an 
increase in import penetration. See Volume I of the Petition, at 11-22. 
We have assessed the allegations and supporting evidence regarding 
material injury, threat of material injury, and causation, and we have 
determined that these allegations are properly supported by adequate 
evidence and meet the statutory requirements for initiation. See 
Initiation Checklist at Attachment III, Injury.

Initiation of Countervailing Duty Investigation

    Section 702(b)(1) of the Act requires the Department to initiate a 
CVD proceeding whenever an interested party files a petition on behalf 
of an industry that: (1) Alleges the elements necessary for an 
imposition of a duty under section 701(a) of the Act; and (2) is 
accompanied by information reasonably available to the petitioner(s) 
supporting the allegations. The Department has examined the Petition on 
steel cylinders from the PRC and finds that it complies with the 
requirements of section 702(b) of the Act. Therefore, in accordance 
with section 702(b) of the Act, we are initiating a CVD investigation 
to determine whether manufacturers, producers, or exporters of steel 
cylinders in the PRC receive countervailable subsidies. For a 
discussion of evidence supporting our initiation determination, see 
Initiation Checklist.
    We are including in our investigation the following programs 
alleged in the Petition to have provided countervailable subsidies to 
producers and exporters of the subject merchandise in the PRC:

A. State-Owned Enterprise (``SOE'') Programs

    1. Preferential Loans for SOEs.
    2. Loan and Interest Forgiveness for SOEs.
    3. Provision of Land and/or Land Use Rights to SOEs at Less than 
Adequate Remuneration.

B. Grant Programs

    1. The State Key Technology Renovation Project Fund.
    2. Circular on Issuance of Management Methods for Foreign Trade 
Development Support Fund.
    3. Rebates for Export and Credit Insurance Fees.
    4. GOC and Sub-Central Grants, Loans, and Other Incentives for 
Development of Famous Brands and China World Top Brands.

C. Loans and Directed Credit

    1. Preferential Lending to Steel Product Producers under the Ninth 
Five-Year Plan.
    2. Treasury Bond Loans.
    3. Preferential Lending to Steel Cylinders Producers and Exporters 
Classified as ``Honorable Enterprises''.

D. Income Tax Programs

    1. ``Two Free, Three Half'' Program for FIEs.
    2. Income Tax Reductions for Export-oriented FIEs.
    3. Preferential Tax Programs for FIEs that are Engaged in Research 
and Development.
    4. Income Tax Reduction for FIEs that Re-Invest Profits in Export-
oriented Enterprises.
    5. Local Income Tax Exemption and Reduction Programs for 
``Productive'' FIEs.
    6. Income Tax Credits for Domestically-Owned Companies Purchasing 
Domestically-Produced Equipment.

E. Other Tax Programs

    1. Import Tariff and VAT Exemptions for FIEs and Certain Domestic 
Enterprises Using Imported Equipment in Encouraged Industries.
    2. VAT Refunds for FIEs Purchasing Domestically-Produced Equipment.
    3. VAT Exemptions for Central Region.

F. Government Provision of Goods or Services for Less Than Adequate 
Remuneration (``LTAR'')

    1. Hot-Rolled Steel.
    2. Seamless Tube Steel.
    3. Welded Tube Steel.
    4. Standard Commodity Steel Billets and Blooms.
    5. High-Quality Chromium Molybdenum Alloy Steel Billets and Blooms.
    6. Electricity.

G. Subsidies to Steel Cylinders Producers Located in Economic 
Development Zones

    1. Subsidies Provided in the Tianjin Binhai New Area and the 
Tianjin Economic and Technological Development Area.

Respondent Selection

    For this investigation, the Department expects to select 
respondents based on U.S. Customs and Border Protection (``CBP'') data 
for U.S. imports during the period of investigation. We intend to make 
our decision regarding respondent selection within 20 days of 
publication of this Federal Register notice. The Department invites 
comments regarding the CBP data and respondent selection within seven 
calendar days of publication of this Federal Register notice.

Distribution of Copies of the Petition

    In accordance with section 702(b)(4)(A)(i) of the Act and 19 CFR 
351.202(f), a copy of the public version of the Petition has been 
provided to the representatives of the GC. Because of the particularly 
large number of producers/exporters identified in the Petition, the 
Department considers the service of the public version of the Petition 
to the foreign producers/exporters satisfied by the delivery of the 
public version to the GOC, consistent with 19 CFR 351.203(c)(2).

ITC Notification

    We have notified the ITC of our initiation, as required by section 
702(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 45 days after the date 
on which the Petition is filed, whether there is a reasonable 
indication that imports of subsidized steel cylinders from the PRC are 
causing material injury, or threatening to cause material injury, to a 
U.S. industry. See section 703(a)(2) of the Act. A negative ITC 
determination will result in the investigation being terminated; 
otherwise, the investigation will proceed according to statutory and 
regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: May 31, 2011.
Ronald K. Lorentzen,
Deputy Assistant Secretary for Import Administration.

Attachment I

Scope of the Investigation

    The merchandise covered by the scope of the investigation is 
seamless steel cylinders designed for storage or transport of 
compressed or liquefied gas (``high pressure steel cylinders''). High 
pressure steel cylinders are fabricated of chrome alloy steel 
including, but not limited to, chromium-molybdenum steel or chromium 
magnesium steel, and have permanently impressed into the steel, either 
before or after importation, the symbol of a U.S. Department of 
Transportation, Pipeline and Hazardous Materials Safety Administration 
(``DOT'')-approved high pressure steel cylinder manufacturer, as well 
as an approved DOT type marking of DOT 3A,

[[Page 33242]]

3AX, 3AA, 3AAX, 3B, 3E, 3HT, 3T, or DOT-E (followed by a specific 
exemption number) in accordance with the requirements of sections 
178.36 through 178.68 of Title 49 of the Code of Federal Regulations, 
or any subsequent amendments thereof. High pressure steel cylinders 
covered by the investigation have a water capacity up to 450 liters, 
and a gas capacity ranging from 8 to 702 cubic feet, regardless of 
corresponding service pressure levels and regardless of physical 
dimensions, finish or coatings.
    Excluded from the scope of the investigation are high pressure 
steel cylinders manufactured to UN-ISO-9809-1 and 2 specifications and 
permanently impressed with ISO or UN symbols. Also excluded from the 
investigation are acetylene cylinders, with or without internal porous 
mass, and permanently impressed with 8A or 8AL in accordance with DOT 
regulations.
    Merchandise covered by the investigation is classified in the 
Harmonized Tariff Schedule of the United States (``HTSUS'') under 
subheading 7311.00.00.30. Subject merchandise may also enter under 
HTSUS subheadings 7311.00.00.60 or 7311.00.00.90. Although the HTSUS 
subheadings are provided for convenience and customs purposes, the 
written description of the merchandise under the investigation is 
dispositive.

[FR Doc. 2011-14042 Filed 6-7-11; 8:45 am]
BILLING CODE 3510-DS-P