[Federal Register Volume 76, Number 241 (Thursday, December 15, 2011)]
[Notices]
[Pages 77964-77974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-32195]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-570-977]


High Pressure Steel Cylinders From the People's Republic of 
China: Preliminary Determination of Sales at Less Than Fair Value

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


DATES: Effective Date: December 15, 2011.
SUMMARY: The Department of Commerce (``Department'') preliminarily 
determines that high pressure steel cylinders (``steel cylinders'') 
from the People's Republic of China (``PRC'') are being, or are 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''). The estimated margins of sales at LTFV are shown in the 
``Preliminary Determination'' section of this notice.

FOR FURTHER INFORMATION CONTACT: Emeka Chukwudebe or Alan Ray, 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-
0219 or (202) 482-5403, respectively.

SUPPLEMENTARY INFORMATION:

Initiation

    On May 11, 2011, the Department received a petition concerning 
imports of steel cylinders from the PRC filed in proper form by Norris 
Cylinder Company (``Petitioner'').\1\
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    \1\ See Petitions for the Imposition of Antidumping and 
Countervailing Duties: High Pressure Steel Cylinders From the 
People's Republic of China filed on May 11, 2011 (``Petition'').
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    On June 8, 2011, the Department initiated an antidumping duty 
(``AD'') investigation on steel cylinders from the PRC.\2\ 
Additionally, in the Initiation Notice, the Department notified parties 
of the application process by which exporters and producers may obtain 
separate-rate status in non-market economy (``NME'') investigations 
such as this investigation.\3\
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    \2\ See High Pressure Steel Cylinders From the People's Republic 
of China: Initiation of Antidumping Duty Investigation, 76 FR 33213 
(June 8, 2011) (``Initiation Notice'').
    \3\ See id., 76 FR at 33216-33217.
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    On June 27, 2011, 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 steel 
cylinders. The ITC's preliminary determination was published in the 
Federal Register on July 1, 2011.\4\
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    \4\ See Investigation Nos. 701-TA-480 and 731-TA-1188; 
Preliminary, High Pressure Steel Cylinders From China, 76 FR 38697 
(July 1, 2011).
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Period of Investigation

    The period of investigation (``POI'') is October 1, 2010, through 
March 31, 2011.\5\
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    \5\ See 19 CFR 351.204(b)(1).
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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, 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.

[[Page 77965]]

Scope Comments

    In accordance with the preamble to the Department's regulations, 
the Department sets 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 
Notice.\6\ No interested party submitted scope comments.
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    \6\ See Antidumping Duties; Countervailing Duties, 62 FR 27296, 
27323 (May 19, 1997); see also Initiation Notice, 76 FR at 33213-
33214.
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Respondent Selection

    In the Initiation Notice, the Department stated its intent to limit 
the number of quantity and value (``Q&V'') questionnaires sent to 
exporters or producers to those companies identified in the 
Petition.\7\ On June 1, 2011, the Department sent Q&V questionnaires to 
the ten companies identified in the Petition as exporters or producers 
of steel cylinders from the PRC.\8\ The Department also posted the Q&V 
questionnaire for this investigation on its Web site at http://ia.ita.doc.gov/ia-highligHTSUS-and-news.html. Of the ten companies to 
which the Department sent Q&V questionnaires, the Department received 
two Q&V responses.\9\ In addition, the Department also received two 
unsolicited Q&V responses.\10\
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    \7\ See Initiation Notice, 76 FR at 33216.
    \8\ See Letter from the Department to All Interested Parties, 
dated June 1, 2011.
    \9\ The Department received responses from Beijing Tianhai 
Industry Co., Ltd. (``BTIC'') and Zhejiang Jindun Pressure Vessel 
Co., Ltd. (``Zhejiang Jindun'').
    \10\ The Department received unsolicited Q&V responses from 
Shanghai J.S.X. International Trading Corporation and Shijiazhuang 
Enric Gas Equipment Co., Ltd.
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    Based on the responses submitted to the Department, on August 25, 
2011, the Department selected BTIC (``Respondent'') as the only 
mandatory respondent for individual examination in this investigation. 
BTIC accounts for the largest volume of subject merchandise sold to the 
United States during the POI that can be reasonably examined.\11\
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    \11\ See ``Memorandum to Christian Marsh, Deputy Assistant 
Secretary for Antidumping and Countervailing Duty Operations, from 
James C. Doyle, Director, Office 9; Antidumping Duty Investigation 
of High Pressure Steel Cylinders from the People's Republic of 
China: Respondent Selection,'' (``Respondent Selection Memo'') dated 
August 25, 2011.
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    On August 29, 2011, Zhejiang Jindun submitted a letter requesting 
treatment as a voluntary respondent. On August 30, 2011, Petitioner 
submitted a letter opposing Zhejiang Jindun's request for voluntary 
treatment. On September 2, 2011, the Department issued a letter 
providing a schedule for voluntary responses to the Department's 
initial NME Questionnaire.\12\ However, the letter also stated that the 
schedule does not indicate that the Department will accept a voluntary 
respondent in this investigation.\13\ Given the Department's current 
resource constraints, we are not selecting a voluntary respondent at 
this time because to do so would be unduly burdensome and would inhibit 
the timely completion of this investigation.\14\ As stated in the 
Respondent Selection Memo, the Department is conducting numerous, 
concurrent, antidumping proceedings which limits the number of analysts 
that can be assigned to this investigation.
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    \12\ See Letter from the Department Re: ``Antidumping Duty 
Investigation of High Pressure Steel Cylinders from the People's 
Republic of China (``PRC''): Schedule for Voluntary Responses to the 
Department's Initial Questionnaire,'' dated September 2, 2011.
    \13\ See id.
    \14\ See section 782(a)(2) of the Act.
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Questionnaire

    On July 29, 2011, the Department issued to BTIC the NME AD 
questionnaire with product characteristics used in the designation of 
CONNUMs and assigned to the merchandise under consideration. Between 
August 26, 2011, and November 10, 2011, BTIC submitted responses to the 
Department's original and supplemental sections A, C, and D 
questionnaires. In addition, between September 14, 2011 and October 5, 
2011, Zhejiang Jindun also submitted responses to the Department's 
original section A, C and D questionnaires.

Surrogate Country Comments

    On August 29, 2011, the Department determined that Colombia, 
Indonesia, the Philippines, South Africa, Thailand, and Ukraine are 
countries whose per capita gross national income is comparable to the 
PRC in terms of economic development.\15\ On September 7, 2011, the 
Department requested comments from the interested parties regarding the 
selection of a surrogate country. On September 20, the Department 
extended the deadline for the submission of surrogate country and 
factor valuation comments to September 26, 2011, and October 7, 2011, 
respectively. For a detailed discussion of the selection of the 
surrogate country, see ``Surrogate Country'' section below.
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    \15\ See ``Memorandum from Carole Showers, Director, Office of 
Policy, to Matthew Renkey, Acting Program Manager, Office 9: 
Antidumping Investigation of High Pressure Steel Cylinders from the 
People's Republic of China (PRC): Request for a List of Surrogate 
Countries for an Antidumping Duty Investigation of High Pressure 
Steel Cylinders from the People's Republic of China (`China'),'' 
dated August 29, 2011 (``Surrogate Country List'').
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Surrogate Value Comments

    On September 29, 2011, and October 17, 2011, the Department 
extended the deadline for the submission of surrogate value (``SV'') 
comments to October 18, 2011 and October 24, 2011, respectively. On 
October 24, 2011, Petitioner and BTIC submitted surrogate factor 
valuation comments and data. On November 2, 2011, November 14, 2011, 
and November 22, 2011, Petitioner and BTIC submitted rebuttal surrogate 
factor valuation comments.

Separate Rate Applications

    Between August, 4, 2011, and August 26, 2011, the Department 
received separate rate applications from four companies.\16\ See the 
``Separate Rates'' section below for the full discussion of the 
treatment of the separate rate applicants.
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    \16\ The following companies filed separate-rate applications: 
BTIC; Shanghai J.S.X. International Trading Corporation; Zhejiang 
Jindun; and Shijiazhuang Enric Gas Equipment Co., Ltd. (these 
companies, exclusive of BTIC, are collectively referred to as, 
``Separate Rate Respondents'').
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Postponement of Preliminary Determination

    On September 8, 2011, Petitioner filed a timely request to postpone 
the issuance of the preliminary determination by 60 days. On September 
27, 2011, the Department published in the Federal Register a notice 
postponing the preliminary antidumping duty determination for this 
investigation of steel cylinders from the PRC.\17\
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    \17\ See High Pressure Steel Cylinders From the People's 
Republic of China: Postponement of Preliminary Determination of 
Antidumping Duty Investigation, 76 FR 59658 (September 27, 2011).
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Non-Market-Economy Country

    For purposes of initiation, Petitioners submitted LTFV analyses of 
the PRC as an NME country.\18\ The Department considers the PRC to be 
an NME country. 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 Department.\19\ No party has challenged 
the designation of the PRC as an NME country in this investigation. 
Therefore, we continue to

[[Page 77966]]

treat the PRC as an NME country for purposes of this preliminary 
determination.
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    \18\ See also Initiation Notice, 76 FR at 33215.
    \19\ See 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).
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Surrogate Country

    When the Department is investigating imports from an NME country, 
section 773(c)(1) of the Act directs it to base normal value (``NV''), 
in most circumstances, on the NME producer's factors of production 
(``FOP''), valued in a surrogate market economy (``ME'') 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 ME countries that are: (1) At a level of economic 
development comparable to that of the NME country; and (2) significant 
producers of comparable merchandise.\20\ Once the Department has 
identified the countries that are economically comparable to the PRC, 
it identifies those countries which are significant producers of 
comparable merchandise. From the list of countries which are both 
economically comparable and significant producers and the Department 
will then select a primary surrogate country based upon whether the 
data for valuing FOPs are both available and reliable.
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    \20\ See Import Administration Policy Bulletin 04.1: Non-Market 
Economy Surrogate Country Selection Process (March 1, 2004) 
(``Policy Bulletin'') available on the Department's Web site at 
http://ia.ita.doc.gov/policy/index.html.
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Economic Comparability

    As explained in our Surrogate Country List, the Department 
considers Colombia, Indonesia, the Philippines, South Africa, Thailand, 
and Ukraine all comparable to the PRC in terms of economic 
development.\21\ Therefore, we consider all six countries as having 
satisfied this prong of the surrogate country selection criteria.\22\ 
Petitioner argued that India should also be considered economically 
comparable to the PRC and considered a potential surrogate country.\23\ 
While we recognize Petitioner has challenged the Department's reliance 
on absolute GNI to establish the list of economically comparable 
countries, our practice is to rely on absolute GNI because, as 
explained in Magnesium from China.\24\
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    \21\ See Surrogate Country List.
    \22\ See section 773(c)(4)(A) of the Act.
    \23\ See Petitioner's Supplemental Section A Response for 
Beijing Tianhai Industry Co., Ltd.: Antidumping Duty Investigation 
on High Pressure Steel Cylinders from the People's Republic of 
China, dated October 14, 2011.
    \24\ See Magnesium Metal From the People's Republic of China: 
Final Results of the 2008-2009 Antidumping Duty Administrative 
Review of the Antidumping Duty Order, 75 FR 65450 (October 25, 2010) 
and accompanying Issues and Decision Memorandum at Comment 4.

    The Department finds that the selection of the range of 
economically comparable countries based on absolute GNIs is 
reasonable and consistent with the Act. The Department has a long-
standing and predictable practice of selecting economically 
comparable countries on the basis of absolute GNI. Moreover, 
Petitioner has failed to provide sufficient reasoning to demonstrate 
why the Department should use relative GNI as a basis for defining 
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economic comparability * * *

Therefore, the Department does not find persuasive Petitioner's 
argument regarding the relative similarity in difference in GNI between 
South Africa and India. Furthermore, we note that in Steel Wheels \25\ 
the Department stated:
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    \25\ See Certain Steel Wheels From the People's Republic of 
China: Notice of Preliminary Determination of Sales at Less Than 
Fair Value, Partial Affirmative Preliminary Determination of 
Critical Circumstances, and Postponement of Final Determination, 76 
FR 677703 (November 2, 2011) (``Steel Wheels'').

    [U]nless we find that all of the countries determined to be 
equally economically comparable are not significant producers of 
comparable merchandise, do not provide a reliable source of publicly 
available surrogate data or are unsuitable for use for other 
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reasons, we will rely on data from one of these countries.

Because the Department finds that one of these countries meets the 
selection criteria, as explained below, the Department is not 
considering India as the primary surrogate country.

Producers of Identical or Comparable Merchandise

    Section 773(c)(4)(B) of the Act requires the Department to value 
FOPs in a surrogate country that is a significant producer of 
comparable merchandise. Neither the statute nor the Department's 
regulations provide further guidance on what may be considered 
comparable merchandise. Given the absence of any definition in the 
statute or regulations, the Department looks to other sources such as 
the Policy Bulletin for guidance on defining comparable 
merchandise.\26\ The Policy Bulletin states that ``the terms 
`comparable level of economic development,' `comparable merchandise,' 
and `significant producer' are not defined in the statute.'' The Policy 
Bulletin further states that ``in all cases, if identical merchandise 
is produced, the country qualifies as a producer of comparable 
merchandise.'' Conversely, if identical merchandise is not produced, 
then a country producing comparable merchandise is sufficient in 
selecting a surrogate country.\27\ Further, when selecting a surrogate 
country, the statute requires the Department to consider the 
comparability of the merchandise, not the comparability of the 
industry.\28\ ``In cases where identical merchandise is not produced, 
the team must determine if other merchandise that is comparable is 
produced. How the team does this depends on the subject merchandise.'' 
\29\ In this regard, the Department recognizes that any analysis of 
comparable merchandise must be done on a case-by-case basis:
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    \26\ See Policy Bulletin.
    \27\ The Policy Bulletin also states that ``if considering a 
producer of identical merchandise leads to data difficulties, the 
operations team may consider countries that produce a broader 
category of reasonably comparable merchandise,'' at note 6.
    \28\ See Sebacic Acid from the People's Republic of China; Final 
Results of Antidumping Duty Administrative Review, 62 FR 65674 
(December 15, 1997) and accompanying Issues and Decision Memorandum 
at Comment 1 (to impose a requirement that merchandise must be 
produced by the same process and share the same end uses to be 
considered comparable would be contrary to the intent of the 
statute).
    \29\ See Policy Bulletin, at 2.

    In other cases, however, where there are major inputs, i.e., 
inputs that are specialized or dedicated or used intensively, in the 
production of the subject merchandise, e.g., processed agricultural, 
aquatic and mineral products, comparable merchandise should be 
identified narrowly, on the basis of a comparison of the major 
inputs, including energy, where appropriate.\30\
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    \30\ See id., at 3.

Further, the statute grants the Department discretion to examine 
various data sources for determining the best available 
information.\31\ Moreover, while the legislative history provides that 
the term ``significant producer'' includes any country that is a 
significant ``net exporter,'' \32\ it does not preclude reliance on 
additional or alternative metrics. To evaluate this factor we obtained 
export data using the GTA for HTSUS 7311.00: Containers for Compressed 
or Liquefied Gas of Iron or Steel, which is comparable to the 
merchandise under consideration because high pressure steel cylinders 
fall within this HTSUS category and this merchandise has a similar end-
use to scope merchandise. The GTA data demonstrate that all six of the 
countries identified in the Surrogate Country List were exporters of 
comparable merchandise during the POI.\33\ The

[[Page 77967]]

Department notes that India is also an exporter of comparable 
merchandise as demonstrated by GTA data, and India is also a producer 
of identical and comparable merchandise as evidenced by the financial 
statements which Petitioner has placed on the record.
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    \31\ See section 773(c) of the Act; Nation Ford Chem. Co. v. 
United States, 166 F.3d 1373, 1377 (Fed. Cir. 1999).
    \32\ See Conference Report accompanying H.R. 3, the 1988 Omnibus 
Trade & Competitiveness Act, H. Rep. No. 100-576, at 590 (1988) 
(``Conference Report'').
    \33\ See Petitioner's High Pressure Steel Cylinders from the 
People's Republic of China; Petitioner's Comments on Selection of 
Surrogate Country for Antidumping Investigation, dated September 26, 
2011.
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Significant Producers of Identical or Comparable Merchandise

    With respect to the criterion of being a significant producer of 
comparable merchandise, Petitioner submits that, for purposes of the 
Department's selection of an appropriate surrogate country, India is a 
producer of identical merchandise; that Indonesia, South Africa, 
Ukraine, the Philippines, Colombia, and Thailand also are producers of 
comparable merchandise; that only India, Thailand, and Indonesia are 
significant producers of comparable merchandise based on global 
exports.\34\
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    \34\ See id.
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    Respondent proposed that the Department select Ukraine as the 
primary surrogate country and India as a secondary surrogate country in 
this investigation. Respondent notes that as the Department included 
Ukraine in the Surrogate Country List, the Department has already found 
Ukraine comparable in terms of economic development. Further, 
Respondent contends that Ukraine is a significant producer of 
comparable merchandise.\35\
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    \35\ See Respondent's First Surrogate Value Submission for 
Beijing Tianhai Industry Co., Ltd.: Antidumping Duty Investigation 
on High Pressure Steel Cylinders from the People's Republic of 
China, dated October 24, 2011, at Exhibits 2A and 2B and November 
14, 2011, at page 3.
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    Respondent also suggests that, consistent with its established 
practice, the Department should define ``significant producer'' in this 
proceeding as a country that has produced comparable merchandise during 
the relevant period. Consequently, Respondent states that the 
Department should find that Ukraine is a significant producer of 
comparable merchandise, based on the data submitted in its comments.
    As noted above, Colombia, Indonesia, South Africa, the Philippines, 
Thailand, and Ukraine were exporters of comparable merchandise 
(Containers for Compressed or Liquefied Gas of Iron or Steel) during 
the POI. Further, we note that Respondent provided production data from 
Ukraine of comparable merchandise, at the six-digit HTSUS level under 
which scope merchandise would be classified, demonstrating significant 
production.\36\ Because Thailand, Colombia, the Philippines, Indonesia, 
Ukraine, and South Africa constitute countries that are both 
economically-comparable to the PRC and significant producers of 
comparable merchandise, the Department looks to the availability of SV 
data from these countries to determine whether any of the countries is 
an appropriate surrogate country.
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    \36\ See id.
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Data Availability

    Petitioner contends that India is the best choice for the surrogate 
country because publicly available information from Indian sources is 
readily available to value the FOPs used to produce identical 
merchandise.\37\ Both Petitioner and Respondent provided publicly 
available and contemporaneous financial statements for Indian producers 
of identical and comparable merchandise for which the Department is 
able to calculate overhead, selling, general, and administrative 
expenses (``SG&A''), and profit.
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    \37\ See Petitioner's High Pressure Steel Cylinders from the 
People's Republic of China; Petitioner's Comments on Selection of 
Surrogate Country for Antidumping Investigation, dated September 26, 
2011.
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    Respondent suggests that Ukraine is the best choice for the 
surrogate country because publicly available information from Ukraine 
sources is readily available to value the FOPs used to produce steel 
cylinders.\38\ Respondent also contends that there is substantial 
Ukrainian data for valuing FOPs that are publicly available from the 
Global Trade Atlas (``GTA''). Respondent also notes that 
contemporaneous information is available from the International Labor 
Organization (``ILO'') that will allow the Department to use Ukrainian 
data to value labor costs. As stated above, both Petitioner and 
Respondent provided publicly available and contemporaneous financial 
statements for Indian producers of identical and comparable merchandise 
for which the Department is able to calculate overhead, SG&A, and 
profit. Respondent posits that, for all the above reasons, the 
Department should select Ukraine as the primary surrogate country and 
India as a secondary surrogate country because Ukraine best satisfies 
the requirements pursuant to the statute, the regulations, and the 
Policy Bulletin.
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    \38\ See Respondent's First Surrogate Value Submission for 
Beijing Tianhai Industry Co., Ltd.:
    Antidumping Duty Investigation on High Pressure Steel Cylinders 
from the People's Republic of China, dated October 24, 2011.
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    When evaluating SV data, the Department considers several factors 
including whether the SV data are publicly available, contemporaneous 
with the POI, represent a broad-market average, from an approved 
surrogate country, tax- and duty-exclusive, and specific to the input. 
There is no hierarchy among these criteria. It is the Department's 
practice to carefully consider the available evidence in light of the 
particular facts of each industry when undertaking its analysis.\39\
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    \39\ See Policy Bulletin.
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    In this case, the record does not contain quality data for 
Thailand, Colombia, the Philippines, South Africa, or Indonesia. 
Accordingly, these countries will not be considered for primary 
surrogate country selection purposes at this time.
    The record does contain data from Ukraine.

Surrogate Country Selection

    For this preliminary determination, the Department has selected 
Ukraine as the primary surrogate country for valuing BTIC's FOPs. We 
recognize that Petitioner has challenged the validity of the Ukrainian 
data for the valuation of blooms and seamless pipes, particularly with 
respect to its carbon level. We acknowledge that the Ukrainian SV for 
steel contains a carbon level that is outside the range for the 
production of identical merchandise; however, it is within the range 
for the production of comparable merchandise. Furthermore, we note that 
the Indian HTS categories which Petitioner suggests for valuing blooms 
and tubes are for basket categories that cover a wide range of alloys 
with numerous elements. The only difference between the Ukrainian HTS 
and the Respondent's input is a certain amount of carbon, which we have 
no reason to expect to have a significant effect on value. Therefore, 
we find that Ukraine satisfies the Department's selection criteria: (1) 
It is economically comparable with the PRC; (2) it is a significant 
producer of comparable merchandise; and (3) the data required to value 
BTIC's FOPs are both available on the record and reliable.
    The Department has not selected India as the primary surrogate 
country as argued by Petitioner. As we have stated in a recent 
preliminary determination, ``unless we find that all of the countries 
determined to be equally economically comparable, are not significant 
producers of comparable merchandise, do not provide a reliable source 
of publicly available surrogate data or are unsuitable for use for 
other reasons, we will rely on data from one of these countries.'' \40\ 
In this instance,

[[Page 77968]]

we find that Ukraine does satisfy the Department's criteria for the 
selection of a primary surrogate country, and as such, resort to an 
alternative surrogate country which is not as economically comparable 
to the PRC as the countries on the Surrogate Country List, is not 
warranted.
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    \40\ See Steel Wheels.
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    The Department normally uses SV data which are from a country that 
is economically comparable to the NME and a significant producer of 
identical or comparable merchandise, and which are on the record and 
are not otherwise unsuitable for use. However, in exceptional 
circumstances, the Department may be required to include surrogate 
value information from a country which is not as economically 
comparable as those countries on the Surrogate Country List when the 
only data available on the record of the proceeding is from such a 
country. The record of this investigation contains no financial 
statements for producers of identical or comparable merchandise from 
Ukraine or any of the other countries found to be economically 
comparable to the PRC and a significant producer of identical or 
comparable merchandise. Therefore, the Department has preliminarily 
determined to use the financial statement from Everest Kanto Cylinders 
Ltd., an Indian producer of identical and comparable merchandise, for 
calculating the surrogate financial and SG&A ratios, as this is the 
only contemporaneous financial statement on the record of this 
investigation. A detailed explanation of the SVs is provided below in 
the ``Normal Value'' section of this notice.
    In accordance with 19 CFR 351.301(c)(3)(i), for the final 
determination in an antidumping duty investigation, interested parties 
may submit publicly available information to value the FOPs within 40 
days after the date of publication of the preliminary 
determination.\41\
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    \41\ In accordance with 19 CFR 351.301(c)(1), for the final 
determination of this investigation, interested parties may submit 
factual information to rebut, clarify, or correct factual 
information submitted by any other interested party less than ten 
days before, on, or after, the applicable deadline for submission of 
such factual information. However, the Department notes that 19 CFR 
351.301(c)(1) permits new information only insofar as it rebuts, 
clarifies, or corrects information recently placed on the record. 
The Department generally will not accept the submission of 
additional, previously absent-from-the-record alternative surrogate 
value information. See Glycine from the People's Republic of China: 
Final Results of Antidumping Duty Administrative Review and Final 
Rescission, in Part, 72 FR 58809 (October 17, 2007) and accompanying 
Issues and Decision Memorandum (``Glycine Final'') at Comment 2.
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Targeted Dumping

Targeted Dumping Allegations

    The statute allows the Department to employ an alternative dumping 
margin calculation methodology in an AD investigation under the 
following circumstances: (1) There is a pattern of export prices 
(``EP'') or constructed export prices (``CEP'') for comparable 
merchandise that differ significantly among purchasers, regions, or 
periods of time; and (2) the Department explains why such differences 
cannot be taken into account using the standard average-to-average or 
transaction-to-transaction methodology.\42\
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    \42\ See section 777A(d)(1)(B) of the Act.
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    On October 14, 2011, the Department received Petitioner's 
allegations of targeted dumping by BTIC using the Department's targeted 
dumping test as established in Steel Nails.\43\ In its allegations, 
Petitioner asserted that there are patterns of U.S. sales prices for 
comparable merchandise that differ significantly during a certain time 
period. On November 22, 2011, Petitioner amended its targeted dumping 
allegation in response to the revised U.S. sales data submitted by 
BTIC.
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    \43\ See Certain Steel Nails from the United Arab Emirates: 
Notice of Final Determination of Sales at Not Less Than Fair Value, 
73 FR 33985 (June 16, 2008) (``Steel Nails'') and accompanying 
Issues and Decision Memorandum at Comments 1-9; see also Proposed 
Methodology for Identifying and Analyzing Targeted Dumping in 
Antidumping Investigations; Request for Comment, 73 FR 26371 (May 9, 
2008).
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Targeted Dumping Test

    We conducted a time-period targeted dumping analysis for BTIC using 
the methodology we adopted in Steel Nails and most recently articulated 
in Wood Flooring.\44\ The methodology we employed involves a two-stage 
test; the first stage addresses the pattern requirement and the second 
stage addresses the significant-difference requirement.\45\ In this 
test, we made all price comparisons on the basis of identical 
merchandise (i.e., by control number or CONNUM). We based all of our 
targeted dumping calculations on the U.S. net price, which we 
determined for U.S. sales by BTIC in our standard margin calculations.
---------------------------------------------------------------------------

    \44\ See Steel Nails; see also Multilayered Wood Flooring From 
the People's Republic of China: Final Determination of Sales at Less 
Than Fair Value, 76 FR 64318 (October 18, 2011) (``Wood Flooring'') 
and accompanying Issues and Decision Memorandum at Comment 4.
    \45\ See Steel Nails, and accompanying Issues and Decision 
Memorandum at Comments 3 and 6; and Wood Flooring, and accompanying 
Issues and Decision Memorandum at Comment 4.
---------------------------------------------------------------------------

Price Comparison Method

    The Department preliminarily has found a pattern of prices for 
comparable merchandise that differs significantly by time period (i.e., 
targeted dumping). In doing so, the Department finds that the pattern 
of price differences identified cannot be taken into account using the 
standard average-to-average (``A-T-A'') methodology because the A-T-A 
methodology conceals differences in price patterns between the targeted 
and non-targeted groups by averaging low-priced sales to the targeted 
group with high-priced sales to the non-targeted group.\46\ Thus, the 
Department finds, pursuant to section 777A(d)(1)(B) of the Act, that 
application of the standard A-T-A comparison methodology would result 
in the masking of dumping that is unmasked by application of the 
alternative average-to-transaction (``A-T-T'') comparison method to all 
of BTIC's U.S. sales. Accordingly, for this preliminary determination 
we have applied the alternative A-T-T methodology to all U.S. sales 
that BTIC reported.\47\
---------------------------------------------------------------------------

    \46\ See Certain Coated Paper Suitable for High-Quality Print 
Graphics Using Sheet-Fed Presses From the People's Republic of 
China: Final Determination of Sales at Less Than Fair Value, 75 FR 
59217 (September 27, 2010) and accompanying Issues and Decision 
Memorandum at Comment 3; see also Wood Flooring, and accompanying 
Issues and Decision Memorandum at Comment 4.
    \47\ See Wood Flooring, and accompanying Issues and Decision 
Memorandum at Comment 4, and Memorandum to the File, through Matthew 
Renkey, Acting Program Manager, Office 9, from Alan Ray, Analysis of 
the Preliminary Determination of the Antidumping Duty Investigation 
of High Pressure Steel Cylinders from the People's Republic of China 
(``PRC''): Beijing Tianhai Industry Co., Ltd. (``BTIC''), dated 
December 7, 2011 (``BTIC's Prelim Analysis Memo'').
---------------------------------------------------------------------------

Affiliations and Single Entity Determinations

    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 of 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, 5 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.


[[Page 77969]]


    Additionally, section 771(33) of the Act stipulates 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 restrain or direction over the other person.''
    Finally, according to 19 CFR 351.401(f)(1) and (2), two or more 
companies may be treated as a single entity for antidumping duty 
purposes if: (1) The producers are affiliated, (2) the producers have 
production facilities for 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.\48\
---------------------------------------------------------------------------

    \48\ See 19 CFR 351.401(f)(1) and (2).
---------------------------------------------------------------------------

BTIC

    The record of this investigation demonstrates that BTIC, a producer 
and exporter of steel cylinders is affiliated with American Fortune 
Company (``American Fortune''), Langfang Tianhai High Pressure 
Container Co., Ltd. (``Langfang Tianhai'') and Tianjin Tianhai High 
Pressure Container Co., Ltd. (``Tianjin Tianhai''), pursuant to 
sections 771(33)(A) and (F) of the Act, based on ownership and common 
control. American Fortune is a U.S. company involved in the sale and 
distribution of the subject merchandise, and Langfang Tianhai and 
Tianjin Tianhai are both PRC producers of steel cylinders. Evidence of 
this affiliation was provided by BTIC in its questionnaire responses, 
as well as ownership/affiliation charts, organization charts, and 
business licenses/certificates of approval submitted by all four 
companies, which are business proprietary data.\49\ Additionally, BTIC 
has claimed throughout its numerous questionnaire responses that it is 
affiliated with American Fortune, Langfang Tianhai and Tianjin Tianhai, 
pursuant to the Department's regulations and the statute. Finally, the 
companies share common board members or managers.\50\ As such, there is 
significant potential for manipulation of price or production. 
Therefore, we preliminarily determine that BTIC, American Fortune, 
Langfang Tianhai, and Tianjin Tianhai are affiliated within the meaning 
of sections 771(33)(A) and (F) of the Act.
---------------------------------------------------------------------------

    \49\ See BTIC's Section A Response for Beijing Tianhai Industry 
Co., Ltd. Antidumping Duty Investigation on High Pressure Steel 
Cylinders from the People's Republic of China exhibits 11 and 13, 
dated August 26, 2011; see also BTIC's Supplemental Section A 
Response for Beijing Tianhai Industry Co., Ltd.: Antidumping Duty 
Investigation on High Pressure Steel Cylinders from the People's 
Republic of China, dated October 13, 2011 (``BTIC's supplemental 
section A response''), at 3 through 5.
    \50\ See id.
---------------------------------------------------------------------------

    Furthermore, we find that BTIC, Langfang Tianhai, and Tianjin 
Tianhai should be considered as a single entity for purposes of this 
investigation.\51\ In addition to being affiliated, they all have 
production facilities for similar or identical products that would not 
require substantial retooling and there is a significant potential for 
manipulation of production based on the level of common ownership and 
control, shared management, and an intertwining of business 
operations.\52\
---------------------------------------------------------------------------

    \51\ See 19 CFR 351.401(f).
    \52\ See 19 CFR 351.401(f)(1) and (2); see BTIC's supplemental 
section A response, at 3 through 5.
---------------------------------------------------------------------------

    Because the Department finds that BTIC, Langfang Tianhai, and 
Tianjin Tianhai are a single entity, the Department is utilizing the 
aggregate FOP database BTIC provided for purposes of the preliminary 
determination, which includes the FOPs used by BTIC, Langfang Tianhai 
and Tianjin Tianhai.

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 AD rate.\53\ 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 sufficiently independent so as to 
be entitled to a separate rate.\54\ However, if the Department 
determines that a company is wholly foreign-owned or located in a ME 
country, then a separate rate analysis is not necessary to determine 
whether that company is independent from government control.\55\
---------------------------------------------------------------------------

    \53\ 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'').
    \54\ 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'') as amplified by 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).
    \55\ See, e.g., PET Film.
---------------------------------------------------------------------------

    In the Initiation Notice, the Department notified parties of the 
application process by which exporters and producers may obtain 
separate rate status in NME investigations.\56\ The process requires 
exporters and producers to submit a separate rate status 
application.\57\
---------------------------------------------------------------------------

    \56\ See Initiation Notice.
    \57\ See 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 05.1'') available at http://ia.ita.doc.gov. Policy Bulletin 
05.1 states, at 6: ``{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.'' 
(emphasis added).
---------------------------------------------------------------------------

    We have considered whether each PRC company that submitted a 
complete separate rate application, or a complete section A 
questionnaire response as a mandatory respondent, is eligible for a 
separate rate. Because the Separate Rate Respondents and BTIC 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 that they are 
sufficiently independent through the absence of both de jure and de 
facto governmental control over export activities.

1. Absence of De Jure Control

    The evidence provided by Respondent and the Separate Rate 
Respondents supports a preliminary finding of de jure absence of 
governmental control based on the following factors articulated in 
Sparklers: (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 Separate Rate Respondents' and mandatory 
respondent's response, dated August 4, 2011, through August 26, 2011, 
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.

[[Page 77970]]

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.\58\ 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.
---------------------------------------------------------------------------

    \58\ 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).
---------------------------------------------------------------------------

    We determine that, for BTIC and the Separate Rate Respondents, 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.\59\
---------------------------------------------------------------------------

    \59\ See, e.g., each Separate Rate Respondent's applications 
submitted between August 4, 2011, and August 26, 2011.
---------------------------------------------------------------------------

    The evidence placed on the record of this investigation by the 
mandatory respondent 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 Respondent.
    The separate rate is normally determined based on the weighted-
average of the estimated dumping margins established for exporters and 
producers individually investigated, excluding zero and de minimis 
margins or margins based entirely on adverse facts available 
(``AFA'').\60\ In this investigation BTIC has an estimated weighted-
average dumping margin which is above de minimis and which is not based 
on total AFA. Therefore, because there is only one relevant weighted-
average dumping margin for this final determination, we will use the 
weighted-average of BTIC's calculated AD margin using the alternative 
methodology, which is 5.08 percent.
---------------------------------------------------------------------------

    \60\ See section 735(c)(5)(A) of the Act.
---------------------------------------------------------------------------

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

    Information on the record of this investigation indicates that 
there were more exporters of steel cylinders from the PRC than those 
indicated in the response to our request for Q&V information during the 
POI.\61\ As stated above, we issued our request for Q&V information to 
ten potential PRC producers/exporters of steel cylinders. While 
information on the record of this investigation indicates that there 
are other producers/exporters of steel cylinders in the PRC, we 
received only two timely-filed solicited Q&V responses. In addition, as 
noted above, we also received two timely-filed, unsolicited Q&V 
responses, which we considered for respondent selection purposes. 
Although all producers/exporters were given an opportunity to provide 
Q&V information, not all producers/exporters provided a response to the 
Department's Q&V letter.\62\ Therefore, the Department has 
preliminarily determined that there were PRC producers/exporters of 
steel cylinders during the POI that did not respond to the Department's 
request for information. We have treated these PRC producers/exporters, 
as part of the PRC-wide entity because they did not qualify for a 
separate rate.\63\ For a detailed discussion, see the ``Separate Rate'' 
section above.
---------------------------------------------------------------------------

    \61\ See Respondent Selection Memo.
    \62\ The following eight companies were not responsive to the 
Department's request for Q&V information: Shanghai High Pressure 
Container Co., Ltd.; Heibei Baigong Industrial Co., Ltd.; Nanjing 
Ocean High-Pressure Vessel Co., Ltd.; Qingdao Baigong Industrial and 
Trading Co., Ltd.; Shandong Huachen High Pressure Vessel Co., Ltd.; 
Shandong Province Building High Pressure Vessel Limited Company; 
Sichuan Mingchuan Chengyu Co., Ltd.; and Zhuolu High Pressure Vessel 
Co., Ltd.
    \63\ See, e.g., Prestressed Concrete Steel Wire Strand From the 
People's Republic of China: Preliminary Determination of Sales at 
Less Than Fair Value, 74 FR 68232, 68236 (December 23, 2009) (``PC 
Strand Prelim'') unchanged in 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); see also 
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 in reaching the applicable 
determination.
    Information on the record of this investigation indicates that the 
PRC-wide entity was unresponsive to the Department's requests for 
information. Specifically, certain companies did not respond to our 
questionnaires requesting Q&V information. As a result, pursuant to 
section 776(a)(2)(A) of the Act, we find that the use of FA is 
appropriate to determine the PRC-wide rate.\64\
---------------------------------------------------------------------------

    \64\ See PC Strand Prelim, 74 FR at 68236.
---------------------------------------------------------------------------

    Section 776(b) of the Act provides that, in selecting from among 
the facts otherwise available, the Department may employ an adverse 
inference if an interested party fails to cooperate by not acting to 
the best of its ability to comply with requests for information.\65\ 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.
---------------------------------------------------------------------------

    \65\ See also Statement of Administrative Action accompanying 
the Uruguay Round Agreements Act (``URAA''), H.R. Doc. 103-316, 870 
(1994) (``SAA''); 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).
---------------------------------------------------------------------------

    When employing an adverse inference, section 776(b) of the Act 
indicates that the Department may rely upon information derived from 
the petition, the final determination from the LTFV investigation, a 
previous administrative review, or any other information placed on the 
record. The

[[Page 77971]]

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 
AFA rule to induce respondents to provide the Department with complete 
and accurate information in a timely manner.'' \66\ As guided by the 
SAA, the information used as AFA should ensure an uncooperative party 
does not benefit by failing to cooperate than if it had cooperated 
fully.\67\ 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.\68\ As 
AFA, we have preliminarily assigned a rate of 26.23 percent to the PRC-
wide entity, the highest transaction-specific rate calculated for 
BTIC.\69\ In this instance, for the reasons discussed below, we believe 
that it is a reasonable exercise of the Department's discretion to 
select an AFA rate based on data in the investigation, instead of 
relying on secondary information.
---------------------------------------------------------------------------

    \66\ 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 (August 
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 (February 23, 1998).
    \67\ See SAA at 870.
    \68\ 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), 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).
    \69\ See Certain Stainless Steel Butt-Weld Pipe Fittings from 
Taiwan: Final Results and Final Rescission in Part of Antidumping 
Duty Administrative Review, 74 FR 66620 (December 16, 2009), and 
accompanying Issues and Decision Memorandum at Comment 1.
---------------------------------------------------------------------------

    In selecting this particular transaction-specific margin to use as 
the AFA rate, the Department analyzed the underlying transaction 
resulting in the 26.23 percent dumping margin and affirmed that this 
rate is neither unusual in terms of transaction quantities nor 
otherwise aberrational.\70\ Some of this analysis includes business 
proprietary information and, as a result, is contained in BTIC's Prelim 
Analysis Memo, at Attachment 4. In summary, our review of BTIC's 
individual transaction margins affirms that this rate is not unusual in 
terms of transaction quantities--there are significant numbers of sales 
with quantities similar to that in the underlying transaction.\71\ The 
fact that BTIC has a number of other transaction-specific margins very 
close to its highest transaction-specific margin of 26.23 percent 
further demonstrates that this margin is not aberrational.\72\ The rate 
is otherwise reasonable because it represents an actual rate at which a 
cooperating respondent sold the subject merchandise during the POI. 
When the AFA rate is based upon sales from the POI, it is supported by 
substantial evidence.\73\ If during the POI, the cooperating respondent 
sold the subject merchandise at the rate the Department selected, the 
Department may reasonably determine that an uncooperative respondent 
could have made all of its sales at the same rate. Therefore, we have 
determined that BTIC's transaction-specific margin of 26.23 percent, 
based on data in the current investigation, is not aberrational and is 
a reasonable AFA rate for the PRC-wide entity for this preliminary 
determination. The PRC-wide entity rate applies to all entries of steel 
cylinders except for entries from BTIC and the three other producers/
exporters receiving a separate rate.
---------------------------------------------------------------------------

    \70\ See, e.g., Certain Lined Paper Products from India: Notice 
of Final Results of Antidumping Duty Administrative Review, 75 FR 
7563 (February 22, 2010) and the accompanying Issues and Decision 
Memorandum; Hyundai Elec. Indus. Co., Ltd. v United States, 395 F. 
Supp. 2d 1231, 1235-36 (Ct. Int'l Trade 2005); F.lii Di Cecco Di 
Filippo Fara S. Martino S.p.A v. United States, 216 F.3d 1027, 1032 
(Fed. Cir 2000).
    \71\ See id.
    \72\ See id at 81-82.
    \73\ See Shanghai Taoen Int'l Trading Co. v. United States, 360 
F. Supp. 2d 1339, 1348 (Ct. Int'l Trade 2005).
---------------------------------------------------------------------------

Date of Sale

    19 CFR 351.401(i) states 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 ordinary course of 
business.'' 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.\74\ The Court of International Trade 
(``CIT'') has stated, ``a party seeking to establish a date of sale 
other than invoice date bears the burden of producing sufficient 
evidence to ``'satisfy' the Department that `a different date better 
reflects the date on which the exporter or producer establishes the 
material terms of sale.' '' \75\ 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.\76\
---------------------------------------------------------------------------

    \74\ See 19 CFR 351.401(i); see also Allied Tube & Conduit Corp. 
v. United States, 132 F. Supp. 2d 1087, 1090 (CIT 2001) (quoting 19 
CFR 351.401(i)) (``Allied Tube'').
    \75\ See Allied Tube, 132 F. Supp. 2d at 1090-1092.
    \76\ See, e.g., 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 Date of Sale, Comment 
1.
---------------------------------------------------------------------------

A. EP

    BTIC reported its date of sale based on the date BTIC issued an 
invoice to the unaffiliated United States customer. No information on 
the record demonstrated that some other date better reflected the date 
on which the material terms of sale were established. Therefore, 
consistent with 19 CFR 351.401(i), the Department has preliminary 
determined that the invoice date should be used as the date of sale for 
EP sales.\77\ For the final results, the Department intends to seek 
additional information concerning the date of sale of BTIC's EP sales.
---------------------------------------------------------------------------

    \77\ See BTIC's Section A Response for Beijing Tianhai Industry 
Co., Ltd. Antidumping Duty Investigation on High Pressure Steel 
Cylinders from the People's Republic of China at page 21, dated 
August 26, 2011.
---------------------------------------------------------------------------

B. CEP

    BTIC reported that the date of sale was determined by the contract 
signed between its affiliated importer \78\ and its unaffiliated U.S. 
customer and provided evidence confirming that the contract date was in 
fact the date of sale for CEP sales, as the material terms of sale were 
set at that time. Therefore, the Department has preliminarily 
determined that BTIC met its burden to establish that contract date, 
rather than invoice date, should be used as the date of sale for CEP 
sales.
---------------------------------------------------------------------------

    \78\ American Fortune.
---------------------------------------------------------------------------

Fair Value Comparisons

    To determine whether sales of steel cylinders to the United States 
by BTIC were made at LTFV, we compared EPs and/or CEPs to NV, as 
described in the ``U.S. Price,'' and ``Normal Value'' sections of this 
notice. Specifically, we compared NV to weighted-average EPs and/or 
CEPs in accordance with section 777A (d)(1) of the Act.

U.S. Price

A. EP

    In accordance with section 772(a) of the Act, we based the U.S. 
price for certain BTIC sales on EP because the first sale to an 
unaffiliated purchaser was made prior to importation, and the use of 
CEP was not otherwise warranted. We calculated EP based on the packed 
prices to unaffiliated

[[Page 77972]]

purchasers in, or for exportation to, the United States. We made 
deductions, as appropriate, for any movement expenses (e.g., foreign 
inland freight from the plant to the port of exportation, domestic 
brokerage, etc.) in accordance with section 772(c)(2)(A) of the Act. We 
based these movement expenses on SVs where a PRC company provided the 
service and was paid in Renminbi (``RMB'') (see ``Factor Valuation 
Methodology'' section below for further discussion).\79\
---------------------------------------------------------------------------

    \79\ For details regarding our EP calculations, see BTIC's 
Prelim Analysis Memo.
---------------------------------------------------------------------------

B. CEP

    In accordance with section 772(b) of the Act, we based the U.S. 
price for some of BTIC's sales on CEP because certain sales to an 
unaffiliated customer were made by this respondent's respective U.S. 
affiliate.\80\ In accordance with section 772(a) of the Act, CEP is the 
price at which the subject merchandise is first sold (or agreed to be 
sold) in the United States before or after the date of importation by 
or for the account of the producer or exporter of such merchandise or 
by a seller affiliated with the producer or exporter, to a purchaser 
not affiliated with the producer or exporter, as adjusted under 
subsections (c) and (d) of section 772 of the Act. In accordance with 
section 772(a) of the Act, we used CEP for a portion of BTIC's U.S. 
sales because the first sale to an unaffiliated customer was made by 
BTIC's U.S. affiliate.
---------------------------------------------------------------------------

    \80\ Respondent reported that its respective affiliate in the 
United States performed sales functions such as: sales negotiation, 
issuance of invoices and receipt of payment from the ultimate U.S. 
customer during the POI, citing Glycine From the People's Republic 
of China: Preliminary Results of Antidumping Duty Administrative 
Review and Preliminary Rescission, in Part, 72 FR 18457 (April 12, 
2007) unchanged in Glycine Final (where the Department stated that 
``we based U.S. price for certain sales on CEP in accordance with 
section 772(b) of the Act, because sales were made by Nantong 
Donchang's U.S. affiliate, Wavort, Inc. {``Wavort''{time}  to 
unaffiliated purchasers.'').
---------------------------------------------------------------------------

    We calculated CEP for BTIC based on delivered prices to 
unaffiliated purchasers in the United States. We made deductions from 
the U.S. sales price, where applicable, for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These included such 
expenses as foreign inland freight from the plant to the port of 
exportation, international freight, marine insurance, other U.S. 
transportation, U.S. customs duty, U.S. inland freight from port to the 
warehouse, and U.S. inland freight from the warehouse to the customer. 
In accordance with section 772(d)(1) of the Act, the Department 
deducted credit expenses, inventory carrying costs and indirect selling 
expenses from the U.S. price, all of which relate to commercial 
activity in the United States. 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 SVs if the expense was 
paid to an NME company in RMB, actual expenses, or an average of the 
two.\81\
---------------------------------------------------------------------------

    \81\ For details regarding our CEP calculations, see BTIC's 
Prelim Analysis Memo. See also Memorandum to the File, through 
Matthew Renkey, Acting Program Manager, Office 9, through Emeka 
Chukwudebe, Antidumping Duty Investigation of High Pressure Steel 
Cylinders from the People's Republic of China (``PRC''): Surrogate 
Values (``SVs'') for the Preliminary Determination (``Prelim SV 
Memo'').
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Normal Value

    Section 773(c)(1) of the Act provides that the Department shall 
determine the 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 the FOP 
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.\82\
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    \82\ 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 (April 17, 2006), 
unchanged in 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).
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Factor Valuation Methodology

    In accordance with section 773(c) of the Act, we calculated NV 
based on FOP data reported by BTIC for the POI. To calculate NV, we 
multiplied the reported per-unit factor-consumption rates by publicly 
available SVs (except as discussed below). In selecting the SVs, among 
other criteria, we considered the quality, specificity, and 
contemporaneity of the data. As appropriate, we adjusted input prices 
by including freight costs to make them delivered prices. Specifically, 
we added to Ukrainian SVs a surrogate freight cost using the shorter of 
the 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).\83\
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    \83\ A detailed description of all SVs used can be found in the 
Prelim SV Memo.
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    For this preliminary determination, we used Ukrainian import 
statistics to calculate SVs for the mandatory respondent's FOPs (direct 
materials, including steel tubes, steel billets, and certain energy 
FOPs, and packing materials). In selecting the best available 
information for valuing FOPs in accordance with section 773(c)(1) of 
the Act, the Department's practice is to select, to the extent 
practicable, SVs which are non-export average values, most 
contemporaneous with the POI, product-specific, and tax-exclusive.\84\
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    \84\ 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, 42683 (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).
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    Furthermore, with regard to the Ukrainian import-based SVs, we have 
disregarded import prices that we have reason to believe or suspect may 
be subsidized. We have reason to believe or suspect that prices of 
inputs from Indonesia, India, Thailand and South Korea may have been 
subsidized because we have found in other proceedings that these 
countries maintain broadly available, non-industry-specific export 
subsidies.\85\ Therefore, it is reasonable to infer that all exports to 
all markets from these countries may be subsidized.\86\ Further, guided 
by the legislative history, it is the Department's practice not to 
conduct a formal investigation to ensure that such prices are not 
subsidized.\87\

[[Page 77973]]

Rather, the Department bases its decision on information that is 
available to it at the time it makes its determination. Additionally, 
consistent with our practice, we disregarded prices from NME countries 
and excluded imports labeled as originating from an ``unspecified'' 
country 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.\88\ Therefore, we have not used prices from 
these countries either in calculating the Ukrainian import-based SVs or 
in calculating ME input values.\89\
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    \85\ See, e.g., Certain Cut-to-Length Carbon Quality Steel Plate 
from Indonesia: Final Results of Expedited Sunset Review, 70 FR 
45692 (August 8, 2005), and accompanying Issues and Decision 
Memorandum at 4; Carbazole Violet Pigment 23 From India; Expedited 
Five-year (Sunset) Review of the Countervailing Duty Order, 75 FR 
13257 (March 19, 2010), and accompanying Issues and Decision 
Memorandum at 4-5; 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 17, 19-20; Final 
Affirmative Countervailing Duty Determination: Certain Hot-Rolled 
Carbon Steel Flat Products From Thailand, 66 FR 50410 (October 3, 
2001), and accompanying Issues and Decision Memorandum at 23.
    \86\ See Notice of Final Determination of Sales at Less Than 
Fair Value and Negative Final Determination of Critical 
Circumstances: Certain Color Television Receivers From the People's 
Republic of China, 69 FR 20594 (April 16, 2004) and accompanying 
Issues and Decision Memorandum at Comment 7.
    \87\ See Conference Report, at 590; see also 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 (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).
    \88\ See Notice of Preliminary Determination of Sales at Less 
Than Fair Value and Postponement of Final Determination: Chlorinated 
Isocyanurates From the People's Republic of China, 69 FR 75294, 
75301 (December 16, 2004), unchanged in Notice of Final 
Determination of Sales at Less Than Fair Value: Chlorinated 
Isocyanurates From the People's Republic of China, 70 FR 24502 (May 
10, 2005).
    \89\ See id.
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    Previously, the Department used regression-based wages that 
captured the worldwide relationship between per capita GNI and hourly 
manufacturing wages, pursuant to 19 CFR 351.408(c)(3), to value the 
respondent's cost of labor. However, on May 14, 2010, the Court of 
Appeals for the Federal Circuit (``CAFC''), in Dorbest Ltd. v. United 
States, 604 F.3d 1363, 1372 (Fed. Cir. 2010) (``Dorbest''), invalidated 
19 CFR 351.408(c)(3). As a consequence of the CAFC's ruling in Dorbest, 
the Department no longer relies on the regression-based wage rate 
methodology described in its regulations.
    On June 21, 2011, the Department revised its methodology for 
valuing the labor input in NME antidumping proceedings.\90\ In Labor 
Methodologies, the Department explained that the best methodology to 
value the labor input is to use industry-specific labor rates from the 
primary surrogate country.\91\ Additionally, the Department determined 
that the best data source for industry-specific labor rates is Chapter 
6A: Labor Cost in Manufacturing, from the International Labor 
Organization (ILO) Yearbook of Labor Statistics (Yearbook).\92\ There 
are no Chapter 6A labor data available for Ukraine, pertaining to the 
industry specific to subject merchandise. In Labor Methodologies, the 
Department explained that, ``if there is no industry-specific data 
available for the surrogate country within the primary data source, 
i.e., ILO Chapter 6A data, the Department will then look to national 
data for the surrogate country for calculating the wage rate.'' \93\ 
The latest year for which ILO Chapter 6A reports national data for 
Ukraine is 2006. The most current and publicly available national data 
for industrial wages in Ukraine is reported, however, by the State 
Statistics Service of Ukraine, a government entity, at http://www.ukrstat.gov.ua/. We find that this information constitutes the best 
available information on the record because it is contemporaneous with 
the POR and, thus, more accurately reflective of actual wages in 
Ukraine.
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    \90\ See Antidumping Methodologies in Proceedings Involving Non-
Market Economies: Valuing the Factor of Production: Labor, 76 FR 
36092 (June 21, 2011) (``Labor Methodologies'').
    \91\ See Labor Methodologies, 76 FR at 36093.
    \92\ See Labor Methodologies, 76 FR at 36093-36094.
    \93\ See id. at 36094 n. 11.
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    Therefore, for the preliminary determination, we calculated the 
labor inputs using the data for average monthly industrial wages 
prevailing during the POI in Ukraine, corresponding to 
``Manufacturing'' economic sector. For the preliminary determination, 
the calculated industry-specific wage rate is 13.09 UAH/hour. Because 
these data do not reflect the indirect costs reflected in Chapter 6A 
data, we find that the facts and information on the record do not 
warrant or permit an adjustment to the surrogate financial 
statements.\94\ A more detailed description of the wage rate 
calculation methodology is provided in the Prelim SV Memo.
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    \94\ See id. at 36094.
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    To value factory overhead, selling, general, and administrative 
expenses, and profit, we relied on the unconsolidated financial 
statement from Everest Kanto Cylinders Ltd., a producer of identical 
merchandise located in India. While India is not the primary surrogate 
country, this financial statement is the only one from a producer of 
comparable or identical merchandise on the record, and is 
contemporaneous with the POI. For further details regarding the 
calculation of the surrogate financial rations, see the Prelim SV Memo.

Currency Conversion

    We made currency conversions into U.S. dollars, in accordance with 
section 773A(a) of the Act, based on the exchange rates in effect on 
the dates of the U.S. sales as certified by the Federal Reserve Bank.

Verification

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

Combination Rates

    In the Initiation Notice, the Department stated that it would 
calculate combination rates for certain respondents that are eligible 
for a separate rate in this investigation.\95\
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    \95\ See Initiation Notice; Policy Bulletin 05.1.
    \96\ The PRC-Wide entity includes: Shanghai High Pressure 
Container Co., Ltd.; Heibei Baigong Industrial Co., Ltd.; Nanjing 
Ocean High-Pressure Vessel Co., Ltd.; Qingdao Baigong Industrial and 
Trading Co., Ltd.; Shandong Huachen High Pressure Vessel Co., Ltd.; 
Shandong Province Building High Pressure Vessel Limited Company; 
Sichuan Mingchuan Chengyu Co., Ltd. and; Zhuolu High Pressure Vessel 
Co., Ltd.
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Preliminary Determination

    The weighted-average dumping margins are as follows:

------------------------------------------------------------------------
                                                       Weighted-average
           Exporter                   Producer         margin (percent)
------------------------------------------------------------------------
Beijing Tianhai Industry Co.,  Langfang Tianhai High                5.08
 Ltd.                           Pressure Container
                                Co., Ltd.
Beijing Tianhai Industry Co.,  Tianjin Tianhai High                 5.08
 Ltd.                           Pressure Container
                                Co., Ltd.
Beijing Tianhai Industry Co.,  Beijing Tianhai                      5.08
 Ltd.                           Industry Co., Ltd.
Shanghai J.S.X. International  Shanghai High                        5.08
 Trading Corporation.           Pressure Special Gas
                                Cylinder Co., Ltd.
Zhejiang Jindun Pressure       Zhejiang Jindun                      5.08
 Vessel Co., Ltd.               Pressure Vessel Co.,
                                Ltd.
Shijiazhuang Enric Gas         Shijiazhuang Enric                   5.08
 Equipment Co., Ltd.            Gas Equipment Co.,
                                Ltd.
------------------------------------------------------------------------
                 PRC-Wide Rate \96\                                26.23
------------------------------------------------------------------------


[[Page 77974]]

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 steel cylinders from the PRC 
as described in the ``Scope of Investigation'' section, entered, or 
withdrawn from warehouse, for consumption from BTIC, the Separate-Rate 
Respondents, and the PRC-wide entity on or after the date of 
publication of this notice in the Federal Register. Additionally, 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.\97\
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    \97\ See, e.g., Notice of Final Determination of Sales at Less 
Than Fair Value: Carbazole Violet Pigment 23 From India, 69 FR 
67306, 67307 (November 17, 2007).
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    We will instruct CBP to require a cash deposit or the posting of a 
bond equal to the weighted-average amount by which the normal value 
exceeds U.S. price, as follows: (1) The rate for the exporter/producer 
combinations listed in the chart above will be the rate we have 
determined in this preliminary determination; (2) for all PRC exporters 
of subject merchandise which have not received their own rate, the 
cash-deposit rate will be the PRC-wide rate; and (3) for all non-PRC 
exporters of subject merchandise which have not received their own 
rate, the cash-deposit rate will be the rate applicable to the PRC 
exporter/producer combination that supplied that non-PRC exporter. 
These suspension of liquidation instructions will remain in effect 
until further notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we will notify the 
ITC of our preliminary affirmative determination of sales at less than 
fair value. 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 steel cylinders, or sales (or the likelihood of 
sales) for importation, of the steel cylinders within 45 days of our 
final determination.

Public Comments

    Case briefs or other written comments may be submitted to the 
Assistant Secretary for Import Administration no later than seven days 
after the date on which the final verification report is issued in this 
proceeding and rebuttal briefs, limited to issues raised in case 
briefs, may be submitted no later than five days after the deadline 
date for case briefs. See 19 CFR 351.309. A table of contents, list of 
authorities used and an executive summary of issues should accompany 
any briefs submitted to the Department. This summary should be limited 
to five pages total, including footnotes.
    In accordance with section 774 of the Act, we will hold a public 
hearing, if requested, to afford interested parties an opportunity to 
comment on arguments raised in case or rebuttal briefs. 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, filed 
electronically using Import Administration's Antidumping and 
Countervailing Duty Centralized Electronic Service System (``IA 
ACCESS''). An electronically filed document must be received 
successfully in its entirety by the Department's electronic records 
system, IA ACCESS, by 5 p.m. Eastern Standard Time (ET) 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. If a request for a hearing is made, we will inform parties 
of the scheduled date for the hearing which will be held at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue NW., 
Washington, DC 20230, at a time and location to be determined. See 19 
CFR 351.310. Parties should confirm by telephone the date, time, and 
location of the hearing.
    We will make our final determination no later than 135 days after 
the date of publication of this preliminary determination, pursuant to 
section 735(a)(2) of the Act.
    This determination is issued and published in accordance with 
sections 733(f) and 777(i)(1) of the Act.

    Dated: December 7, 2011.
Christian Marsh,
Acting Assistant Secretary for Import Administration.
[FR Doc. 2011-32195 Filed 12-14-11; 8:45 am]
BILLING CODE 3510-DS-P