Certain Large Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Mexico: Preliminary Notice of Intent to Rescind Administrative Review

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Preliminary Notice of Intent to Rescind Administrative Review.

SUMMARY:

On October 1, 2001, we published the notice of initiation of this antidumping duty review with respect to Tubos de Acero de Mexico, S.A. (“TAMSA”). See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 66 FR 49924 (October 1, 2001). We have preliminarily determined that the review of TAMSA should be rescinded.

EFFECTIVE DATE:

September 4, 2002.

FOR FURTHER INFORMATION CONTACT:

James Terpstra or David Salkeld, AD/CVD Enforcement, Office 6, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-3965 or (202) 482-1168, respectively.

SUPPLEMENTARY INFORMATION:

The Applicable Statute and Regulations:

Unless otherwise indicated, all citations to the statute are references to made to the Tariff Act of 1930 (“the Act”) by the Uruguay Round Agreements Act (“URAA”). In addition, unless otherwise indicated, all citations to the Department regulations refer to the regulations codified at 19 CFR part 351 (2001).

Case History

On August 1, 2001, the Department of Commerce (“the Department”) published in the Federal Register the notice of “Opportunity to Request an Administrative Review” of the antidumping duty order on certain large diameter carbon and alloy seamless standard, line, and pressure pipe (“SLP”) from Mexico, for the period February 4, 2000 through July 31, 2001 (66 FR 39729). On August 31, 2001, we received a request from the petitioner¹ to review TAMSA. On October 1, 2001, we published the notice of initiation of this antidumping duty administrative review with respect to TAMSA. See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part, 66 FR 49924 (October 1, 2001).

TAMSA submitted an October 4, 2001 letter certifying that neither TAMSA, nor its U.S. affiliate, Siderca Corp., entered for consumption, or sold, exported, or shipped for entry for consumption in the United States subject merchandise during the period of review (“POR”). On May 8, 2002, we published a notice extending the preliminary results until no later than June 3, 2002. See Certain Large Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Mexico: Extension of Preliminary Results of Antidumping Duty Administrative Review, 67 FR 30873 (May 8, 2002). On May 29, 2002, petitioner in this case made a submission arguing that the review should not be rescinded. Because it was not practicable to address the issues raised by June 3, 2002, we postponed the preliminary determination an additional 90 days, until September 3, 2002, in accordance with 751(a)((3)(A) of the Act. See Certain Large Diameter Carbon and Alloy Seamless Standard, Line and Pressure Pipe from Mexico: Extension of Preliminary Results of Antidumping Duty Administrative Review, 67 FR 39349 (June 7, 2002).

Scope of the Review

The products covered are large diameter seamless carbon and alloy (other than stainless) steel standard, line, and pressure pipes produced, or equivalent, to the American Society for Testing and Materials (“ASTM”) A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-589, ASTM A-795, and the American Petroleum Institute (“API”) 5L specifications and meeting the physical parameters described below, regardless of application, with the exception of the exclusions discussed below. The scope of this review also includes all other products used in standard, line, or pressure pipe applications and meeting the physical parameters described below, regardless of specification, with the exception of the exclusions discussed below. Specifically included within the scope of this review are seamless pipes greater than 4.5 inches (114.3 mm) up to and including 16 inches (406.4 mm) in outside diameter, regardless of wall-thickness, manufacturing process (hot finished or cold-drawn), end finish (plain end, beveled end, upset end, threaded, or threaded and coupled), or surface finish.

The seamless pipes subject to this review are currently classifiable under the subheadings 7304.10.10.30, 7304.10.10.45, 7304.10.10.60, 7304.10.50.50, 7304.31.60.50, 7304.39.00.36 7304.39.00.40, 7304.39.00.44, 7304.39.00.48, 7304.39.00.52, 7304.39.00.56, 7304.39.00.62, 7304.39.00.68, 7304.39.00.72, 7304.51.50.60, 7304.59.60.00, 7304.59.80.30, 7304.59.80.35, 7304.59.80.40, 7304.59.80.45, 7304.59.80.50, 7304.59.80.55, 7304.59.80.60, 7304.59.80.65, and 7304.59.80.70 of the Harmonized Tariff Schedule of the United States (“HTSUS”).

Specifications, Characteristics, and Uses: Large diameter seamless pipe is used primarily for line applications such as oil, gas, or water pipeline, or utility distribution systems. Seamless pressure pipes are intended for the conveyance of water, steam, petrochemicals, chemicals, oil products, natural gas and other liquids and gasses in industrial piping systems. They may carry these substances at elevated pressures and temperatures and may be subject to the application of external heat. Seamless carbon steel pressure pipe meeting the ASTM A-106 standard may be used in temperatures of up to 1000 degrees Fahrenheit, at various American Society of Mechanical Engineers (“ASME”) code stress levels. Alloy pipes made to ASTM A-335 standard must be used if temperatures and stress levels exceed those allowed for ASTM A-106. Seamless pressure pipes sold in the United States are commonly produced to the ASTM A-106 standard.

Seamless standard pipes are most commonly produced to the ASTM A-53 specification and generally are not intended for high temperature service. They are intended for the low temperature and pressure conveyance of water, steam, natural gas, air and other liquids and gasses in plumbing and heating systems, air conditioning units, automatic sprinkler systems, and other related uses. Standard pipes (depending on type and code) may carry liquids at elevated temperatures but must not exceed relevant ASME code requirements. If exceptionally low temperature uses or conditions are anticipated, standard pipe may be manufactured to ASTM A-333 or ASTM A-334 specifications.

Seamless line pipes are intended for the conveyance of oil and natural gas or other fluids in pipe lines. Seamless line pipes are produced to the API 5L specification.

Seamless water well pipe (ASTM A-589) and seamless galvanized pipe for fire protection uses (ASTM A-795) are used for the conveyance of water.

Seamless pipes are commonly produced and certified to meet ASTM A-106, ASTM A-53, API 5L-B, and API 5L-X42 specifications. To avoid maintaining separate production runs and separate inventories, manufacturers typically triple or quadruple certify the pipes by meeting the metallurgical requirements and performing the required tests pursuant to the respective specifications. Since distributors sell the vast majority of this product, they can thereby maintain a single inventory to service all customers.

The primary application of ASTM A-106 pressure pipes and triple or quadruple certified pipes in large diameters is for use as oil and gas distribution lines for commercial applications. A more minor application for large diameter seamless pipes is for use in pressure piping systems by refineries, petrochemical plants, and chemical plants, as well as in power generation plants and in some oil field uses (on shore and off shore) such as for separator lines, gathering lines and metering runs. These applications constitute the majority of the market for the subject seamless pipes. However, ASTM A-106 pipes may be used in some boiler applications.

The scope of this review includes all seamless pipe meeting the physical parameters described above and produced to one of the specifications listed above, regardless of application, with the exception of the exclusions discussed below, whether or not also certified to a non-covered specification. Standard, line, and pressure applications and the above-listed specifications are defining characteristics of the scope of this investigation. Therefore, seamless pipes meeting the physical description above, but not produced to the ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-589, ASTM A-795, and API 5L specifications shall be covered if used in a standard, line, or pressure application, with the exception of the specific exclusions discussed below.

For example, there are certain other ASTM specifications of pipe which, because of overlapping characteristics, could potentially be used in ASTM A-106 applications. These specifications generally include ASTM A-161, ASTM A-192, ASTM A-210, ASTM A-252, ASTM A-501, ASTM A-523, ASTM A-524, and ASTM A-618. When such pipes are used in a standard, line, or pressure pipe application, such products are covered by the scope of this review.

Specifically excluded from the scope of this review are:

A. Boiler tubing and mechanical tubing, if such products are not produced to ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-589, ASTM A-795, and API 5L specifications and are not used in standard, line, or pressure pipe applications.

B. Finished and unfinished oil country tubular goods (“OCTG”), if covered by the scope of another antidumping duty order from the same country. If not covered by such an OCTG order, finished and unfinished OCTG are included in this scope when used in standard, line or pressure applications.

C. Products produced to the A-335 specification unless they are used in an application that would normally utilize ASTM A-53, ASTM A-106, ASTM A-333, ASTM A-334, ASTM A-589, ASTM A-795, and API 5L specifications.

D. Line and riser pipe for deepwater application, i.e., line and riser pipe that is (1) used in a deepwater application, which means for use in water depths of 1,500 feet or more; (2) intended for use in and is actually used for a specific deepwater project; (3) rated for a specified minimum yield strength of not less than 60,000 psi; and (4) not identified or certified through the use of a monogram, stencil, or otherwise marked with an API specification (e.g., “API 5L”).

With regard to the excluded products listed above, the Department will not instruct Customs to require end-use certification until such time as petitioner or other interested parties provide to the Department a reasonable basis to believe or suspect that the products are being utilized in a covered application. If such information is provided, the Department will require end-use certification only for the product(s) (or specification(s)) for which evidence is provided that such products are being used in a covered application as described above. For example, if, based on evidence provided by petitioner, the Department finds a reasonable basis to believe or suspect that seamless pipe produced to the A-335 specification is being used in an A-106 application, it will require end-use certifications for imports of that specification. Normally the Department will require only the importer of record to certify to the end-use of the imported merchandise. If it later proves necessary for adequate implementation, the Department may also require producers who export such products to the United States to provide such certification on invoices accompanying shipments to the United States.

Although the HTSUS subheadings are provided for convenience and U.S. Customs Service (“Customs”) purposes, the written description of the merchandise subject to this scope is dispositive.

Rescission of First Administrative Review

TAMSA submitted an October 4, 2001 letter certifying that neither TAMSA, nor its U.S. affiliate, Siderca Corp., entered for consumption, or sold, exported, or shipped for entry for consumption in the United States subject merchandise during the period of review (“POR”). See Memorandum from James Terpstra through Melissa Skinner to Holly A. Kuga, “Certain Large Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Mexico: Preliminary Notice of Intent to Rescind Administrative Review,” (Preliminary Rescission Memo) dated September 3, 2002, located in the case file in the Central Records Unit (“CRU”), main Commerce Building, room B-099. We conducted a shipment data query on SLP produced by TAMSA during the POR. To further confirm TAMSA's claim that it did not export subject merchandise to the United States during the POR, we requested entry documentation from Customs related to 14 entries. See Memorandum from Geoffrey Craig to Lee Kramer, dated October 10, 2001, in the CRU.

On January 17, 2002, we stated that based on our shipment data query and examination of entry documents, we should treat TAMSA as a non-shipper and, in accordance with section 351.213(d)(3) of the Department's regulations, rescind this review. See Memorandum from James Terpstra through Melissa Skinner to the File, “Certain Large Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Mexico: Rescission of First Administrative Review, dated January 17, 2002, on file in the CRU. We allowed parties to comment on our intent to rescind the review. Id. On January 28, 2002, petitioner submitted a letter objecting to the Department's intent to rescind because the Department did not disclose the documentation or methodology it used to reach its initial decision. Petitioner also asserted that the Department must investigate those entries of subject merchandise that fell within the exclusion clause of the scope (i.e., SLP used for deepwater applications) and demonstrate that those entries were, in fact, used in a deepwater application.

TAMSA responded in a February 1, 2002 letter stating that the Department need not require that exporters and U.S. importers prove the end use of the imported product. TAMSA cites the Department's final determination in the antidumping duty investigation, which states that “{T}he Department will not instruct Customs to require end-use certificates until such time as petitioner or other interested parties provide to the Department a reasonable basis to believe or suspect that the products are being utilized in a covered application.” Large Diameter Carbon and Alloy Seamless Standard, Line, and Pressure Pipe from Mexico, 65 FR 39358, 39359 (June 26, 2000)(Issues and Decision Memorandum, Scope of Investigation). TAMSA also noted that Customs is capable of making informed decisions in terms of evaluating whether an entry will indeed be used for deepwater applications.

On March 11, 2002, we asked TAMSA to elaborate and provide documentation on one of the 14 entries during the POR that we requested from Customs because the entry was subject to antidumping duties. Based on the fact that we were aware of at least one entry of subject merchandise, we issued a sales questionnaire to TAMSA on March 11, 2002.

On March 25, 2002, TAMSA placed on the record documentation related to this entry showing that the entry was for testing purposes. For further discussion, see the Preliminary Rescission Memo. Although TAMSA did not formally respond to the questionnaire, its March 25, 2002, letter essentially reiterated TAMSA's earlier statement that it did not have any shipments of subject merchandise because the sole entry of subject merchandise was for testing purposes and did not meet other criteria that would be necessary for the entry to be deemed a sale.

Consistent with the Court of Appeals for the Federal Circuit's decision in NSK Ltd. v. United States, 115 F.3d 965, 975 (Fed. Cir. 1997), we determine that TAMSA's sole entry does not constitute a “sale” for the purposes of our proceeding. With respect to the other 13 entries, we disagree with petitioner's contention that the burden is on the Department to prove that entries excluded from the order (e.g., SLP used for deepwater application) are used for that purpose. As stated in the scope, until petitioner presents evidence suggesting that entries are being used in a covered application, we will not require an end-use certificate. Petitioner has not provided any evidence to suggest that the entries are being used in a covered application. Thus, there were no sales of subject merchandise by TAMSA during the POR.

Further, we have satisfied petitioner's request that all documentation related to our analysis be placed on the record. On April 25, 2002, we asked TAMSA to place on the record the remaining 13 entry documents that were collected from Customs and analyzed by the Department. On April 29, 2002, TAMSA submitted the 13 entry documents. In comments submitted on May 29, 2002, petitioner argued that the documents did not sufficiently show that the entries were used in a deepwater application.

Based on our shipment data query and examination of entry documents, we are treating TAMSA as a non-shipper for the purpose of this review. Therefore, in accordance with section 351.213(d)(3) of the Department's regulations, and consistent with our practice, we preliminarily determine to rescind this review. See e.g., Stainless Steel Bar from India; Preliminary Results of Antidumping Duty Administrative Review and New Shipper Review, and Partial Rescission of Administrative Review, 65 FR 12209 (March 8, 2000); Persulfates From the People's Republic of China; Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission of Administrative Review, 65 FR 18963 (April 10, 2000).

An interested party may request a hearing within 30 days of publication of this preliminary notice. See 19 CFR 351.309. Any hearing, if requested, will be held 44 days after the date of publication, or the first working day thereafter. Interested parties may submit case briefs no later than 30 days after the date of publication of this preliminary notice. Rebuttal briefs, limited to issues raised in such briefs, may be filed no later than 37 days after the date of publication. Parties who submit arguments are requested to submit with the argument (1) a statement of the issue, (2) a brief summary of the argument and (3) a table of authorities. Further, parties submitting written comments should provide the Department with an additional copy of the public version of any such comments on diskette. The Department will issue the final notice, which will include the results of its analysis of issues raised in any such comments, or at a hearing, if requested, within 120 days of publication of this preliminary notice.

This notice is in accordance with section 751(a)(1) of the Act and section 351.213(d) of the Department's regulations.