71 FR 52770, September 7, 2006 DEPARTMENT OF COMMERCE International Trade Administration [C-427-810] Preliminary Results of Countervailing Duty Administrative Review: Corrosion-Resistant Carbon Steel Flat Products from France AGENCY: Import Administration, International Trade Administration, Department of Commerce. SUMMARY: The Department of Commerce (``the Department'') is conducting an administrative review of the countervailing duty (``CVD'') order on corrosion-resistant carbon steel flat products (``CORE'') from France for the period January 1, 2004, through December 31, 2004. We preliminarily find that the net subsidy rate for the company under review is de minimis. See the ``Preliminary Results of Review'' section of this notice, infra. Interested parties are invited to comment on these preliminary results. (See the ``Public Comment'' section, infra). EFFECTIVE DATE: September 7, 2006. FOR FURTHER INFORMATION CONTACT: Kristen Johnson, AD/CVD Operations, Office 3, Import Administration, International Trade Administration, U.S. Department of Commerce, 14\th\ Street and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-4793. SUPPLEMENTARY INFORMATION: Background On August 17, 1993, the Department published in the Federal Register the CVD order on CORE from France. See Countervailing Duty Order and Amendment to Final Affirmative Countervailing Duty Determination: Certain Steel Products from France, 58 FR 43759 (August 17, 1993). On August 1, 2005, the Department published a notice of opportunity to request an administrative review of this CVD order. See Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity to Request Administrative Review, 70 FR 44085 (August 1, 2005). On August 31, 2005, we received a timely request for review from Duferco Coating S.A. and Sorral S.A. (collectively, ``Duferco Sorral''), a French producer and exporter of subject merchandise, and from the United States Steel Corporation (``the petitioner''). On September 28, 2005, the Department initiated an administrative review of the CVD order on CORE from France, covering the period January 1, 2004, through December 31, 2004. See [[Page 52771]] Initiation of Antidumping and Countervailing Duty Administrative Reviews and Request for Revocation in Part, 70 FR 56631 (September 28, 2005). On October 4, 2005, the Department issued a questionnaire to Duferco Sorral, the Government of France (``the GOF''), and the European Commission (``the EC''); we received their respective questionnaire responses on December 7, 2005, and December 13, 2005. On April 27, June 14, June 21, July 13, July 17, and August 4, 2006, we issued supplemental questionnaires to Duferco Sorral, the GOF, and the EC. We received supplemental questionnaire responses from Duferco Sorral on May 25, July 7, July 26, and August 9, 2006; from the GOF on May 25, July 7, July 26, and August 18, 2006; and from the EC on May 22, June 27, and July 20, 2006. On April 17, 2006, the Department published in the Federal Register an extension of the deadline for the preliminary results. See Corrosion-Resistant Carbon Steel Flat Products from France and the Republic of Korea: Extension of Time Limit for Preliminary Results of Countervailing Duty Administrative Reviews, 71 FR 19714 (April 17, 2006). In accordance with 19 CFR 351.213(b), this review covers only those producers or exporters of the subject merchandise for which a review was specifically requested. The only company subject to this review is Duferco Sorral. This review covers 18 programs. Scope of the Order This order covers cold-rolled (``cold-reduced'') carbon steel flat- rolled carbon steel products, of rectangular shape, either clad, plated, or coated with corrosion-resistant metals such as zinc, aluminum, or zinc-, aluminum-, nickel- or iron-based alloys, whether or not corrugated or painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating, in coils (whether or not in successively superimposed layers) and of a width of 0.5 inch or greater, or in straight lengths which, if of a thickness less than 4.75 millimeters, are of a width of 0.5 inch or greater and which measures at least 10 times the thickness or if of a thickness of 4.75 millimeters or more are of a width which exceeds 150 millimeters and measures at least twice the thickness, as currently classifiable in the Harmonized Tariff Schedule of the United States (``HTSUS'') under item numbers 7210.30.0030, 7210.30.0060, 7210.41.0000, 7210.49.0030, 7210.49.0090, 7210.61.0000, 7210.69.0000, 7210.70.6030, 7210.70.6060, 7210.70.6090, 7210.90.1000, 7210.90.6000, 7210.90.9000, 7212.20.0000, 7212.30.1030, 7212.30.1090, 7212.30.3000, 7212.30.5000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 7212.60.0000, 7215.90.1000, 7215.90.3000, 7215.90.5000, 7217.20.1500, 7217.30.1530, 7217.30.1560, 7217.90.1000, 7217.90.5030, 7217.90.5060, 7217.90.5090. Included in this order are corrosion-resistant flat-rolled products of non-rectangular cross-section where such cross-section is achieved subsequent to the rolling process (i.e., products which have been ``worked after rolling'') for example, products which have been beveled or rounded at the edges. Excluded from this order are flat-rolled steel products either plated or coated with tin, lead, chromium, chromium oxides, both tin and lead (``terne plate''), or both chromium and chromium oxides (``tin-free steel''), whether or not painted, varnished or coated with plastics or other nonmetallic substances in addition to the metallic coating. Also excluded from this order are clad products in straight lengths of 0.1875 inch or more in composite thickness and of a width which exceeds 150 millimeters and measures at least twice the thickness. Also excluded from this order are certain clad stainless flat-rolled products, which are three-layered corrosion-resistant carbon steel flat-rolled products less than 4.75 millimeters in composite thickness that consist of a carbon steel flat-rolled product clad on both sides with stainless steel in a 20[percnt]-60[percnt]- 20[percnt] ratio. These HTSUS item numbers are provided for convenience and customs purposes. The written descriptions remain dispositive. Period of Review The period for which we are measuring subsidies is January 1, 2004, through December 31, 2004. Background and Methodology Information I. Background A. Company History Duferco Sorral\1\ is wholly owned by Duferco Belgium S.A. (``Duferco Belgium''), a Belgian holding company which is part of the Duferco Group, a Swiss conglomerate. Duferco Sorral is affiliated with Duferco S.A., a Swiss corporation that buys and sells steel products of the Duferco Group, including Duferco Sorral. For sales of CORE to the United States during the POR, Duferco Sorral sold the subject merchandise to Duferco S.A., which then resold the products to Duferco Steel, Inc., an affiliated U.S. sales company. --------------------------------------------------------------------------- \1\ Duferco is located in the Picardie region, which is the northern part of France. Sorral is located in the Alsace region, which is on the eastern border of France. There are 26 regions in France. --------------------------------------------------------------------------- Duferco Belgium purchased Duferco (formerly known as Beautor S.A. (``Beautor''))\2\ and Sorral from Arcelor S.A. in 2003. Arcelor was created through the merger of the French company Usinor S.A. (``Usinor'')\3\ with the Luxembourg company Arbed S.A. and the Spanish company Aceralia Corporacion Siderurgica S.A. The merger became effective in February 2002, upon approval of the EC. As a condition for the merger, the EC required the divestiture of certain holdings, including Usinor's cold-rolling and electro-galvanizing facilities in Beautor, France (i.e., Beautor) and the hot-dipped galvanized and organic coating facilities in Strasbourg, France (i.e., Sorral).\4\ The purpose of the divestiture was to ensure that Usinor/Arcelor no longer controlled the facilities and could not hinder competition in the steel industry. According to the EC's instructions, the purchaser of Beautor and Sorral was to be a viable existing or potential competitor, independent of the parties, and having the incentive to maintain and develop the divested businesses as active competitive forces in competition with the seller.\5\ Arcelor proposed Duferco Belgium as a suitable purchaser for Beautor and Sorral. In February 2003, the EC approved the private-to-private sale between Arcelor and Duferco Belgium. --------------------------------------------------------------------------- \2\ Beautor S.A. was transformed into Duferco Coating S.A. on March 31, 2004, by the shareholders. This transformation was retroactive to October 1, 2003, the opening day of the company's fiscal year. \3\ Usinor, a formerly government-owned entity, was the only company reviewed in the underlying investigation. See Final Affirmative Countervailing Duty Determinations: Certain Steel Products from France, 58 FR 37304 (July 9, 1993). Usinor was later privatized between 1995 and 1997. See Issues and Decision Memorandum for the Section 129 Determination: Corrosion-Resistant Carbon Steel Flat Products from France; Final Results of Expedited Sunset Review of Countervailing Duty Order, dated October 24, 2003. \4\ See ``Non-Confidential Version of the Commitments to the European Commission: Case No. COMP/ECSC 1351 - Aceralia/Arbed/ Usinor,'' at 1-2, contained within the June 27, 2006, Memorandum to the File concerning the Placement of Public Documents on the Record of the Review. This public document is available on the public record in the Central Records Unit (``CRU''), located in the main Commerce Building in room B-099. \5\ Id. at 4-5. --------------------------------------------------------------------------- B. Change-in-Ownership [[Page 52772]] As explained in the ``Company History'' section above, Duferco Belgium purchased Beautor and Sorral, previously Usinor facilities, from Arcelor. The Department has previously determined that Usinor received countervailable subsidies. See Issues and Decision Memorandum for the Section 129 Determination: Corrosion-Resistant Carbon Steel Flat Products from France; Final Results of Expedited Sunset Review of Countervailing Duty Order, dated October 24, 2003. In this review, Duferco Sorral reported that Beautor received subsidies over a 15-year Average Useful Life (``AUL''). For purposes of these preliminarily results, we find that the benefits from any allocable, non-recurring, pre-sale subsidies to Beautor and Sorral from the GOF and the EC are fully extinguished prior to the POR. Therefore, as this change in ownership could have no impact on any countervailable subsidy benefits in the POR, we are not making any findings in this review as to the nature or terms of this sale. II. Subsidies Valuation Information A. Allocation Period Under 19 CFR 351.524(b), non-recurring subsidies are allocated over a period corresponding to the AUL of the renewable physical assets used to produce the subject merchandise. Pursuant to 19 CFR 351.524(d)(2), there is a rebuttable presumption that the AUL will be taken from the U.S. Internal Revenue Service's 1977 Class Life Asset Depreciation Range System (``IRS Tables''), as updated by the Department of Treasury. For the subject merchandise, the IRS Tables prescribe an AUL of 15 years. No interested party has claimed that the AUL of 15 years is unreasonable. Further, for non-recurring subsidies, we have applied the ``0.5 percent expense test'' described in 19 CFR 351.524(b)(2). Under this test, we compare the amount of subsidies approved under a given program in a particular year to sales (total sales or total export sales, as appropriate) for the same year. If the amount of subsidies is less than 0.5 percent of the relevant sales, then the benefits are allocated to the year of receipt rather than allocated over the AUL period. Analysis of Programs I. Program Preliminarily Determined Not To Confer Countervailable Benefits During the POR A. European Regional Development Fund The European Regional Development Fund (``ERDF'') was created pursuant to the authority in Article 130 of the Treaty of Rome to reduce regional disparities in socio-economic performance within the European Community. The ERDF program provides grants to companies located within regions that meet the criteria of Objective 1 (underdeveloped regions), Objective 2 (declining industrial regions), or Objective 5(b) (declining agricultural regions). Duferco Sorral reported that Beautor was approved for an ERDF grant under Objective 2 in 1998 and 1999.\6\ --------------------------------------------------------------------------- \6\ See Duferco Sorral's December 7, 2005, questionnaire response at 12. See also the GOF's December 7, 2005, questionnaire response at ``European Development Regional Fund'' section. --------------------------------------------------------------------------- In the Pasta from Italy Investigation, the Department determined that ERDF grants constitute a countervailable subsidy within the meaning of section 771(5) of the Tariff Act of 1930, as amended (``the Act''). See Final Affirmative Countervailing Duty Determination: Certain Pasta from Italy, 61 FR 30288, 30294 (June 14, 1996) (``Pasta from Italy Investigation''); see also Certain Pasta from Italy: Final Results of the Seventh Countervailing Duty Administrative Review, 69 FR 70657 (December 7, 2004) (``Pasta from Italy 7\th\ Review''), and accompanying Issues and Decision Memorandum at ``European Regional Development Fund Grants'' within ``Programs Determined to Confer Subsidies During the POR'' section. Specifically, the Department determined that the ERDF grants are a direct transfer of funds from the government bestowing a benefit in the amount of the grant within the meaning of section 771(5)(D)(i) of the Act. The ERDF grants were also found to be regionally specific within the meaning of section 771(5A)(D)(iv) of the Act. In the Pasta from Italy Investigation, we determined that the ERDF grants are non-recurring benefits. In this review, no new information was provided on this program that would warrant reconsideration of our determination that these grants confer a countervailable subsidy or cause us to depart from treating the grants as non-recurring. Therefore, consistent with the Pasta from Italy Investigation and Pasty from Italy 7\th\ Review, we are treating Beautor's ERDF grants as non-recurring. In accordance with 19 CFR 351.524(b)(2), we have applied the ``0.5 percent expense test.''\7\ The calculations demonstrate that the total amount approved for each grant is less than 0.5 percent of Beautor's relevant sales (i.e., total sales) for the respective year in which each grant was approved. Because the amount of subsidies is less than 0.5 percent of the relevant sales, we have expensed the benefit from each ERDF grant in the year of receipt rather than allocate the benefits over the AUL period. See the August 31, 2006, Memorandum to the File concerning the Preliminary Calculations for the 2004 Administrative Review of Corrosion-Resistant Carbon Steel Flat Products from France.\8\ Therefore, no benefit from the ERDF grants was conferred to Duferco Sorral during the POR. --------------------------------------------------------------------------- \7\ For more information, see ``Allocation Period,'' supra. \8\ A public version of the document is available on the public record in the CRU. --------------------------------------------------------------------------- II. Programs Preliminarily Determined Not To Be Countervailable A. Worker Training Contracts\9\ --------------------------------------------------------------------------- \9\ In prior cases, the Department found Worker Training Contracts not to be countervailable. See Final Affirmative Countervailing Duty Determination: Stainless Steel Sheet and Strip in Coils from France, 64 FR 30774, 30782 (June 8, 1999) (``Sheet and Strip from France'') at ``Work/Training Contracts.'' See also Final Affirmative Countervailing Duty Determination: Certain Cut-to-Length Carbon-Quality Steel Plate from France, 64 FR 73277, 73282 (``CTL France'') at ``Investment/Operating Subsidies.'' If a program is determined to be non-countervailable in a previous proceeding, the Department will not normally reconsider such a determination in future proceedings absent evidence potentially contradicting that determination. We preliminarily find that there is no information on the record of the instant case, including this segment of the proceeding, that warrants a change to our earlier finding that this program is not specific and, therefore, not countervailable. --------------------------------------------------------------------------- B. Seine-Normandy Water Agency Assistance The Seine-Normandy Water Agency (``SNWA''), a public institution with financial autonomy,\10\ is administered jointly by the Ministries of the Environment and Finance.\11\ The mission of SNWA, one of six water agencies in France, is to reduce and prevent pollution of the Seine River. To that end, SNWA provides financial assistance in the form of grants and loans to companies located along the Seine for projects dedicated to protecting, increasing, and improving the water resources, attaining quality requirements, and protecting against flooding (collectively referred hereto as ``pollution prevention program'').\12\ Pursuant to Article 14 and Article 14-1 of the Water Law of 1964, all polluting [[Page 52773]] companies having plants located in the basin of the Seine River, regardless of their sector of activity, have the legal obligation to enter into the SNWA consortium and fund its activities through the payment of levies.\13\ Article 14-1 establishes that the levies are proportional to the quantity of polluting waste the company is likely to produce during the production cycle. Companies which are in arrears are ineligible to receive assistance for pollution reduction projects. Duferco Sorral reported that Beautor received grants and long-term loans from SNWA over a 15-year AUL, and that Duferco Sorral itself received a grant in 2004. --------------------------------------------------------------------------- \10\ See Article L-213-5 of the Environment Code at Annex 1 contained in the GOF's May 25, 2006, questionnaire response. \11\ See Chapter 19 entitled ``Seine-Normandy Basin, France'' of UNESCO's study ``The 1\st\ World Water Development Report: Water for People, Water for Life,'' at footnote 17 on page 438, which is contained within the June 27, 2006, Memorandum to the File concerning ``Placement of Public Documents on the Record of the Review.'' \12\ See the GOF's July 7, 2006, questionnaire response at Annex 2. \13\ See the GOF's May 25, 2006, questionnaire response at Annex 1 for Article 14 and 14-1. --------------------------------------------------------------------------- We analyzed whether the benefits provided by SNWA's pollution prevention program are specific ``in law or fact'' within the meaning of section 771(5A) of the Act. We preliminarily determine that, under section 771(5A)(D)(ii) of the Act, the program is not de jure specific according to the criteria for determining which companies are eligible for benefits. These criteria are set forth in the Water Act of 1964 and companion legislation. We next examined whether the pollution prevention assistance distributed by SNWA is de facto specific. Pursuant to section 771(5A)(D)(iii) of the Act, a subsidy is de facto specific if one or more of the following factors exists: (1) the number of enterprises, industries, or groups which use a subsidy is limited; (2) there is predominant use of a subsidy by an enterprise, industry, or group; (3) an enterprise, industry, or group receives a disproportionately large amount of the subsidy; or (4) the manner in which the authority providing a subsidy has exercised discretion indicates that an enterprise, industry, or group is favored over others. For the Picardie region,\14\ where Beautor/Duferco is located, the GOF reported the number of companies which received assistance from SNWA for the years 2001, 2002, 2003, and 2004. With the exception of 2003, in which 47 companies received assistance, 60 companies or more were recipients of assistance provided by SNWA in each of the other years.\15\ The GOF also reported that no applicant was rejected. The amount of assistance provided to the steel industry ranged from a high of 8.5 percent in 2001 to a low of 0.4 percent in 2003.\16\ During the POR, steel companies received assistance of [euro] 69,000 for surface treatment, which was approximately 2.0 percent of the assistance provided by SNWA to companies in the Picardie region.\17\ For 2004, the industrial groups located in the eight regions that compose SNWA's territory received pollution assistance totaling [euro] 48.6 million, of which [euro] 25.8 million was loans and [euro] 22.8 million was grants.\18\ Economic activity along the Seine River is diverse, consisting of the agro-food, automobile, chemical, metallurgy, oil refining, and paper industries in addition to farming and wine- production.\19\ --------------------------------------------------------------------------- \14\ Picardie is one of the 26 regions of France and one of the eight regions in SNWA's territory. \15\ See the GOF's July 26, 2006, questionnaire response at ``Assistance provided by the Seine-Normandy Water Agency'' section. \16\ See the GOF's July 26, 2006, questionnaire response for 2001 at Annex 1, and July 7, 2006, questionnaire response for 2004 at Annex 1. \17\ See the GOF's May 25, 2006, questionnaire response ``Assistance provided by the Seine-Normandy Water Agency'' section and Annex 2. \18\ See August 10, 2006, Memorandum to the File concerning ``Placement of Public Documents on the Record of the Review - Seine- Normandy Water Agency's Annual Report.'' \19\ See Chapter 19 entitled ``Seine-Normandy Basin, France'' of UNESCO's study ``The 1\st\ World Water Development Report: Water for People, Water for Life,'' at page 432, which is contained within the June 27, 2006, Memorandum to the File concerning ''Placement of Public Documents on the Record of the Review.'' --------------------------------------------------------------------------- On this basis of these facts, we preliminarily find that the pollution prevention program is not limited based on the number of users nor is Duferco Sorral or the steel industry a predominant or disproportionate recipient of the total funding. Accordingly, we preliminarily determine that this program is not specific and, therefore, we do not reach the issue of whether there is a financial contribution or benefit. Therefore, this program does not confer countervailable subsidies within the meaning of section 771(5) of the Act.\20\ --------------------------------------------------------------------------- \20\ Even if we were preliminarily to determine that the program was specific for years prior to 2001, the grants which Beautor received would have been expensed in the year of receipt with no benefits allocable to the POR and the benefit provided by the long- term loans is less than 0.005 percent of Duferco Sorral's total sales for the POR. --------------------------------------------------------------------------- III. Programs Preliminarily Determined Not To Be Used We preliminarily determine that Duferco Sorral did not apply for or receive benefits under these programs during the POR: A. Investment Subsidies B. Long-Term Loans from Fonds de Developpement Economique et Social and Caisse Francaise de Developpement Industriel C. Assistance from Delegation a l'Amenagement du Territoire et a l'Action Regionale D. Financing from the Caisse des Depots et Consignations E. Preferential Loans from Local Economic (Regional) Development Agencies F. Regional Development Incentives G. European Coal and Steel Community Article 54 Loans H. European Social Fund I. ECSC Article 56 Conversion Loans, Interest Rebates, and Restructuring Grants J. Export Financing K. Grants from the River Dock Agency L. Loans from the Ministry of Research & Industry M. New Community Investment Loans N. Tax Subsidies under Article 39 O. Youthstart. Preliminary Results of Review In accordance with 19 CFR 351.221(b)(4)(i), we have calculated a subsidy rate for Duferco Sorral for calendar year 2004. We preliminarily determine that the net countervailable subsidy rate is 0.00 percent ad valorem. If the final results of this review remain the same as these preliminary results, the Department intends to instruct U.S. Customs and Border Protection (``CBP'') within 15 days of publication of the final results of this review, to liquidate without regard to countervailing duties all shipments of subject merchandise produced by Duferco Sorral entered, or withdrawn from warehouse, for consumption from January 1, 2004, through December 31, 2004. The Department will also instruct CBP not to collect cash deposits of estimated countervailing duties on all shipments of the subject merchandise produced by Duferco Sorral, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review. We will also instruct CBP to continue to collect cash deposits for non-reviewed companies at the most recent company-specific or country- wide rate applicable to the company. Accordingly, the cash deposit rates that will be applied to non-reviewed companies covered by this order are those established in the most recently completed administrative proceeding. See Certain Steel Products from France: Notice of Final Court Decision and Amended Final Determination of Countervailing Duty Investigation, 64 FR 67561 (December 2, 1999). These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested. [[Page 52774]] Public Comment Pursuant to 19 CFR 351.224(b), the Department will disclose to parties to the proceeding any calculations performed in connection with these preliminary results within five days after the date of the public announcement of this notice. Pursuant to 19 CFR 351.309, interested parties may submit written comments in response to these preliminary results. Unless otherwise indicated by the Department, case briefs must be submitted within 30 days after the date of publication of this notice. Rebuttal briefs, limited to arguments raised in case briefs, must be submitted no later than five days after the time limit for filing case briefs, unless otherwise specified by the Department. Parties who submit argument in this proceeding are requested to submit with the argument: (1) a statement of the issues, and (2) a brief summary of the argument. Parties submitting case and/or rebuttal briefs are requested to provide to the Department copies of the public version on disk. Case and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 351.310, within 30 days of the date of publication of this notice, interested parties may request a public hearing on arguments to be raised in the case and rebuttal briefs. Unless the Secretary specifies otherwise, the hearing, if requested, will be held two days after the date for submission of rebuttal briefs, that is, 37 days after the date of publication of these preliminary results. Representatives of parties to the proceeding may request disclosure of proprietary information under administrative protective order no later than 10 days after the representative's client or employer becomes a party to the proceeding, but in no event later than the date the case briefs, under 19 CFR 351.309(c)(ii), are due. See 19 CFR 351.305(b)(3). The Department will publish the final results of this administrative review, including the results of its analysis of arguments made in any case or rebuttal briefs. This administrative review is issued and published in accordance with section 751(a)(1) and 777(i)(1) of the Act. Dated: August 31, 2006. David M. Spooner, Assistant Secretary for Import Administration. [FR Doc. E6-14847 Filed 9-6-06; 8:45 am] BILLING CODE 3510-DS-S