A-505-801, C-505-802
A-201-825, C-201-826
A-517-802, C-517-803
A-307-817, C-307-818
Proprietary Document
Public Version

ADMINISTRATIVE DETERMINATION PURSUANT TO COURT INSTRUCTIONS:
ANTIDUMPING AND COUNTERVAILING DUTY PETITIONS ON
CERTAIN CRUDE PETROLEUM OIL PRODUCTS
FROM IRAQ, MEXICO, SAUDI ARABIA, AND VENEZUELA

Save Domestic Oil, Inc. v. United States
Consol. Court No. 99-09-00558, Slip Op. 00-120 (Sept. 19, 2000)

SUMMARY

The Department of Commerce ("Commerce") has prepared this administrative determination pursuant to the U.S. Court of International Trade's ("Court") instructions in Save Domestic Oil, Inc., v. United States, Slip Op. 00-120 (September 19, 2000) ("SDO"). This determination pertains to Commerce's industry-support analysis of antidumping ("AD") and countervailing duty ("CVD") petitions on certain crude petroleum oil products ("crude oil") from Iraq, Mexico, Saudi Arabia, and Venezuela. Commerce dismissed these petitions on August 9, 1999. Dismissal of Antidumping and Countervailing Duty Petitions: Certain Crude Petroleum Oil Products From Iraq, Mexico, Saudi Arabia, and Venezuela, 64 Fed. Reg. 44480 (Aug. 16, 1999) ("Dismissal Determinations"). In accordance with the Court's instructions, we have reconsidered various issues relating to our original decision to dismiss the petitions.

Pursuant to that reconsideration, we have found that the petitions filed by Save Domestic Oil, Inc. ("the petitioner"), lack the industry support necessary for us to initiate antidumping and countervailing duty investigations.

BACKGROUND

Following the Dismissal Determinations, the petitioner filed suit, requesting that the Court address, inter alia, four issues:

(1) whether Commerce properly included the views of domestic producers that opposed the petitions but were alleged to be related to foreign producers;

(2) whether Commerce properly included the views of domestic producers opposed to the petitions but which also imported subject merchandise;

(3) whether Commerce properly disregarded the views of the Independent Petroleum Association of America ("IPAA") when IPAA did not demonstrate that it was an interested party in this case; and

(4) whether Commerce took adequate steps to assess the views of labor.

On September 19, 2000, the Court issued a ruling in SDO. Regarding the views of producers related to foreign producers, the Court ruled that, as a matter of law, where domestic producers opposed to the petition are alleged to be related to foreign producers, Commerce must establish controlling relationships before it can assess whether those producers have demonstrated that their interests as domestic producers would be adversely affected by the imposition of AD and CVD orders. (1) Based on its review of the record, the Court ruled that no such controlling relationships were established and that, therefore, application of the "adverse effects" test was inappropriate. (2)

With respect to treatment of the opposing views of domestic producers who are importers, the Court held that Commerce's "adverse effects" findings were not relevant to its assessment of importing producers. (3) In the Court's view, Commerce was required to analyze whether these importing domestic producers have a "common stake" as domestic producers. Commerce's failure to do so without considering each firm's level of imports and resulting dependancy, the Court concluded, was an abuse of discretion. (4) Additionally, according to the Court, to the extent that this company-specific reassessment reveals that "lease condensate" is included in the opposing domestic producers' production, Commerce may need to reach a determination as to whether "lease condensate" is included in the domestic like product. (5)

Regarding Commerce's decision that IPAA did not demonstrate its interested-party status, the Court held that, while Commerce "properly required IPAA to prove the necessary connection to the regional domestic like product, . . . {IPAA} may still be able to establish on remand that its members are regional producers." (6) Finally, with respect to Commerce's treatment of the views of labor, the Court concluded that the agency inappropriately did not account for the views of Paper, Allied-Industrial, Chemical & Energy Workers International Union, AFL-CIO, CLC ("PACE"), which represents crude-oil production workers in the domestic industry. (7)

The Court "remanded to Commerce for contemplation of commencement of a preliminary investigation by its ITA (and referral for such an investigation by the {International Trade Commission ("ITC")}) in accordance with law. . . . " (8) However, if Commerce determined not to initiate the requested investigations (and refer the matters to the ITC), the Court instructed that written reasons be filed within 60 days. (9) This administrative determination provides Commerce's reasoning with respect to each of the issues identified in the SDO decision.

With the exception of the issue involving the industry-support position of PACE, Commerce has relied upon the existing record evidence or other sources readily available to it in accordance with section 732(c)(1)(A)(i) of the Tariff Act of 1930, as amended ("the Act"). We determined that obtaining additional information from interested parties would not be necessary in order for us to make our determination and, in fact, that the submission of such information would result in further comments that would constrain our ability to address the Court's concerns within the time allotted by the Court. For these reasons, we returned any unsolicited information or comment we received to the submitting party. (10)

On November 16, 2000, Commerce appealed SDO to the United States Court of Appeals for the Federal Circuit. The Federal Circuit subsequently ruled that the SDO decision did not meet the finality requirement necessary for appeal and dismissed the appeal. Save Domestic Oil, Inc. v. United States, No. 01-1091, slip op. At 3 (July 31, 2001).

REMAND RESULTS

I. INTERESTED-PARTY STATUS OF IPAA

Background

IPAA is an association that expressed support for the petitions during the original pre-initiation examination of industry support. When we dismissed the petitions originally, we disregarded the support of IPAA because IPAA had not demonstrated that a majority of its members were producers of crude oil in the region. The Court found that we applied the correct legal standard, but it remanded the issue, stating that IPAA "may still be able to establish on remand that its members are regional producers." (11)

Remand Results

The statute defines an "interested party" as including "a trade or business association a majority of whose members manufacture, produce, or wholesale a domestic like product in the United States . . . ." (12) Because the petitioner requested relief on behalf of a regional domestic industry, only an association for which a majority of its members are regional producers may qualify as an interested party. To satisfy this requirement, no less than 50 percent of the association's members must qualify as interested parties, i.e., regional crude-oil producers.

Upon reviewing the information on the record, we found that we had sufficient data with which to analyze fully whether IPAA qualifies to speak as an interested party. This data includes a national listing provided by IPAA of all of IPAA's members that were producers of crude oil, regardless of location, the total number of members (including both oil- producing and non-oil-producing companies or individuals) of IPAA, and a list of all regional producers from the Energy Information Administration ("EIA"). By comparing the list of IPAA's members identified as crude-oil producers to EIA's list of regional producers, we were able to identify which of IPAA's members were producers in the region. Using this methodology, we determined that substantially less than 50 percent of IPAA's members are regional producers. Therefore, IPAA does not qualify as an interested party and, consequently, we have not counted the support of its members, except in cases where an individual member that produced crude oil in the region either expressed an opinion on its own behalf or belonged to another association that qualified as an interested party. For a complete description of our analysis, see Memorandum from Oil Team to Richard W. Moreland, "Crude Oil from Four Countries - Counting the Support of an Association," dated August 7, 2001.

II. ACCOUNTING FOR THE VIEWS OF LABOR

Background

In its original industry-support determination, Commerce did not account for the position of PACE in establishing the level of industry support. Specifically, on July 29, 1999, during the time period over which we conducted the original pre-initiation examination of industry support, we received a letter from PACE that expressed support for the petitions. (13) On August 9, 1999, Commerce determined that PACE was an interested party with respect to only those companies whose workers PACE represents that were involved in crude-oil production within the region. Because PACE was unable to provide production data for the specific facilities at which it represents workers engaged in the production of crude oil and because we could not obtain the necessary production data from the companies themselves due to statutory time constraints, we had no way of accounting for PACE's support in our industry-support determination.

The Court, after noting that Commerce did not account for PACE's expression of support for the petitions at the six production companies because "their chosen union representative failed to provide requested information," held that, in light of the applicable law and "the clear intent of Congress in enacting URAA, . . . it was not in accordance with law for the agency to have failed to account at all for the views of labor in this case." (14)

Remand Results

As instructed by the Court, Commerce has reexamined the views of PACE in making the industry-support determination. For a complete description of our analysis, see Memorandum from Oil Team to Richard W. Moreland, "Remand on Dismissal of Petitions for the Imposition of Antidumping and Countervailing Duties on Crude Oil from Iraq, Mexico, Saudi Arabia, and Venezuela - Counting the Support of Labor," dated August 7, 2001 ("Labor Memorandum").

PACE is the principal labor union in the U.S. oil industry. (15) There is no record evidence of any other union in the crude-oil industry, and PACE was the only union or group of workers to express a position in support of or in opposition to the petitions, i.e., no other unions, employee organizations, or ad hoc groups of workers came forward and submitted their views of the petitions. Accordingly, for purposes of accounting for the views of labor with respect to the petitions, our focus was solely on companies identified by PACE as employing members of its union. To do so, on October 16, 2000, Commerce requested from the six regional crude-oil production companies the necessary production information related to the facilities of those companies allegedly employing PACE members. (16) We received responses from all but one of the companies between October 16 and October 31, 2000. (17)

Given the information on the record, we now have sufficient data with which to account for PACE's support of the petitions. For the companies identified by PACE that expressed no position in support of or opposition to the petitions, we need not make any change to our calculations because we have already included the production of such a company in support of the petitions as a consequence of our survey methodology. (18) For companies employing PACE union members that expressed opposition to the petitions (or whose production was included as part of another company's opposition to the petitions), in accordance with section 351.203(e)(3) of Commerce's regulations and the Statement of Administrative Action ("SAA"), (19) we have neutralized the production of those facilities.

III. LEASE CONDENSATE

Background

In the Dismissal Determinations, we determined that it was not necessary to decide whether lease condensate was included in the scope of the petitions or the domestic like product because the petitioner did not have the requisite industry support regardless of how we resolved the issue. (20) In SDO, the Court indicated that the issue of lease condensate may need to be resolved, explaining that, if lease condensate is not included in the petitioner's domestic product but Commerce determines that lease condensate is part of the API Ad Hoc Free Trade Committee's ("the Committee's") (21) domestic product, then Commerce may need to discount that part of the total domestic production data attributable to the Committee in opposition to the petitions. (22)

Remand Results

Crude oil is a mixture of liquid hydrocarbons of varying degrees of complexity. Lease condensate is a mixture of hydrocarbons that are gaseous in a natural underground reservoir but condense into a liquid at atmospheric pressures. It is often commingled with crude oil prior to being sold to a refinery as crude oil.

In addressing the Court's concerns regarding whether the Committee's production data should be discounted, we first need to determine whether lease condensate is a domestic like product. Section 771(10) of the Act defines the domestic like product as "the product which is like, or in the absence of like, most similar in characteristics and uses with, the article subject to" the investigation. Therefore, in determining whether lease condensate is a domestic like product, we first need to determine whether it is included in the subject merchandise. For a complete description of our analysis regarding lease condensate, see Memorandum from Oil Team to Richard W. Moreland, "Lease Condensate," dated August 7, 2001 ("Lease Condensate Memorandum").

The scope, as stated by the petitioner in this case, covers all crude petroleum oils and oils obtained from bituminous minerals testing at, above or below 25 degrees A.P.I., as defined in the 1999 HTS, subheadings 2709.00.10 and 2709.00.20. (23) Therefore, the subject merchandise as identified in the petitions is crude oil.

During the pre-initiation phase of the investigation, we questioned the petitioner about its basis for claiming that lease condensate should not be considered crude oil as defined by the scope language in the petitions. In response, the petitioner argued that lease condensate has a different range of API gravities from crude oil and that lease condensate does not have a "full range" of hydrocarbons as does crude oil. However, nothing in the petitioner's scope language, as it exists, explicitly excludes lease condensate nor did the petitioner ever revise its proposed scope language so as to exclude lease condensate.

In this remand, we have considered further whether the scope of the petitions includes lease condensate. As a practical matter, lease condensate is often commingled with crude oil without being distinguished or distinguishable. The petitioner itself recognized that lease condensate is commingled with crude oil and industry publications confirm that lease condensate is commonly commingled with crude oil.

Further, lease condensate that is commingled with crude oil enters the United States as crude oil under either HTS 2709.00.10 or 2709.00.20, depending on the overall API gravity of the commingled product. The United States Customs Service does not attempt to separately measure that part of the commingled crude oil that is lease condensate. Notwithstanding the petitioner's claim that lease condensate is a different product than crude oil, we find that it is not possible to separately identify crude oil and lease condensate entering under the HTS numbers stated in the scope of the petitions. As a result, any attempt to exclude lease condensate from the scope of the petitions would be unadministrable.

Further, based on our review of numerous definitions of crude oil, we find that the EIA definition, which includes lease condensate, is widely accepted and consistent with the oil industry's expectations. The EIA defines crude oil as follows:

Crude Oil (Including Lease Condensate). A mixture of hydrocarbons that exists in liquid phase in underground reservoirs and remains liquid at atmospheric pressure after passing through surface-separating facilities. Included are lease condensate and liquid hydrocarbons produced from tar sands, gilsonite, and oil shale. Drip gases are also included, but topped crude oil (residual oil) and other unfinished oils are excluded. Liquids produced at natural gas processing plants and mixed with crude oil are likewise excluded where identifiable. Crude oil is considered as either domestic or foreign, according to the following:

Domestic. Crude oil produced in the United States or from its "outer continental shelf" as defined in 43 USC 1331.

Foreign. Crude oil produced outside the United States. Imported Athabasca hydrocarbons (tar sands from Canada) are included. (24)

Thus, it is clear that a basic industry definition of crude oil includes lease condensate. Considering this and the fact that lease condensate is commingled with crude oil when entering under the HTS numbers stated in the scope language of the petition, we find that excluding lease condensate from the scope would be unadministrable and, as a result, unreasonable. Therefore, we find that lease condensate is included in the scope of the petitions and the subject merchandise.

Turning to the issue of whether lease condensate is a domestic like product, we find that a product that is included in the subject merchandise is clearly within the domestic like product. There has been no argument that lease condensate produced in the domestic market is not "like" the lease condensate produced in a foreign market. Moreover, the petitioner has provided no legal basis or argument, other than simple assertion, to justify excluding lease condensate from the domestic like product. Therefore, we find that lease condensate is a domestic like product.

Assuming arguendo that lease condensate were not included in the subject merchandise, we would still find that it is a part of the domestic like product based on a like-product analysis. The petitioner has argued that Commerce should not include lease condensate in the domestic like product because, in light of the different hydrocarbon compounds found in lease condensate as opposed to crude oil, lease condensate can only be refined into a limited range of products. The Committee and two foreign exporters have argued that lease condensate is very similar to light crude oil in terms of physical characteristics and uses and that lease condensate, when commingled, becomes indistinguishable from other crude oil.

Lease condensate has no use except as it is refined into end- products. We agree with the petitioner that lease condensate can only be refined into a limited range of end-products, however, the range of end-products cannot determine whether the input crudes are separate domestic like products. Otherwise, crude oil would be divided into numerous domestic like products depending on the end products produced. Thus, we find that the petitioner's arguments are not persuasive.

In performing the like-product analysis, Commerce has relied upon the ITC's like-product criteria. The ITC examines the following criteria to determine the like product: 1) physical characteristics and uses; 2) interchangeability; 3) channels of distribution; 4) common manufacturing facilities; 5) customer or producer perceptions; and, where appropriate, 6) price.

As a result of the like-product analysis, we find that lease condensate is a domestic like product regardless of whether it is included in the subject merchandise. (25) First, there is no clear dividing line between crude oil and lease condensate. Instead, we find that crude oil is a spectrum, with gravities of crude oil at different points on the spectrum having different mixes of hydrocarbon compounds. Lease condensate is merely at the lighter end of this spectrum.

Second, lease condensate is used in the production of many of the same end-products as very light crude oil and, to this extent, it is interchangeable with crude oil.

Third, regarding channels of distribution, lease condensate and crude oil are produced in a similar manner, with similar extraction facilities, shipped in the same manner, and sold to the same end-user (i.e., refineries).

Fourth, lease condensate from a crude-oil operation is extracted, transported, and handled in the same manner as crude oil.

Fifth, there is no commercial use for lease condensate except, like all crude oil, to be refined. The refining process for both products is essentially the same. Therefore, lease condensate is perceived and used as other crude oil.

Finally, the scale of the price difference between heavy crude oil and light crude oil is typically the same as the price difference between light crude oil and lease condensate.

Having determined that lease condensate is included in both the subject merchandise and the domestic like product, we considered whether an adjustment should be made to the survey response data to account for lease condensate. We found, through our examination of public documents, that several parties, including members of the petitioner and members of the Committee, included lease condensate in their domestic-production data. We find that this is an indication that lease condensate is, in the normal course of business, included as a part of crude oil. There is no evidence on the record that all companies have not accounted for lease condensate in the same manner and, therefore, we find that no adjustment to the figures used to calculate industry support is needed.

IV. TREATMENT OF THE VIEWS OF DOMESTIC PRODUCERS ALLEGEDLY RELATED TO FOREIGN PRODUCERS

Background

In the underlying proceeding and before the Court, the petitioner argued that Commerce should disregard the views of certain members of the Committee because these companies allegedly were related to foreign producers of the subject merchandise. These relationship allegations were never proven; indeed, Commerce stated that it had "serious questions concerning the sufficiency of the petitioner's allegations." (26) Nevertheless, working within the limited time that Congress mandated for the initiation determination, Commerce exercised its discretion to make the necessary decisions in the most efficient manner possible. Rather than address the alleged affiliations and the evidence submitted by the companies involved, which contradicted the petitioner's allegations, we focused on the second part of the statutory test. In other words, we assumed, for the sake of argument, that relationships existed and evaluated whether the opposing domestic producers demonstrated that their interests as domestic producers would be adversely affected by the imposition of antidumping or countervailing duty orders. (27)

Remand Results

In its SDO decision, the Court examined the petitioner's claims regarding the alleged relationships and the record evidence submitted by the petitioner in support of these claims. (28) The Court held that, while the record reflected relationships in certain instances, the record "does not substantiate that those {relationships} referred to by {the petitioner} entail the kind of control contemplated" by the Act. (29) As a consequence, the Court ruled that Commerce's "adverse effects" analysis pursuant to this provision was "inapposite." (30) For these reasons, further analysis of this issue is not warranted.

V. TREATMENT OF THE VIEWS OF OPPOSING DOMESTIC PRODUCERS THAT IMPORTED SUBJECT MERCHANDISE

Background

Sections 702(c)(4)(B)(ii) and 732(c)(4)(B)(ii) of the Act provide that the position of domestic producers of a domestic like product who are importers of the subject merchandise may be disregarded. In light of the statutory provision, the petitioner argued that Commerce should disregard the opposition of the Committee members and others because of their imports of subject merchandise. For purposes of the petition review, Commerce focused its analysis of the importer issue on the Committee because it is composed of the largest U.S. producers in opposition to the petitions and because its treatment is dispositive of the industry-support issue. In the Dismissal Determinations, Commerce determined not to exclude the Committee members that import because these domestic producers demonstrated that their opposition to the petitions was based on their concern that the imposition of antidumping or countervailing duty orders would adversely affect their interests as domestic producers.

The Court acknowledged Commerce's discretion in interpreting and administering the Act. However, the Court held that Commerce could not rely on the "adversely affected" test as the basis for accepting or rejecting the opposition of U.S. producers that import the subject merchandise. (31) With regard to our rationale for distinguishing oil from other cases in which we have disregarded the opposition of members of the domestic industry that imported the subject merchandise, the Court stated that:

Whatever the geological and concomitant political realities, Congress and Commerce both have referred to a "common stake" in the economics underlying a given administrative proceeding as the dispositive test. And whether an importer passes that test in order to have its opposition to a petition for imposition of antidumping or countervailing duties counted necessarily entails ITA consideration of that firm's level of imports and resultant dependancy thereon. For the agency not to have administered its test on an individual basis was an abuse of its discretion. (32)

Consequently, the Court ordered Commerce to reconsider its determination with respect to U.S. oil producers opposing the petition that also import subject crude oil. Thus, if we are to consider the opposition of the Committee members in the industry-support determination, the Court directs us instead first to "consider the facts and circumstances of the business of each Committee company, standing on its own, including most necessarily that particular company's imports of crude petroleum oil from Iraq, Mexico, Saudi Arabia, or Venezuela." (33)

Remand Results

The Act provides that Commerce "may" disregard the opposition of a U.S. producer that imports the subject merchandise. The plain meaning of the statute is reinforced by the legislative history, which states that the provision gives Commerce "the discretion to disregard the position of domestic producers who are also importers of the subject merchandise." (34) Furthermore, Congress did not intend that Commerce use a bright-line test in exercising this discretion; rather, it indicated that the agency should review the "relevant facts in each case."

Our consideration of the facts and circumstances of each importing company (assuming they have regional production), as directed by the Court and as it relates to whether the opposition of the importing company should be counted, raises three issues for each such company: (1) its dependancy on oil imports from Iraq, Mexico, Saudi Arabia, or Venezuela, (2) its stake as a producer in the domestic oil industry, and (3) how the stake and the import dependancy compare (i.e., whether, despite the import dependancy, they have a common stake that justifies counting the company's opposition to the petition). (35) In examining the size of company's stake as a producer in the U.S. oil industry it is important to note that crude oil is not manufactured but rather is "produced" by extracting it from the ground. The extractive nature of the crude-oil production process suggests that, in addition to production volume, the size of a company's stake in the domestic crude-oil industry can be thought of in terms of extraction-related variables such as the number of oil-field workers employed, the number of new oil wells drilled, the total number of oil wells in operation, and oil field- related capital expenditures. The remainder of this section of the remand consists of three parts that address the aforementioned issues in turn and contain the outcome of our company- and country- specific analyses.

A. Import Dependancy

The Statement of Administrative Action ("SAA") provides that Commerce "will not apply a bright line test to determine whether a producer who is an importer of the subject merchandise . . . should be excluded from the domestic industry. Instead, it will look to relevant factors, such as . . . volume of imports." (36) The petitioner has argued that Commerce should disregard the opposition of Committee members and others because they import crude petroleum oil. The petitioner has cited several cases in which Commerce has disregarded opposition from domestic producers which also imported, such as in the Frozen Concentrated Orange Juice case. (37)

The statute commits the decision whether to disregard the opposition of domestic producers which are importers to the discretion of Commerce. Although Commerce has disregarded the opposition of importers in some cases, the decision rests on the particular facts of each case. For example, in FCOJ most of the opposing companies had some level of imports and the vast majority of imports came from one country, Brazil. Commerce found that, because importing was quite common in the domestic industry, the mere fact that a U.S. producer was an importer of subject merchandise was not sufficient to disregard the producer's opposition. Commerce looked at a particular company's imports of FCOJ from Brazil as a percentage of that company's domestic production of FCOJ. The agency established a threshold based on the relative levels of imports that included the opposition to the petition of any company whose level of imports of FCOJ from Brazil was less than 50 percent of its total production and disregarded the opposition of any company whose level of imports was more than 50 percent of production.

The facts of the present case indicate, however, that simply applying the analysis adopted in FCOJ would be inappropriate. As we found in the orange-juice industry, imports are common in the oil industry. Imports are necessary because domestic production is insufficient to meet domestic demand. However, unlike orange juice, oil is a limited, non- renewable natural resource. For these reasons, current U.S. demand cannot be satisfied solely by increasing domestic production; it can be satisfied only through a substantial level of imports. (38) In fact, the United States as a whole imports 56 percent of its crude-oil consumption needs. (39) The region identified in the crude-oil petitions (40) imports an even higher proportion of its consumption needs (65 percent). (41) We also note that regional imports of oil are 184 percent of regional oil production. (42) Finally, a further indication that U.S. demand cannot be satisfied by domestic production is the fact that the U.S. Government limits exports of oil from the region in question. (43) Because of these unique circumstances, it is inappropriate to disregard the opposition of importers without regard to factors other than the relative level of imports.

Given that the relevant facts differ between the FCOJ industry and the crude-oil industry, we have determined that a 50-percent threshold as it was applied in FCOJ is inappropriate for this case. Rather we have devised a series of import-dependancy benchmarks as follows:

no imports of subject merchandise;

imports of subject merchandise up to 50 percent of production;

imports of subject merchandise between 50 and 100 percent of production;

imports of subject merchandise over 100 percent of production.

We agree that imports as a percentage of production is a reasonable way to examine import dependancy, as was done in FCOJ, and that there must be some type of quantitative measure against which to evaluate a company's import dependancy. In this case we have developed an analysis that takes into account the relevant facts of the oil industry. First, if a producer opposing the petition did not import oil from any of the subject countries, we have counted that producer's opposition in each of the cases and have not conducted a common-stakes analysis. (44)

We do recognize that, in situations where a company imports (on a regional basis) from a subject country less than half of its regional production (i.e., the 50-percent benchmark), that company has a low import dependancy with respect to that subject country. In light of the admonition in the SAA, however, that a "bright line" test is inappropriate, we would still look to establish that the company has a reasonable stake in the domestic industry before counting its opposition. Where a company imports (on a regional basis) from a subject country an amount between half and all of its regional production (i.e., between the 50-plus to 100- percent benchmark), we recognize that the company has a significant import dependancy with respect to that country. Nonetheless, given the import dependancy of the United States as a whole, and specifically the region at issue in this case, we do not automatically disregard that company's view. Rather, we would insist that the company demonstrate a more significant "stake" in the domestic oil industry before we would count its opposition to the petition. We would consider a company whose regional imports of crude oil from a subject country exceed that company's regional production (i.e., regional imports from a subject country divided by regional production is greater than 100 percent) to be highly import-dependant with respect to that particular country. In these situations we expect to see an extraordinary stake in domestic production before we could conclude that the company in question was not overly import-dependant on the subject merchandise. It is important to note that neither the 50-percent nor the 100-percent benchmarks are "bright-line" thresholds. Rather, they are a useful and informative way to think about the level of import dependency and the magnitude of "stake" that must be present for us to consider a company's opposition.

This company-specific, country-specific analysis is in accordance with the Act and the Court's instructions. The Act provides that Commerce may disregard the position of domestic producers who are importers of the subject merchandise. The subject merchandise, as defined by section 771(25) of the Act, is "the class or kind of merchandise that is within the scope of the investigation." Therefore, for each of the investigations sought by SDO, Commerce is required to assess the degree to which the domestic producers opposing that petition are importing subject merchandise - crude petroleum oil - from that specific country. Moreover, in its SDO decision, the Court held that Commerce was required to consider each "firm's level of imports and resultant dependency thereon." (45)

For these reasons, we have conducted our analysis on a country- specific and company-specific basis. As mentioned above, we have not used a "bright-line" cut-off point for this case as we did in FCOJ. Rather, as shown at Annex I, we have calculated import dependancy on a company/country basis. For company/subject-country combinations where imports were below 50 percent of production, we consider import dependancy to be low. In situations where the ratio is between 50 percent and 100 percent, we consider the import dependancy high enough to warrant a much greater "stake" in the domestic oil industry. While we consider a company to be highly import-dependant with respect to a particular subject country if its regional imports from that country are above 100 percent of its regional production, we do not consider this fact alone to be dispositive for rejecting that company's opposition. Rather, we have viewed this measure as an indication of the significance we should attach to the common- stakes analysis.

B. Company-Specific Analysis - Stake Concept

In this part, we describe each company's stake as a producer in the U.S. oil industry. We have compiled data on, among other things, regional production, proved reserves, (46) capital expenditures, net wells drilled and completed, employees, and net developed acreage of oil properties, available in Annex II for each company. For some companies, regional data for some variables were not available so we estimated regional statistics from national data. (47)

At issue is not whether each of the companies in question has a stake as a producer in the U.S. oil industry, since the data in Annex II makes plain that each company does. Instead, the issue is one of identifying component variables of a stake, in terms of the facts and information presented in Annex II, that provide a measure of its size (e.g., capital expenditures on oil exploration and development), so that we can undertake a common-stake analysis in part V.C., below. The discussion in that part focuses on the component variables and leaves for the next part an assessment of the size of each company's stake.

In examining the size of a company's stake as a producer in the U.S. oil industry, in terms of the data in Annex II, it is important to note that crude oil is not manufactured, as most other products are, with machinery and equipment that convert raw materials and intermediate inputs into output. Crude oil is "produced" by extracting it from the ground. The extractive nature of the crude-oil production process suggests that, in addition to production volume, the size of a company's stake in the domestic crude-oil industry can be thought of in terms of extraction-related variables such as production volume, the number of oil-field workers employed, the number of new oil wells drilled, the total number of oil wells in operation, and oil field-related capital expenditures. In each case, the greater the magnitude of the variable (e.g., the number of new oil wells drilled), the more extracting (actual or potential) the company is doing and, therefore, the larger is the company's stake in the U.S. oil industry.

The extractive nature of crude-oil production also means that many companies hold at all times a stock of crude-oil reserves that they deplete over time to meet current and future production needs. Holding reserves (that are either owned or leased) poses significant investment risks for a company that increases with the size of reserve holdings. (48) Oil reserves essentially are assets that are traded freely among oil producers and others. The net value of (i.e., the net return on) these assets is tied to oil-extraction costs and the price of crude oil. Because the price of crude oil tends to vary over time more than extraction costs, the investment risk associated with holding reserves essentially arises from movements in the price of crude oil. Downward-trending prices of crude oil make reserves increasingly uneconomical; upward-trending prices of crude oil, while making reserves more profitable, also encourage the search for and development of alternatives to crude oil. The larger the reserve holdings exposed to price fluctuations of crude oil, the greater is the overall investment risk a company assumes. We equate the assumption of investment risk with a stake in the industry, in the sense that companies that take greater risks typically have more to lose. On this basis, it is reasonable to conclude, in terms of the size of stakes that these companies have as producers in the domestic oil industry, that the larger the reserve holdings of the company, the larger that company's stake as a domestic producer of crude oil. Capital expenditures on exploration and development also give an indication of investment risk assumed, so that the larger such expenditures are, the larger is a company's stake.

The length of a company's time (or planning) horizon is another variable that can aid in thinking about the size of stake that each company has in the domestic oil industry. The longer the time horizon, the larger is the company's stake in the sense that the company has a greater commitment to U.S. production over time. From the evidence and data on the record, it is possible to construct a reasonable measure of a company's time horizon that is the inverse of the company's oil-depletion rate. If we let Z be the company's time horizon, then:

Z(t) = R(t)/PR(t),

where R(t) is the company's stock of regional crude-oil reserves in year t and PR(t) is the company's annual regional production volume in year t. Z(t) is measured in years and represents the number of years the company would have to produce at this current rate of production to exhaust current regional reserves. While the stock of a company's reserves typically changes over time due to sales and acquisitions (e.g., exploration), as does production volume, Z(t) nevertheless gives an estimate of how far into the future the company is looking from a production standpoint with respect to the region.

Using the variables and statistics above to think about the size of the stake each company has as a producer in the domestic oil industry and the data in Annex II, we compare these stakes and import-dependancy levels in the next section.

C. Common-Stakes Analysis

1. Comparing the Stake to Import Dependancy

As noted above, we must emphasize that dependancy on oil imports, per se, is not the central issue. All the companies under examination depend on oil imports to some extent. Nor is the issue whether each of the companies has a stake as a producer in the domestic oil industry, since each plainly does. The central issue is whether the stake outweighs the import dependancy. If it does, the company can be said to be speaking in its interest as a producer in the U.S. oil industry and a common stake exists that justifies taking into account the company's opposition to the petition.

Such a comparison would be difficult even if it could be done using a single measure of a company's stake and a common unit of measurement, e.g., dollars or barrels of oil, for the evaluation of both the stake and import dependancy. Unfortunately, constructing such a measure is not possible where, as in this case, there are multiple components of a company's stake as a producer in the domestic oil industry, each involving a different unit of measurement, e.g., workers, wells, barrels, dollars. Thus, although the company-specific comparisons below involve quantitative measures of import dependancy and various aspects of a company's stake, the comparison of the stake with the import dependancy necessarily is, in large part, qualitative in nature.

In accordance with the statute and the Court's directions, Commerce has conducted the common-stake and import-dependancy comparisons for each company on a country-by-country basis. As part of the comparison, we have added the following quantitative measure:

Q(t) = R(t)/IMX(t),

where R(t) is a particular company's regional reserves in year t and IMX(t) reflects that company's regional imports from subject country X in year t. The variable Q is the number of years the producer would have to import from subject country X at the current rate of importation to accumulate the current stock of reserves. Thus, Q measures how long it would take a company to make up the loss of its total reserves with imports from the subject country, assuming that the company did not import from any other countries. Q, therefore, gives a sense of the relative magnitude of import dependancy on the subject country in terms of the company's stake: the smaller or larger Q is, the shorter or longer the time it takes a company to make up with imports the hypothetical loss of its stake and the more or less dependant a company is on imports relative to its stake in the industry.

2. Company- and Country-Specific Comparison of the Stake to Import Dependancy

We used the company- and country-specific information on import dependancy in combination with the variables and statistics described above in part V.B. to determine whether the stake, despite the import dependancy, justifies counting particular companies' opposition to the petitions. (49) Our results, by country, are summarized below. The complete results of these comparisons are contained at Annex III.

Iraq

ARCO, BP-Amoco, Chevron, Conoco, Fina, Mobil, Murphy, and Shell, regional producers of the domestic like product, did not import subject merchandise from Iraq into the region in 1997; therefore, we counted their opposition to the petitions on crude oil from Iraq. The production of these companies, in combination with the production of the 18 other regional producers of the domestic like product (which did not import at all) that opposed the antidumping and countervailing duty petitions on imports of subject merchandise from Iraq, constitutes approximately 589.825 million barrels of the regional production opposing the petitions on Iraq. The 1997 regional production of these opposing domestic producers exceeds the regional production of domestic producers supporting the petitions. Thus, without proceeding with our analysis, we conclude that there is inadequate domestic industry support for the petitions on Iraq. However, in accordance with the Court's determination, for each of the opposing producers of the domestic like product that did import into the region subject merchandise from Iraq, we continued with our analysis of each company's common stake and its dependancy on imports from Iraq.

Because Coastal, Exxon, Marathon, Phillips, and Texaco imported subject merchandise from Iraq into the region during 1997, we assessed each company's stake as a regional producer of the domestic like product against its dependancy on imports from Iraq. For example, although Exxon imported into the region 0.5 million barrels of crude oil from Iraq in 1997, during the same year: 1) imports from Iraq only amounted to 0.65 percent of its regional production; 2) it had approximately 820 million barrels' worth of proven regional reserves; 3) it would have to produce oil at its current rate of production for 10.7 years, assuming it does not purchase or find more reserves, to exhaust current proven regional reserves; 4) at the current level of imports it would take the company 1,643.4 years to make up the loss of its proved regional reserves with imports from Iraq, assuming that Exxon did not import from any other countries or obtain oil from its U.S. production activities outside the region; 5) it owned 3.488 million proved net developed acres of oil and gas properties in the United States; 6) it accounted for approximately 5 percent of regional crude-oil production; 7) it employed 4,000 exploration and production (as opposed to marketing and refining) workers in the United States; 8) it had 5,948 net wells producing or capable of producing oil in the United States; 9) it completed 228 net wells in the United States that were producing or were capable of producing crude oil; 10) it incurred $1.341 billion in capital expenditure for additions to property, plant and equipment for exploration and production activities; 11) it had $13.752 billion of exploration and production assets in the United States at year end; 12) it earned $1.634 billion after taxes from exploration and production activities in the United States; 13) it is deeply involved in exploration and production in the Gulf of Mexico, which is part of the region; 14) it completed 47 net exploratory and development wells in the Gulf of Mexico. We found that similar circumstances exist for all the other opposing producers of the domestic like product that imported the subject merchandise from Iraq. (50) Thus, from these analyses, we determined that Iraqi imports pale in comparison to the substantial and long-term stakes of Coastal, Exxon, Marathon, Phillips, and Texaco as regional producers; therefore, we have counted the opposition of these companies to the petitions on crude oil from Iraq.

Mexico

ARCO, Murphy, Phillips, and Texaco, regional producers of the domestic like product, did not import subject merchandise from Mexico into the region in 1997; therefore, we counted their opposition to the petitions on crude oil from Mexico.

Because BP-Amoco, Chevron, Coastal, Conoco, Exxon, Fina, Marathon, Mobil, and Shell imported subject merchandise from Mexico into the region during 1997, we assessed each company's stake as a regional producer of the domestic like product against its dependancy on imports from Mexico. For example, although BP-Amoco imported into the region 32.851 million barrels of crude oil from Mexico in 1997, during the same year: 1) imports from Mexico only amounted to less than 25 percent (51) of its regional production; 2) it had approximately 1.625 billion barrels' worth of proven regional reserves; 3) it would have to produce oil at its current rate of production for more than eleven years, (52) assuming it does not purchase or find more reserves, to exhaust current proven regional reserves; 4) at the current level of imports it would take the company 49.5 years to make up the loss of its regional proven reserves with imports from Mexico, assuming that BP-Amoco did not import from any other countries or obtain oil from its U.S. production activities outside the region; 5) it owned approximately 3.865 million proved net developed acres of oil and gas properties in the United States; 6) it accounted for more than eight percent (53) of total regional crude-oil production; 7) it employed 8,450 exploration and production (as opposed to refining and marketing) workers in the United States; 8) it had 9,542 net wells in the United States producing or capable of producing oil; 9) it completed approximately fifteen net productive exploratory and fourteen net productive development oil and gas wells in the United States; 10) it incurred $1.744 billion in development expenditures (excluding pipelines) in the United States; 11) its regional production comes from a large number of fields situated principally in the states of Alabama, Colorado, Kansas, Louisiana, New Mexico, Oklahoma, Texas and Wyoming. We found that similar circumstances exist with respect to Chevron, Exxon, Marathon, and Shell. (54) Thus, from these analyses, we determined that these companies' imports into the region of subject merchandise from Mexico are much less substantial than their long-term stakes as regional producers of the domestic like product. Therefore, we have counted the opposition of BP-Amoco, Chevron, Exxon, Marathon, and Shell to the petitions on crude oil from Mexico.

With respect to Coastal, Conoco, Fina, and Mobil, we did not find them to be in a situation similar to that of the above producers of the domestic like product that imported subject merchandise from Mexico (whose opposition to the petitions on Mexico we have counted). Specifically, we found that these companies' levels of imports from Mexico are sufficiently large, even relative to their substantial stakes in the region, that disregarding their opposition to the petitions against Mexico would be appropriate. For example, Fina imported into the region 16.911 million barrels of crude oil from Mexico in 1997. Although it has a substantial stake in the region (e.g., in 1997 Fina had 33.436 million barrels' worth of proven regional reserves, 430 net productive oil wells in the United States, 228 thousand acres of proved net developed oil and gas properties, and incurred $125.4 million in capital expenditures for exploration and production in the United States), its imports into the region from Mexico exceeded 350 percent (55) of its regional production. At this current level of imports, in only two years Fina could make up the loss of its regional reserves with imports from Mexico, assuming that it did not import from any other country. (56) We found that similar circumstances exist for Coastal, Conoco, and Mobil; therefore, we have disregarded the opposition of Coastal, Conoco, Fina, and Mobil to the petitions on crude oil from Mexico.

Saudi Arabia

ARCO, Coastal, Conoco, Fina, and Murphy, regional producers of the domestic like product, did not import subject merchandise from Saudi Arabia into the region during 1997; therefore, we counted their opposition to the petitions on crude oil from Saudi Arabia.

Because BP-Amoco, Chevron, Exxon, Marathon, Mobil, Phillips, Shell, and Texaco imported subject merchandise from Saudi Arabia into the region during 1997, we assessed each company's stake as a regional producer of the domestic like product against its dependancy on imports from Saudi Arabia. For example, although Shell imported into the region 8.928 million barrels of crude oil from Saudi Arabia in 1997, during the same year: 1) its imports from Saudi Arabia only amounted to 8.93 percent of its regional production; 2) it had approximately 1.065 billion barrels' worth of proven regional reserves; 3) it would have to produce oil at its current rate of production for 10.65 years, assuming it does not purchase or find more reserves, to exhaust current regional reserves; 4) at the current level of imports it would take the company 119 years to make up the loss of its regional reserves with imports from Saudi Arabia, assuming that Shell did not import from any other countries or obtain oil from its U.S. production activities outside the region; 5) it owned 1.199 million net developed acres of oil and gas properties in the United States; 6) it accounted for approximately 6.5 percent of total regional production; 7) it employed more than 2,200 workers in regional exploration, development, and production activities; 8) it owned 1,803 net wells in the United States producing or capable of producing oil and held an equity interest in 8,148 other net wells in the United States; 9) it completed 32 net exploratory and 99 net development oil and gas wells in the United States; 10) it incurred $2.229 billion worth of capital expenditures for property acquisition, exploration, and production in the United States; 11) it had $1.060 billion in net income from exploration and production activities in the United States; 12) at year end it held interests in 1,023 tracts in the Gulf of Mexico. We found that similar circumstances exist with respect to BP-Amoco, Chevron, and Exxon. (57) Thus, from these analyses, we determined that these companies' imports into the region of subject merchandise from Saudi Arabia are substantially outweighed by their long- term stakes as regional producers of the domestic like product. Therefore, we have counted the opposition of BP-Amoco, Chevron, Exxon, and Shell to the petitions on crude oil from Saudi Arabia.

With respect to Marathon, Mobil, Phillips, and Texaco, we did not find them to be in a situation similar to that of the above producers of the domestic like product that imported subject merchandise from Saudi Arabia (whose opposition to the petitions on Saudi Arabia we have counted). Specifically, we found that these companies' levels of imports from Saudi Arabia are sufficiently large, even relative to their substantial stakes in the region, that disregarding their opposition to the petitions against Saudi Arabia would be appropriate. For example, Texaco imported into the region 184.022 million barrels of crude oil from Saudi Arabia in 1997. Although it has a substantial stake in the region (e.g., in 1997 Texaco had approximately 970.9 million barrels' worth of proven regional reserves, 19,110 net wells in the United States producing or capable of producing oil, 1.875 million proved net developed acres of oil and gas properties in the United States, and invested $3.183 billion in U.S. exploration and production activities), its imports into the region from Saudi Arabia amounted to 268.49 percent of its regional production. At this current level of imports in only 5.3 years Texaco could make up the loss of its regional reserves with imports from Saudi Arabia, assuming that it did not import from any other country. We found that similar circumstances exist for Marathon, Mobil, and Phillips; therefore, we have disregarded the opposition of Marathon, Mobil, Phillips, and Texaco to the petitions on crude oil from Saudi Arabia. (58)

Venezuela

Because ARCO, BP-Amoco, Chevron, Coastal, Conoco, Exxon, Fina, Marathon, Mobil, Murphy, Phillips, Shell, and Texaco imported subject merchandise from Venezuela into the region during 1997, we assessed each company's stake as a regional producer of the domestic like product against its dependancy on imports from Venezuela. For example, although ARCO imported into the region 3.262 million barrels of crude oil from Venezuela in 1997, during the same year: 1) its imports from Venezuela amounted to less than ten percent (59) of its regional production; 2) it had approximately 386.96 million barrels' worth of proven regional reserves; 3) it would have to produce oil at its current rate of production for more than nine years, (60) assuming it does not purchase or find more reserves, to exhaust current regional reserves; 4) at the current level of imports it would take the company 118.6 years to make up the loss of its regional reserves with imports from Venezuela, assuming that ARCO did not import from any other countries or obtain oil from its U.S. production activities outside the region; 5) it owned 331,000 net developed acres of oil and gas properties in the lower 48 states; 6) it accounted for more than approximately two percent (61) of total regional production; 7) it had 5,146 net wells in the United States producing or capable of producing oil; 8) it completed 438 net exploratory and development wells in the United States; 9) it incurred $1.212 billion worth of capital expenditures for property acquisition, exploration, and production activities in the United States. We found that similar circumstances exist with respect to BP-Amoco, Chevron, Conoco, Exxon, Marathon, Mobil, Phillips, Shell, and Texaco. (62) Thus, from these analyses, we determined that these companies' imports into the region of subject merchandise from Venezuela are substantially outweighed by their long-term stakes as regional producers of the domestic like product. Therefore, we have counted the opposition of ARCO, BP-Amoco, Chevron, Conoco, Exxon, Marathon, Mobil, Phillips, Shell, and Texaco to the petitions on crude oil from Venezuela.

With respect to Coastal, Fina, and Murphy, we did not find them to be in a situation similar to that of the above producers of the domestic like product that imported subject merchandise from Venezuela (whose opposition to the petitions on Venezuela we have counted). Specifically, we found that these companies' levels of imports from Venezuela are sufficiently large, even relative to their substantial stakes in the region, that disregarding their opposition to the petitions against Venezuela would be appropriate. For example, Murphy imported into the region 35.574 million barrels of crude oil from Venezuela in 1997. Although it has a substantial stake in the region (e.g., in 1997 Murphy had approximately 19.1 million barrels' worth of proven regional reserves, 131.6 net wells in the United States producing or capable of producing oil, 136,000 thousand proved net developed acres of oil and gas properties in the United States, and incurred $147 million in capital expenditures for U.S. exploration and production activities), its imports into the region from Venezuela amounted to 1019.02 percent of its regional production. At this current level of imports, in less than a year Murphy could make up the loss of its regional reserves with imports from Venezuela. We found that similar circumstances exist for Coastal and Fina; therefore, we have disregarded the opposition of Coastal, Fina, and Murphy to the petitions on crude oil from Venezuela. (63)

Summary of Company- and Country-Specific Conclusions

As a result of our analysis, the table below indicates the company- specific conclusions we have drawn concerning companies whose opposition to the country-specific petitions we have disregarded.

Disregard Opposition
  Iraq Mexico Saudi Arabia Venezuela
ARCO No No No No
BP-Amoco No No No No
Chevron No No No No
Coastal No Yes No Yes
Conoco No Yes No No
Exxon No No No No
Fina No Yes No Yes
Marathon No No Yes No
Mobil No Yes Yes No
Murphy No No No Yes
Phillips No No Yes No
Shell No No No No
Texaco No No Yes No

CONCLUSION

We hereby submit this administrative determination pursuant to the Court's order in SDO. We have revised our calculation of the production totals contained in the August 9, 1999, memorandum, "Recalculation of Industry Support," to reflect the changes resulting from this administrative determination. Specifically, we disregarded the opposition of certain opposing domestic producers that imported subject merchandise from Mexico, Saudi Arabia, and/or Venezuela, as described above, and we adjusted the production figures of three companies downward to neutralize the opposition of their facilities employing PACE members. (64) These changes are reflected in an attachment to the August 7, 2001, memorandum, "Revision to Industry-Support Calculations." The following table contains the revised industry-support percentages:

Revised Industry- Support Percentages
  Iraq
AD
Iraq CVD Mexico
AD
Mexico
CVD
Saudi Arabia
AD
Saudi
Arabia
CVD
Venezuela
AD
Venezuela
CVD
Support 38.29% 38.23% 40.34% 40.28% 43.56% 43.57% 38.70% 38.70%
Oppose 61.71% 61.77% 59.66% 59.72% 56.44% 56.43% 61.30% 61.30%

Based on the above, we continue to find that there is inadequate domestic industry support, in accordance with sections 702(c)(4)(A)(ii) and 732(c)(4)(A)(ii) of the Act, to initiate investigations pursuant to these petitions.

As a result of Commerce's finding that there is inadequate domestic industry support for these petitions, Commerce's consideration of many other issues that necessarily would have to be addressed prior to initiation is moot. For example, Commerce affirms that it has not determined whether the petitioner has provided adequate and accurate information to establish (i) material injury or threat thereof, (ii) dumping, and (iii) countervailable subsidy.

______________________

Faryar Shirzad
Assistant Secretary
    for Import Administration

______________________
(Date)

___________________________________________________________________________ footnotes:

1. SDO, Slip Op. 00-120, at 18-19.

2. Id. at 19-21.

3. Id. at 22.

4. Id. at 28-32.

5. Id. at 40.

6. Id. at 32-33.

7. Id. at 34-37.

8. Id. at 42.

9. Id.

10. See, e.g., Letter To Marathon Oil Company, dated November 8, 2000.

11. SDO, Slip Op. 00-120, at 33.

12. Section 771(9)(E) of the Act.

13. In this letter, PACE stated that it represented workers in six regional companies that are involved in production of crude oil. PACE also stated that it represented production workers at a seventh crude-oil production company, but Commerce determined that PACE was not an interested party with respect to that company because those workers were located outside the region (i.e., in Alaska). Furthermore, PACE stated that it represented workers at four regional companies that are involved in transporting crude-oil production to shipping and refinery facilities, but Commerce determined that it would be inappropriate to recognize PACE as an interested party with respect to these companies because the pipeline companies were involved solely in transporting crude oil to shipping and refinery facilities.

14. SDO, Slip. Op. 00-120, at 37.

15. See Labor Memorandum, at 4-5.

16. We did not request information from the four regional pipeline companies. Consistent with our original determination, we find that it would be inappropriate to consider PACE an interested party with respect to these companies because they are part of a separate industry that is involved solely in transporting crude oil to shipping and refinery facilities, but are not engaged in the production of crude oil. Thus, it would be inconsistent with section 771(9)(D) of the Act to consider PACE an interested party with respect to the four domestic companies involved in transporting crude oil because these companies are not part of the "industry engaged in the manufacture, production, or wholesale in the United States of" crude oil. See Labor Memorandum.

17. In addition, on October 16, 2000, we transmitted a letter to PACE, requesting that PACE review the names of companies to which we sent our requests for information, advise us of any required corrections to the named companies, and submit for the record any supplements to its previous submissions related to PACE's representation of crude-oil production workers. PACE did not respond to our request.

18. See Labor Memorandum, at n. 30; see also Memorandum from The Industry Support Team to Richard W. Moreland, "Calculation of Industry-Support Percentages," dated August 9, 1999, at 4.

19. Section 351.203(e)(3) of Commerce's regulations provides that Commerce will grant equal weight to the positions of workers and management regarding the petition according to the production of the domestic like product of the firm in which the workers and management are employed. This regulation provides further that, if the positions of management and workers at a firm are in direct opposition, Commerce will treat the production of that firm as representing neither support for, nor opposition to, the petition. This regulation is consistent with the intent of Congress in passing the Uruguay Round Agreements Act, as delineated in the SAA, which states: "[i]f the management of a firm expresses a position in direct opposition to the views of the workers in that firm, Commerce will treat the production of the firm as representing neither support nor opposition to the position." SAA, at 192.

20. See Dismissal Determinations, 64 Fed. Reg. at 44481.

21. The following U.S. producers are members of the Committee: ARCO, BHP Petroleum, BP-Amoco, Burlington Resources, Chevron, Conoco, Exxon, Fina, Kerr-McGee, Marathon Oil, Mobil, Murphy Oil, Occidental Petroleum, Phillips Petroleum, Shell Oil, Texaco. Because every member of the Committee produces crude oil in the region, Commerce found that the Committee qualified as an interested-party association within the meaning of section 771(9)(E) of the Act.

22. See SDO, Slip. Op. 00-120, at 40.

23. See Petition dated June 29, 1999, Common Volume, at 8.

24. Energy Information Administration, Petroleum Supply Annual 1998, Volume, at Glossary.

25. See Lease Condensate Memorandum for further details of this analysis.

26. Prop. Doc. 333 at 3.

27. Dismissal Determinations, 64 Fed. Reg. at 44482.

28. SDO, Slip Op. 00-120, at 20.

29. Id.

30. Id. at 21.

31. SDO, Slip Op. 00-120, at 21-22.

32. Id. at 32.

33. Id. at 43.

34. S. Rep. No. 103-412, at 36 (1994).

35. Commerce uses the term "stake" rather than "common stake" in part V.B. and reserves the term "common stake" for part V.C. With regard to "common stake" and U.S. companies that import oil from Iraq, Mexico, Saudi Arabia, or Venezuela, the issue is not whether they all produce crude oil in the United States, since each company does. And the issue of common stake most certainly does not require that oil- importing companies share with the petitioner an interest in the petition, since support for the petition would not be in question if that were the case. The issue of "common stake" is about whether U.S. companies that import have interests as producers in the U.S. oil industry that outweigh their import interests. If so, they have a common stake in the investigation as domestic producers. It is important to emphasize, here, that "common stake" does not mean "common interests." Even when importing companies and a petitioner have a common stake in the industry, their interests and perspectives as producers may diverge for any number of reasons, including their market outlook and growth prospects, financial health, and the relative size and composition of their stake.

Since the production- and investment-related data discussed in part V.B. sets up but falls short of what is needed for a common-stakes determination, the term "stake" is used in part V.B. to distinguish the discussion in that part from the discussion in part V.C.

36. SAA, H.R. Doc. No. 103-316, Vol. 1, at 858- 59 (1994), reprinted in 1994 U.S.C.C.A.N. 3773.

37. See, e.g., Frozen Concentrated Orange Juice From Brazil: Final Determination of Sales at Less Than Fair Value, 52 Fed. Reg. 8324 (March 17, 1987) ("FCOJ") (noting that "it would not be appropriate to exclude all processor-importers" because most domestic FCOJ producers also imported FCOJ from Brazil and determining "that it is appropriate in this case to exclude from the definition of the industry those firms whose imports of Brazilian FCOJ exceeded 50 percent of their total production" because such firms had a overriding interest in avoiding the imposition of antidumping duties upon dumped imports from Brazil).

38. While there is speculation that there are vast petroleum reserves in the Earth's upper crust and that such reserves continue to be replenished from sources deep in the earth, see, e.g., Thomas Gold, Deep Hot Biosphere (1999), there is no indication that, should such oil exist, there is any way to extract the oil in the near term. Moreover, data from the EIA indicate that reserves in the United States have been declining for some time. Specifically, the EIA states that, "[i]n the past decade, the United States' proved reserves of crude oil have fallen gradually, declining over 21 percent from 28.4 billion barrels in 1985 to 22.3 billion barrels in 1995. . . . The last inter-annual increase, amounting to about 400 million barrels, occurred between 1986 and 1987." Energy Information Administration's Petroleum 1996: Issues and Trends publication, at 56, available at http://www.eia.doe.gov/oil_gas/petroleum/analysis _publications/pet_analysis_publications.html.

39. Here we estimate 1997 total U.S. consumption as the sum of U.S. production and U.S. net imports. We derived total U.S. production (2,362,136 thousand barrels) from Appendix C, Table C1: Revised Crude Oil Production by PAD District and State, 1997 of the 1998 Energy Information Administration/Petroleum Supply Annual and total U.S. net imports (U.S. imports 3,002,299 - U.S. exports 39,308 = total net U.S. imports 2,962,991) from Table 20: Imports of Crude Oil and Petroleum Products by PAD District and Table 27: Exports of Crude Oil and Petroleum Products by PAD District of the 1997 Energy Information Administration/Petroleum Supply Annual. We then calculated the 1997 ratio of U.S. net imports to U.S. consumption as 55.64 percent (2,962,991/(2,362,136+ 2,962,991) and the ratio of U.S. net imports to production as 125.44 percent (2,962,991/2,362,136). All production and import figures presented here are in thousand barrels.

40. PADDs I through V are the Department of Energy's geographic aggregations of the 50 states and the District of Columbia. In addition, PADDs III and V include crude-oil production for federal offshore areas. The petitioner considers PADDs I through IV (including the federal offshore area in PADD III) to be inside the region and all other parts of the United States (including the federal offshore area in PADD V) to be outside the region. In addition to PADDs I through V, the Department of Energy identified PADD VI which is an aggregation of certain U.S. territories and possessions such as Guam, Puerto Rico, and the Virgin Islands. For the regional analysis, the petitioner only considered Puerto Rico to be pertinent since the other U.S. territories in PADD VI are not considered part of the "customs territory of the United States" as defined by General Note 2 of the 1999 Harmonized Tariff Schedule of the United States. Based on the legal and factual analysis contained in our August 8, 1999, "Industry Claim" decision memorandum, we determined that, with regard to the regional-industry claim, the petitioner satisfied the statutory requirements for initiation purposes.

41. We estimated 1997 regional consumption as the sum of regional production and regional net imports. We derived total regional production (1,548,288 thousand barrels) from Appendix C, Table C1: Revised Crude Oil Production by PAD District and State, 1997 of the 1998 Energy Information Administration/Petroleum Supply Annual and total regional net imports (regional imports 2,853,074 - regional exports 11,008 = total net regional imports 2,842,066) from Table 20: Imports of Crude Oil and Petroleum Products by PAD District and Table 27: Exports of Crude Oil and Petroleum Products by PAD District of the 1997 Energy Information Administration/Petroleum Supply Annual. We then calculated the 1997 ratio of regional imports to regional consumption as 64.73 percent (2,842,006/(2,842,066+1,548,288)) and the ratio of imports to production as 183.56 percent (2,842,006/1,548,288).

42. See supra note 41.

43. Exports of crude oil require approved export licenses. See Export Administration Act of 1979, 50 U.S.C. App. 2401; see also 42 U.S.C. 6212 (Presidential authority to restrict exports of petroleum products); Bureau of Export Administration ("BXA"), U.S. Department of Commerce FY 1999 Annual Report (visited Oct. 18, 2000) http://w ww.bxa.doc/press/Publications/FY98AnnualReport.html (stating that, during FY98, BXA approved 12 licenses for exports of 5.79 million barrels of crude oil from the lower 48 states). For 1997, based on the export and production data contained in footnote 41, we estimated that regional exports of crude oil amounted to only 0.71% of regional production. Moreover, according to the EIA:

Crude oil exports play a minor role in the U.S. crude oil balance, averaging just 100-200 thousand barrels per day since 1985 (Figure 64), because they have essentially been banned for most grades most of the time. However, even if there were no restrictions at all, the status of the U.S. as the world's largest net importer of crude would ensure that exports would remain small in almost all circumstances.

Energy Information Administration/Petroleum 1996: Issues and Trends publication, at 82, available at http://www.eia.doe.gov/oil_gas/petroleum/analysis _publications/pet_analysis_publications.html

44. There were twenty producers opposing the antidumping and countervailing duty petitions that did not import subject merchandise from Iraq, Mexico, Saudi Arabia, or Venezuela during 1997. The majority of these companies are independent oil producers. Eighteen of these producers opposed all eight petitions. Two of them, Crawford Energy Inc. and another company which requested that its opposition to the petitions be treated as business proprietary information, supported the two petitions on imports from Iraq but opposed the six petitions on imports from Mexico, Saudi Arabia, and Venezuela. The non-importing opposing producers include Amerada Hess Corporation, Burlington Resources, Century Offshore Management Corporation, CGAS Exploration, CNG Producing Company, Columbus Energy Corporation, Crawford Energy Inc., FABCO Oil and Gas, Inc., Lomak Production (Range Resources Corporation), Occidental Petroleum Corporation, Pennzenergy, Pennsylvania General Energy Corporation, Ocean Energy Inc., Santa Fe Snyder Corporation, Stellar Energy, and five other companies which requested that their opposition to the petitions be treated as business proprietary information. These producers had a combined production in the region of more than 175 million barrels of oil in 1997.

45. SDO, Slip Op. 00-120, at 32 ("{f}or the agency not to have administered its test on an individual basis was an abuse of its discretion").

46. See EIA's Petroleum 1996: Issues and Trends, at 52, available at http://www.eia.doe.gov/oil_gas/petroleum/analysis _publications/pet_analysis_publications.html ("Proved reserves are those volumes of oil that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions").

47. See Annex II.

48. See generally Performance Profiles of Major Energy Producers, 1998, "Behind the Bottom Line: Oil and Gas Profitability at an All-Time Low" http://www.eia.doe .gov/emeu/perfpro/chapter3.html (describing the effect of price movements on asset valuation); Report#:DOE/EIA-0484(2000), World Oil Markets http://eia.doe.gov/oiaf/ieo/oil .html (discussing price volatility in the crude-oil market); International Energy Outlook 2000, Oil Market Volatility: The Long-Term Perspective http://www.eia.doe.gov/ oiaf/ieo/boxtext.html (explaining how short-term price volatility of crude oil affects long- term projections).

49. For this process, we examined those companies expressing opposition that were determined to have imported crude oil from either Iraq, Mexico, Saudi Arabia, or Venezuela. These companies are ARCO, BP-Amoco, Coastal, Chevron, Conoco, Exxon, Fina, Marathon, Mobil, Murphy, Phillips Petroleum, Shell, and Texaco. In many instances, the data on common stake for these companies which we obtained from the record and publicly available sources was not in a form whereby we could isolate statistics for the region defined by the petitioner from the data for the United States as a whole. However, the statistics, when viewed in conjunction with a firm's regional and U.S. production (and reserves, where available), demonstrate that, if we were able to isolate the regional data, it would be substantial enough that our analysis would not be affected. For example, BP Amoco had 3.865 million proved net developed acres and 5.216 million proved net undeveloped acres of oil and gas properties in the United States. BP Amoco produced 316.82 million barrels of crude oil in the United States, including 135.05 million barrels in the region. With this in mind, it is clear that a substantial portion of BP Amoco's net developed and undeveloped acres in the United States must be in the region, even if it is not necessarily in direct proportion to the ratio between regional and U.S. production.

50. See Annexes I - III.

51. Based on the company's request for business proprietary treatment of its production information, we have ranged this figure. The actual figure is available in the Annexes.

52. Ranged figure.

53. Ranged figure.

54. Id.

55. Ranged figure.

56. See Annexes I-III.

57. Id.

58. Id.

59. Ranged figure.

60. Ranged figure.

61. Ranged figure.

62. Id.

63. Id.

64. As specified in section II of this administrative determination, the three companies for which we made this adjustment are Occidental, ARCO, and another company that requested that its opposition to the petitions be treated as business proprietary.