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Notice

Certain In-shell Pistachios from the Islamic Republic of Iran: Preliminary Results of Countervailing Duty Administrative Review

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Information about this document as published in the Federal Register.

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of preliminary results of countervailing duty administrative review.

SUMMARY:

The Department of Commerce (the Department) is conducting an administrative review of the countervailing duty order on certain in-shell pistachios from the Islamic Republic of Iran (Iran) for the period January 1, 2001, through December 31, 2001. If the final results remain the same as the preliminary results of this administrative review, we will instruct the U.S. Customs Service (Customs) to assess countervailing duties as detailed in the “Preliminary Results of Review” section of this notice. Interested parties are invited to comment on these preliminary results. (See the “Public Comment” section of this notice.)

EFFECTIVE DATE:

April 4, 2003.

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FOR FURTHER INFORMATION CONTACT:

Darla Brown, AD/CVD Enforcement, Office VI, Group II, Import Administration, U.S. Department of Commerce, Room 4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone (202) 482-2849.

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SUPPLEMENTARY INFORMATION

Background

On March 11, 1986, the Department published in the Federal Register the countervailing duty order on certain in-shell pistachios from Iran. See Final Affirmative Countervailing Duty Determination and Countervailing Duty Order: In-shell Pistachios from Iran, 51 FR 8344 (March 11, 1986) (In-shell Pistachios). On March 1, 2001, the Department published a notice of “Opportunity to Request an Administrative Review” (67 FR 9438). On March 22, 2002, we received a timely request for an administrative review from Cyrus Marketing, the exclusive representative of the Rafsanjan Pistachio Producers Cooperative (RPPC), the respondent company in this proceeding. On April 24, 2002, we initiated an administrative review covering the period of review (POR) January 1, 2001, through December 31, 2001 (67 FR 20089).

On June 11, 2002, we issued our initial questionnaire to the Government of Iran (GOI) and RPPC. On September 17, 2002, we issued a supplemental questionnaire to RPPC.

On October 23, 2002, we extended the period for the completion of the Preliminary Results pursuant to section 751(a)(3)(A) of the Tariff Act of 1930, as amended (the Act). See Certain In-shell Pistachios from the Islamic Republic of Iran: Extension of Time Limit for Preliminary Results of Countervailing Duty Administrative Review, 67 FR 65091 (October 23, 2002).

On February 20, 2003, we issued a supplemental questionnaire to the GOI. On March 5, 2003, we issued a second supplemental questionnaire to RPPC. On March 19, 2003, we received from the GOI a partial response to the Department's February 20, 2002, supplemental questionnaire.

On March 20, 2003, we sent a letter to the GOI, extending for the second time the time limit for the submission of its full response to the supplemental questionnaire issued by the Department on February 20, 2003. The due date of the supplemental questionnaire was extended until March 25, 2003. However, we stated in the letter that, given the proximity of this extended due date to the date of our preliminary results (i.e., March 31, 2003), we could not guarantee that we would be able to analyze the information contained in the supplemental response in time to incorporate that information in our preliminary results.

On March 21, 2003, we sent a letter to RPPC, extending for the second time the time limit for the submission of its response to the second supplemental questionnaire issued by the Department on March 5, 2003. The due date of the supplemental questionnaire was extended until March 25, 2003. However, we stated in the letter that, given the proximity of this extended due date to the date of our preliminary results (i.e., March 31, 2003), we could not guarantee that we would be able to analyze the information contained in Start Printed Page 16474the supplemental response in time to incorporate that information in our preliminary results.

On March 25, 2003, we did not receive the GOI's supplemental questionnaire response. See March 25, 2003 Memorandum to the File from the team. Therefore, as discussed below in the “Use of Facts Available” section of this notice, we have resorted to the facts otherwise available employing an adverse inference. (See section 776 of the Act.)

Also on March 25, 2003, we did not receive the second supplemental questionnaire response from RPPC. See March 25, 2003 Memorandum to the File from the team. Therefore, as discussed below in the “Use of Facts Available” section of this notice, we have resorted to the facts otherwise available, employing an adverse inference. (See section 776 of the Act.)

In accordance with 19 CFR 351.213 (2002), this administrative review covers only those producers or exporters for which a review was specifically requested. Accordingly, this administrative review covers RPPC and nine programs.

Scope of Review

The product covered by this administrative review is in-shell pistachio nuts from which the hulls have been removed, leaving the inner hard shells and edible meat, as currently classifiable in the Harmonized Tariff Schedules of the United States (HTSUS) under item number 0802.50.20.00. The HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of this proceeding is dispositive.

Use of Facts Available

During the course of this proceeding, we have repeatedly sought information pertaining to all companies that are cross-owned and/or affiliated with RPPC, the producer of subject merchandise, and RPPC's shareholders. See pages III-3 through III-4 of the Department's June 11, 2002, questionnaire, page 1 of the Department's September 17, 2002, supplemental questionnaire, and page 1 of the Department's March 5, 2003, second supplemental questionnaire. In addition, we have repeatedly requested information concerning the total sales and sales of subject merchandise made by RPPC during the POR. See pages III-3 through III-4 of the Department's June 11, 2002, questionnaire, page 1 of the Department's September 17, 2002 supplemental questionnaire, and page 1 of the Department's March 5, 2003, second supplemental questionnaire. Moreover, we have repeatedly asked for specific information concerning RPPC's and its members' usage of the following programs: Provision of Fertilizer and Machinery, Provision of Water and Irrigation Equipment, Duty Refunds on Imported Raw or Intermediate Materials Used in the Production of Exported Goods, Program to Improve the Quality of Exports of Dried Fruit, Tax Exemptions, Technical Assistance from the GOI, and Provision of Credit. See pages III-9 through III-12 of the Department's June 11, 2002, questionnaire, pages 3 through 6 of the Department's September 17, 2002, supplemental questionnaire, and pages 3 through 4 of the Department's March 5, 2003, second supplemental questionnaire.

In response to these repeated inquiries relating to affiliation, sales data, and the seven aforementioned programs, RPPC repeatedly failed to answer specific questions, provided incomplete answers, and did not provide useable information regarding these seven programs.

In addition, we have sought, without success, information from the GOI regarding details about RPPC's and its growers' usage of the programs under review. See the Department's June 11, 2002, initial questionnaire. Moreover, we specifically asked the GOI to provide copies of relevant legislation proving that certain programs subject to this administrative review have been terminated. See the Department's February 20, 2003, supplemental questionnaire. The GOI failed to provide the requested legislation and only answered one of the Department's supplemental questions (see the GOI's March 19, 2003, submission).

Section 776(a) of the Act requires the use of facts available when an interested party withholds information that has been requested by the Department, or when an interested party fails to provide the information requested in a timely manner and in the form required. As described above, RPPC and the GOI have failed to provide information regarding these programs in the manner explicitly and repeatedly requested by the Department; therefore, we must resort to the facts otherwise available.

Furthermore, section 776(b) of the Act provides that in selecting from among the facts available, the Department may use an inference that is adverse to the interests of a party if it determines that a party has failed to cooperate to the best of its ability. The Department finds that by not providing necessary information specifically requested by the Department, despite numerous opportunities, the GOI and RPPC have failed to cooperate to the best of their ability. Therefore, in selecting from among the facts available, the Department determines that an adverse inference is warranted.

When employing an adverse inference in an administrative review, the statute indicates that the Department may rely upon information derived from: (1) The petition, a final determination in a countervailing duty or an antidumping investigation, any previous administrative review, new shipper review, expedited antidumping review, section 753 review, or section 762 review; or (2) any other information placed on the record. See 19 CFR 351.308(c). Thus, in applying adverse facts available, we have used information on the record of this administrative review as well as information from the final determinations of In-shell Pistachios and Certain In-shell Pistachios and Certain Roasted In-shell Pistachios from the Islamic Republic of Iran: Final Results of New Shipper Countervailing Duty Reviews, 68 FR 4997 (January 31, 2003) (Pistachios New Shipper Reviews).

If the Department relies on secondary information (e.g., data from a petition) as facts available, section 776(c) of the Act provides that the Department shall, “to the extent practicable,” corroborate such information using independent sources reasonably at its disposal.[1] The SAA further provides that to corroborate secondary information means that the Department will satisfy itself that the secondary information to be used has probative value. See also, 19 CFR 351.308.

Thus, in those instances in which it determines to apply adverse facts available, the Department, in order to satisfy itself that such information has probative value, will examine, to the extent practicable, the reliability and relevance of the information used. However, unlike other types of information, such as publicly available data on the national inflation rate of a given country or national average interest rates, there typically are no independent sources for data on company-specific benefits resulting from countervailable subsidy programs. The only source for such information normally is administrative determinations. In the instant case, no evidence has been presented or obtained which contradicts the reliability of the Start Printed Page 16475evidence relied upon in previous segments of this proceeding.

With respect to the relevance aspect of corroboration, the Department will consider information reasonably at its disposal as to whether there are circumstances that would render benefit data not relevant. See Cotton Shop Towels from Pakistan: Final Results of Countervailing Duty Administrative Review, 66 FR 42514 (August 13, 2001). Where circumstances indicate that the information is not appropriate as adverse facts available, the Department will not use it. See Fresh Cut Flowers from Mexico; Final Results of Antidumping Duty Administrative Review, 61 FR 6812 (February 22, 1996). In the instant case, no evidence has been presented or obtained which contradicts the relevance of the benefit data relied upon in previous segments of this proceeding. Thus, in the instant case, the Department finds that the information used has been corroborated to the extent practicable.

Analysis of Programs

I. Programs Preliminarily Determined To Confer Subsidies

A. Export Certificate Voucher Program

The GOI and RPPC explain that prior to calendar year 2000, there were three exchange rates in effect: (1) The oil-notional rate, available exclusively to the GOI for its own budgetary requirements; (2) the non-oil export rate, also referred to as the “export rate,” available to importers and exporters for their foreign exchange transactions; and (3) the “free-market” rate, which was itself tied to the Tehran Stock Exchange (TSE). According to information from the GOI, during the months leading up to the POR, the export rate and the “free-market” rate, although similar to each other, were significantly different from the oil-notional rate.

Under this system, the GOI required exporters to deposit a certain percentage of their anticipated export revenue with the Central Bank of Iran (CBI). Deposit rates varied across industries. In the case of the pistachio industry, the deposit requirement was 100 percent of the export sale. Also, the GOI required exporters to obtain, for a nominal fee, an export certificate. In addition, the GOI required exporters to return the foreign exchange earned on the sale to the CBI.

Provided that the exporter conducted the transaction through an Iranian bank, the CBI issued, upon return of the foreign exchange earnings, an export certificate voucher to the exporter. The export certificate voucher, in turn, gave the exporter three options: (1) Use the dollars earned on the export sale, within three months of receipt, to purchase dollar-denominated imports; (2) use the voucher to convert the amount of foreign exchange listed on the export certificate into rials at the export rate; or (3) sell the voucher, within three months of receipt, on the open market at slightly higher margins (i.e., the margin between the export rate and “free market” rate) to buyers in Iran that had a need to acquire U.S. dollars.

According to the GOI, this exchange rate system was revised pursuant to Iran's adoption of its third five-year development plan in March of 2000. Under the new system, the GOI abolished the export rate, thus leaving only two rates, the oil-notional rate and the “free market” rate. However, according to the GOI, participants in the export certificate voucher program were eligible to utilize a third rate that more closely tracked but, nonetheless, was still below the “free market” rate.

Under this revised exchange rate system, exporters must return their foreign currency to the CBI within eight months of the sale. As an added incentive, the CBI offers an early deposit reward to holders of export certificate vouchers equal to one percent of the sale for every month the exporter returns the foreign currency prior to the termination of the eight month deadline. This reward is capped at six percent of the sale. The exporter is then free to sell the “awarded” foreign exchange at the “free market” rate.

According to the GOI, the exchange rate system adopted under the third five-year development plan was, itself, abolished by the CBI in March of 2002. Under the new 2002 system, the GOI claims that it has completely unified its exchange rate system.

According to RPPC, it utilized the export certificate voucher program during the POR, selling the vouchers on the open market at slightly higher margins (i.e., the margin between the export rate and “free market” rate) (see page 11 and Exhibit 7 of RPPC's August 19, 2002, questionnaire response). Moreover, RPPC used the early deposit reward program during the POR (see page 4 of RPPC's October 15, 2002, questionnaire response). To calculate the benefit from the export certificate voucher program, we subtracted the exchange rate listed on each export certificate RPPC sold during the POR from the free market exchange rate that was in effect as of the date of the export certificate. We then multiplied this difference, in rials per dollar, by the dollar value listed on each export certificate. Next, we summed each of the products to arrive at the total benefit in rials. We then divided the total benefit by RPPC's export sales during the POR. We note that, as BIA, we used RPPC's total sales of export certificates in rials for RPPC's export sales, as RPPC did not provide us with its export sales. On this basis, we preliminarily determine, for liquidation purposes, a net countervailable subsidy of 1.14 percent ad valorem for RPPC.

We calculated a benefit for RPPC's early deposit rewards by dividing the total amount of RPPC's early deposit rewards in rials by the same export sales figure discussed above. On this basis, we preliminarily determine, for liquidation purposes, a net countervailable subsidy of 2.72 percent ad valorem for RPPC.

However, we found in the Pistachios New Shipper Reviews that the export certificate voucher program in its entirety was terminated as of March 21, 2002 (see Comment 13 of the Issues and Decision Memorandum). Therefore, for cash deposit purposes, the rate is 0.00 percent ad valorem for RPPC. For further discussion, see “Preliminary Results of Review” section below.

B. Provision of Fertilizer and Machinery

Petitioners have alleged that under this program the GOI provides fertilizer and machinery to the pistachio industry at preferential prices. Although RPPC itself stated that it did not receive any inputs from the GOI during the POR, RPPC did not provide any information regarding the usage of this program by the 70,000 members of RPPC. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

C. Provision of Water and Irrigation Equipment

Petitioners have alleged that the GOI undertakes the construction of soil dams, flood barriers, canals, and other irrigation projects on behalf of pistachio farmers. Although RPPC itself stated that it did not receive any funding from the GOI during the POR with respect to this program, RPPC did not provide any information regarding the usage of this program by the 70,000 members of RPPC. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

D. Program to Improve Quality of Exports of Dried Fruit

Petitioners have alleged that pursuant to the Budget Act of 2001-2002, the GOI provides financial assistance to exporters of dried fruit and pistachios to Start Printed Page 16476assist them in the production of export quality goods. RPPC did not respond to questions regarding its or its members' usage of this program. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

E. Duty Refunds on Imported Raw or Intermediate Materials Used in the Production of Exported Goods

Petitioners have alleged that pursuant to the Third Five Year Development Plan (TFYDP) enacted by the GOI, duties and levies paid in connection with the importation of intermediate materials used in the production of the exported commodities and goods are refunded to exporters. RPPC did not answer any of our questions with respect to this program. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

F. Tax Exemptions

Petitioners have alleged that the GOI provides tax exemptions to agricultural producers who are exporters. During the verification of the new shipper reviews, the Department learned that section 141 of the Direct Taxation Act exempts exporters of agricultural goods from income taxes (see December 4, 2002 memorandum to Melissa G. Skinner, Director, Office of AD/CVD Enforcement VI from Alicia Kinsey, Case Analyst, Verification of the Questionnaire Responses Submitted by the GOI (GOI Verification Report) at page 6, which has been placed on the record of this administrative review). RPPC stated that it was not subject to income taxation during the POR. However, RPPC has failed to provide relevant tax information for any of the 70,000 growers that are members of its cooperative. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

G. Technical Assistance from the GOI

Petitioners have alleged that pistachio growers receive technical support as part of the GOI's program to facilitate agricultural development. Although RPPC itself stated that it did not receive any technical assistance from the GOI during the POR with respect to this program, RPPC did not provide any information regarding the usage of this program by the 70,000 members of RPPC. Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

H. Provision of Credit

Petitioners have alleged that the GOI provides loans at below market interest rates to members of the agricultural sector. RPPC states that it did not receive any loans from the GOI. In the course of this administrative review, we requested that RPPC submit financial statements for the POR. RPPC submitted financial statements covering the year ending March 19, 2001. These financial statements include a line item for “loans” and do not contain any explanatory notes. RPPC claims that these financial statements are complete and are the most current.

We find that RPPC failed to provide us with complete financial statements for the POR, as the financial statements that RPPC submitted cover only one quarter of the POR. We note that RPPC is one of the largest pistachio producers in the world and, thus, should be able to provide the Department with at least some form of financial information (e.g., unaudited financial statements) for the remaining nine and one-half months of the POR, as we are well into 2003. Therefore, we preliminarily determine that there is not enough evidence on the record to confirm that RPPC's outstanding loans were not provided by the GOI, as RPPC did not submit any ledgers or journals as supporting documentation, nor did it submit any financial statements or records for the majority of the POR.

Therefore, as adverse facts available, we preliminarily determine a net countervailable subsidy of 7.11 percent ad valorem, from In-shell Pistachios, for RPPC.

II. Program Determined to Be Not Countervailable

A. Price Supports and/or Guaranteed Purchase of All Production

Based on information obtained in the course of the recently-completed new shipper reviews of in-shell pistachios and in-shell roasted pistachios from Iran, we determined that this program is not countervailable (see Pistachios New Shipper Reviews and the accompanying Issues and Decision Memorandum at Comment 5). No information was submitted in the instant review to warrant the Department to reconsider its determination. Therefore, we continue to find this program not countervailable.

Preliminary Results of Review

In accordance with section 751(a)(1)(A) of the Act, we determined an individual rate for each producer/exporter of the subject merchandise participating in this administrative review. We preliminarily determine the total estimated net countervailable subsidy rate to be:

Producer/Exporter

Rafsanjan Pistachio Producers Cooperative (RPPC).

Net Subsidy Rate

53.63 percent ad valorem.

Under section 351.526 of the Department's regulations, the Department can adjust cash deposit rates to account for program-wide changes. During the recently-completed new shipper reviews of in-shell pistachios and in-shell roasted pistachios from Iran, the Department verified that the export certificate voucher program has been terminated subsequent to the POR (see Pistachios New Shipper Reviews and the accompanying Issues and Decision Memorandum at Comment 13). Therefore, we are adjusting the cash deposit rate to take into account this program-wide change. Thus, in determining the cash deposit rate listed below, we have deducted the subsidies found for this program from the overall subsidy rate calculated for RPPC.

Producer/Exporter

Rafsanjan Pistachio Producers Cooperative (RPPC).

Cash Deposit Rate

49.77 percent ad valorem.

If the final results of this review remain the same as these preliminary results, the Department intends to instruct Customs to assess countervailing duties as indicated above. The Department also intends to instruct Customs to collect cash deposits of estimated countervailing duties as indicated above as a percentage of the f.o.b. invoice price on all shipments of the subject merchandise from reviewed companies, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of this review.

Because the URAA replaced the general rule in favor of a country-wide rate with a general rule in favor of individual rates for investigated and reviewed companies, the procedures for establishing countervailing duty rates, including those for non-reviewed companies, are now essentially the same as those in antidumping cases, except as provided for in section 777A(e)(2)(B) of the Act. The requested review will normally cover only those companies specifically named. See 19 CFR 351.213(b). Pursuant to 19 CFR 351.212(c), for all companies for which a review was not requested, duties must Start Printed Page 16477be assessed at the cash deposit rate, and cash deposits must continue to be collected, at the rate previously ordered. As such, the countervailing duty cash deposit rate applicable to a company can no longer change, except pursuant to a request for a review of that company. See Federal-Mogul Corporation and The Torrington Company v. United States, 822 F.Supp. 782 (CIT 1993) and Floral Trade Council v. United States, 822 F.Supp. 766 (CIT 1993) (interpreting 19 CFR 353.22(e), the antidumping regulation on automatic assessment, which is identical to 19 CFR 351.212(c)(ii)(2)). Therefore, the cash deposit rates for all companies except those covered by this review will be unchanged by the results of this review.

We will instruct Customs 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 will be the rate for that company established in the most recently completed administrative proceeding conducted under the URAA. If such a review has not been conducted, the rate established in the most recently completed administrative proceeding pursuant to the statutory provisions that were in effect prior to the URAA amendments is applicable. These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested. In addition, for the period January 1, 2001, through December 31, 2001, the assessment rates applicable to all non-reviewed companies covered by this order are the cash deposit rates in effect at the time of entry.

Upon completion of this administrative review, the Department will determine, and Customs shall assess, countervailing duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(2), we have calculated a company-specific assessment rate for merchandise subject to this review. The Department will issue appropriate assessment instructions directly to Customs within 15 days of publication of the final results of review. If these preliminary results are adopted in the final results of review, we will direct Customs to assess the resulting assessment rates against the entered customs values for the subject merchandise on each of the company's entries during the review period.

Public Comment

In accordance with 19 CFR 351.310, we will hold a public hearing, if requested, to afford interested parties an opportunity to comment on these preliminary results. Any such hearing is tentatively scheduled to be held 37 days from the date of publication of these preliminary results, at the U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230. Individuals who wish to request a hearing must submit a written request within 30 days of the publication of this notice in the Federal Register to the Assistant Secretary for Import Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue NW, Washington, DC 20230. Parties should confirm by telephone the time, date, and place of the hearing 48 hours before the scheduled time.

Requests for a public hearing should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and, (3) to the extent practicable, an identification of the arguments to be raised at the hearing. Parties may file case briefs pursuant to 19 CFR 351.309(c)(ii). Six copies of the business proprietary version and six copies of the non-proprietary version of the case briefs must be submitted to the Assistant Secretary no later than 30 days from the date of publication of the preliminary determination. As part of the case brief, parties are encouraged to provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Parties may also submit rebuttal briefs pursuant to 19 CFR 351.309(d). Six copies of the business proprietary version and six copies of the non-proprietary version of the rebuttal briefs must be submitted to the Assistant Secretary no later than 5 days from the date of filing of the case briefs. An interested party may make an affirmative presentation only on arguments included in that party's case or rebuttal briefs. Further written arguments should be submitted in accordance with 19 CFR 351.309 and will be considered if received within the time limits specified above.

This administrative review is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677f(i)(1)).

Start Signature

Dated: March 31, 2003.

Joseph A. Spetrini,

Acting Assistant Secretary for Import Administration.

End Signature End Supplemental Information

Footnotes

1.  The Statement of Administrative Action accompanying the URAA clarifies that information from the petition is “secondary information.” See Statement of Administrative Action, accompanying H.R. 5110 (H. Doc. No. 103-316) (1994) (SAA) at 870.

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[FR Doc. 03-8235 Filed 4-3-03; 8:45 am]

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