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Initiation and Preliminary Results of Antidumping Duty Changed Circumstances Review: Certain Circular Welded Non-Alloy Steel Pipe From Mexico

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AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

SUMMARY:

In response to a request for an expedited changed circumstances review from Tuberia Nacional, S.A. de C.V. (TUNA) and Lamina y Placa Comercial, S.A. de C.V. (Lamina y Placa), the Department of Commerce (the Department) is initiating a changed circumstances review of the antidumping duty order on certain circular welded non-alloy steel pipe (CWP) from Mexico pursuant to section 751(b) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.216 and 351.221(c)(3). We have preliminarily concluded that Lamina y Placa is the successor-in-interest to TUNA and, as a result, should be accorded the same treatment previously given to TUNA with respect to the antidumping duty order on CWP from Start Printed Page 71073Mexico. Interested parties are invited to comment on these preliminary results.

DATES:

Effective Date: November 22, 2010.

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FOR FURTHER INFORMATION CONTACT:

Mark Flessner or Robert James, AD/CVD Operations, Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Room 7866, Washington, DC 20230; telephone: (202) 482-6312 or (202) 482-0649, respectively.

Background

The Department published an antidumping duty order on CWP from Mexico on November 2, 1992. See Notice of Antidumping Duty Orders: Certain Circular Welded Non-Alloy Steel Pipe from Brazil, the Republic of Korea (Korea), Mexico, and Venezuela, and Amendment to Final Determination of Sales at Less Than Fair Value: Certain Circular Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453 (November 2, 1992).

On May 17, 2010, both TUNA and Lamina y Placa filed a request for a changed circumstances review of the antidumping duty order on CWP from Mexico. TUNA and Lamina y Placa claim that Lamina y Placa is the successor-in-interest to TUNA in accordance with section 751(b) of the Act and 19 CFR 351.216 and provided documentation supporting its assertion.

On June 30, 2010, the Department issued a questionnaire to TUNA and Lamina y Placa seeking additional information related to their request for a changed circumstances review. On July 28, 2010, TUNA and Lamina y Placa filed their response to the questionnaire. On August 31, 2010, the Department issued a supplemental questionnaire to TUNA and Lamina y Placa.

On September 10, 2010, TUNA and Lamina y Placa submitted their supplemental questionnaire response. On September 21, 2010 and September 27, 2010, TUNA and Lamina y Placa provided further information clarifying the ownership structure and legal status of both entities as requested by the Department. See Memorandum to the File, dated October 14, 2010.

In response to TUNA's and Lamina y Placa's request, the Department is initiating a changed circumstances review of this order.

Scope of the Order

The merchandise covered by this order is circular welded non-alloy steel pipes and tubes, of circular cross-section, not more than 406.4 millimeters (16 inches) in outside diameter, regardless of wall thickness, surface finish (black, galvanized, or painted), or end finish (plain end, beveled end, threaded, or threaded and coupled). These pipes and tubes are generally known as standard pipes and tubes and are intended for the low-pressure conveyance of water, steam, natural gas, and other liquids and gases in plumbing and heating systems, air conditioning units, automatic sprinkler systems, and other related uses, and generally meet ASTM A-53 specifications. Standard pipe may also be used for light load-bearing applications, such as for fence tubing, and as structural pipe tubing used for framing and support members for reconstruction or load-bearing purposes in the construction, shipbuilding, trucking, farm equipment, and related industries. Unfinished conduit pipe is also included in this order. All carbon steel pipes and tubes within the physical description outlined above are included within the scope of this order, except line pipe, oil country tubular goods, boiler tubing, mechanical tubing, pipe and tube hollows for redraws, finished scaffolding, and finished conduit. Standard pipe that is dual or triple certified/stenciled that enters the United States as line pipe of a kind used for oil or gas pipelines is also not included in this order.

Imports of the products covered by this order are currently classifiable under the following Harmonized Tariff Schedule of the United States (HTSUS) subheadings: 7306.30.10.00, 7306.30.50.25, 7306.30.50.32, 7306.30.50.40, 7306.30.50.55, 7306.30.50.85, and 7306.30.50.90. Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this order is dispositive.

Initiation of Antidumping Duty Changed Circumstances Review

Pursuant to section 751(b)(1) of the Act, the Department will conduct a changed circumstances review upon receipt of a request from an interested party or receipt of information concerning an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order. On May 17, 2010, TUNA and Lamina y Placa submitted their request for a changed circumstances review, claiming Lamina y Placa is the successor-in-interest to TUNA. In its submission, TUNA and Lamina y Placa explain that a majority of TUNA's assets were transferred to an affiliated company, Temple de Monterrey, S.A. de C.V. (Temple de Monterrey) on September 30, 2009. TUNA and Lamina y Placa state Temple de Monterrey was subsequently acquired by Lamina y Placa on December 28, 2009. See TUNA's and Lamina y Placa's submission, dated May 17, 2010 at 3 and Exhibits 1 and 2. As a result of the asset transfer and corporate merger, TUNA and Lamina y Placa clarify that all of TUNA's assets previously transferred to Temple de Monterrey are now held by Lamina y Placa. Id. However, TUNA and Lamina y Placa also maintain that the merger did not dissolve TUNA as a legal entity, and while TUNA does not currently have manufacturing or selling activities, it does retain ownership of certain buildings and land. See TUNA's and Lamina y Placa's submission, dated September 27, 2010 at 2 and Exhibit 1.

No other interested parties commented on TUNA's and Lamina y Placa's submissions. Based on the information submitted by TUNA and Lamina y Placa, the Department has determined that changed circumstances sufficient to warrant a review exist. See 19 CFR 351.216(d). The Department also finds that expedited action is warranted in accordance with 19 CFR 351.221(c)(3)(ii), and therefore we are publishing a notice of initiation and preliminary results for this changed circumstances review concurrently. See Ball Bearings and Parts Thereof from Japan: Initiation and Preliminary Results of Changed-Circumstances Review, 71 FR 14679 (March 23, 2006).

Preliminary Results

In antidumping duty changed circumstances reviews involving a successor-in-interest determination, the Department typically examines several factors including, but not limited to: (1) Management; (2) production facilities; (3) supplier relationships; and (4) customer base. See Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 57 FR 20460, 20462 (May 13, 1992) and Certain Cut-to-Length Carbon Steel Plate from Romania: Initiation and Preliminary Results of Changed Circumstances Antidumping Duty Administrative Review, 70 FR 22847 (May 3, 2005) (Plate from Romania). While no single factor or combination of factors will necessarily be dispositive, the Department generally will consider the new company to be the successor to the predecessor if the resulting operations are essentially the same as those of the predecessor company. See, e.g., Industrial Phosphoric Acid from Israel: Final Results of Antidumping Duty Changed Circumstances Review, 59 FR 6944, 6945 (February 14, 1994), and Plate from Romania, 70 FR 22847. Start Printed Page 71074Thus, if the record evidence demonstrates the new company operates as the same business entity as the predecessor company with respect to the production and sale of the subject merchandise, the Department may assign the new company the cash deposit rate of its predecessor. See, e.g., Fresh and Chilled Atlantic Salmon from Norway: Final Results of Changed Circumstances Antidumping Duty Administrative Review, 64 FR 9979, 9980 (March 1, 1999).

In accordance with 19 CFR 351.221(c)(3)(i), we preliminarily determine that Lamina y Placa is the successor-in-interest to TUNA. In its submissions, TUNA and Lamina y Placa provide documentation showing the transfer of production and sales operations from TUNA to Lamina y Placa resulted in little or no change in management, production facilities, supplier relationships, or customer base.

In its initial submission, dated May 17, 2010, TUNA and Lamina y Placa state: (1) The production of subject merchandise at Lamina y Placa is managed by the same individuals who previously managed production operations of subject merchandise at TUNA prior to the merger; (2) subject merchandise produced by Lamina y Placa is in the same location and at the same capacity as produced by TUNA before the merger; (3) Lamina y Placa consumes the same material inputs as TUNA did, sourced from the same major suppliers; and (4) Lamina y Placa sells merchandise to the same customer base to which TUNA made sales.

TUNA and Lamina y Placa further explain that the ultimate ownership of the production facilities remain the same, and did not change as a result of the transfer of a majority of TUNA's assets to Temple de Monterrey, and the latter's eventual merger with Lamina y Placa. Additionally, TUNA and Lamina y Placa point out that the Department has previously collapsed both companies into a single producer entity in the 1998-1999 administrative review of this order (i.e., the most recently completed administrative review of TUNA). See TUNA's and Lamina y Placa's submission, dated May 17, 2010 at 6, citing Circular Welded Non-Alloy Steel Pipe From Mexico: Preliminary Results and Partial Rescission of Antidumping Duty Administrative Review, 65 FR 77560, 77562 (December 20, 2000) (1998-1999 Preliminary Results); unchanged in Circular Welded Non-Alloy Steel Pipe From Mexico: Final Results of Antidumping Duty Administrative Review, 66 FR 21311 (April 30, 2001) and unchanged in Circular Welded Non-Alloy Steel Pipe From Mexico: Amended Final Results of Antidumping Duty Administrative Review, 66 FR 37454 (July 18, 2001).

In performing our analysis, we first examined the organization charts showing the management structure and ownership information for TUNA, Lamina y Placa and Temple de Monterrey both prior to and after the merger of Temple de Monterrey into Lamina y Placa. See TUNA's and Lamina y Placa's submissions, dated May 17, 2010 (Exhibit 3), July 28, 2010 (Exhibit 4), September 10, 2010 (Exhibit 1) and September 21, 2010 (Exhibits 1 and 2). TUNA and Lamina y Placa note that the management of TUNA's pipe facility did not change between TUNA's asset transfer to Temple de Monterrey and Temple de Monterrey's merger into Lamina y Placa. The only significant changes involve transfers of personnel from other affiliated entities, the promotion of Lamina y Placa employees to higher positions and the creation of new positions. As such, Lamina y Placa's management structure after the merger of Temple de Monterrey, for the most part, resembles its previous management structure. See TUNA's and Lamina y Placa's submissions, dated July 28, 2010 at 5-6 and Exhibit 4.

Second, we reviewed production data of subject merchandise from production facilities of both Lamina y Placa and TUNA covering periods prior to and following the asset transfer and corporate merger. Data show both entities maintained the same production capacity. See TUNA's and Lamina y Placa's submissions, dated May 17, 2010 and July 28, 2010 at Exhibits 4 and 5, respectively.

Third, we examined the list of major input suppliers to TUNA for the production of subject merchandise prior to the transfer of a majority of its assets to Temple de Monterrey. We compared this to the list of suppliers of major inputs to Lamina y Placa for the production of subject merchandise following the transfer of TUNA's assets and found both lists were identical. See TUNA's and Lamina y Placa's submission, dated May 17, 2010 at Exhibit 5. Meanwhile, TUNA and Lamina y Placa clarified that Lamina y Placa also maintained relationships with additional suppliers for other material, finished goods and services. See TUNA's and Lamina y Placa's submission, dated July 28, 2010 at Exhibit 6.

Fourth, we reviewed the customer lists for TUNA's sales of subject merchandise prior to the transfer of its assets to Temple de Monterrey and Lamina y Placa's customers following its merger with Temple de Monterrey. TUNA and Lamina y Placa explained that prior to the asset transfer and corporate merger, Lamina y Placa did not operate any facilities for the production of subject merchandise. However, TUNA and Lamina y Placa add that TUNA was involved as a toller for Lamina y Placa, wherein Lamina y Placa placed orders with TUNA for certain subject and non-subject merchandise and paid TUNA a monthly sum for the volume of merchandise produced. TUNA and Lamina y Placa state this arrangement served as a basis for the Department's treatment of Lamina y Placa as a producer in the 1998-1999 Preliminary Results (unchanged in the final results and amended final results) and its decision to collapse both companies as a single entity.[1] See TUNA's and Lamina y Placa's submission, dated July 28, 2010 at 1 and 2. As a result, Lamina y Placa claim that prior to the asset transfer and corporate merger, it sold merchandise to its own customers, while TUNA sold merchandise to only a few direct customers. See TUNA's and Lamina y Placa's submission, dated July 28, 2010 at 7-8 and Exhibit 7. However, since the asset transfer and corporate merger, Lamina y Placa explains it has maintained the same customer base while also absorbing TUNA's former direct customers. Id. at 7-8. Therefore, based on record information, we preliminarily find that Lamina y Placa's customers include those of TUNA's prior to the asset transfer and corporate merger.

For the reasons described above, we preliminarily find that Lamina y Placa is the successor-in-interest to TUNA in accordance with 19 CFR 351.221(c)(3)(i). As such, Lamina y Placa is entitled to TUNA's cash-deposit rate with respect to entries of subject merchandise. Should our final results remain the same as these preliminary results, effective the date of publication of the final results we will instruct U.S. Customs and Border Protection to assign entries of merchandise produced or exported by Lamina y Placa the antidumping duty cash-deposit rate applicable to TUNA.

Public Comment

Any interested party may request a hearing within 15 days of publication of this notice. See 19 CFR 351.310(c). Any hearing, if requested, will be held 22 days after the date of publication of this notice or the first working day thereafter. Interested parties may submit Start Printed Page 71075case briefs not later than 15 days after the date of publication of this notice. See 19 CFR 351.309(c)(ii). Rebuttal briefs, which must be limited to issues raised in case briefs, may be filed not later than 20 days after the date of publication of this notice. Parties who submit case briefs or rebuttal briefs in this changed circumstances review are requested to submit with each argument: (1) A statement of the issue; and (2) a brief summary of the argument. Consistent with 19 CFR 351.216(e), we will issue the final results of this changed-circumstances review no later than 270 days after the date on which this review was initiated, or within 45 days of publication of these preliminary results if all parties agree to our preliminary finding.

During the course of this antidumping duty changed circumstances review, the cash deposit requirements for the subject merchandise exported and manufactured by Lamina y Placa will continue to be the all-others rate established in the investigation. See Notice of Antidumping Duty Orders: Certain Circular Welded Non-Alloy Steel Pipe from Brazil, the Republic of Korea (Korea), Mexico, and Venezuela, and Amendment to Final Determination of Sales at Less Than Fair Value: Certain Circular Welded Non-Alloy Steel Pipe from Korea, 57 FR 49453 (November 2, 1992).

This notice of initiation and preliminary results is published in accordance with sections 751(b)(1) and 777(i)(1) of the Act, and 19 CFR 351.216 and 19 CFR 351.221(c)(3).

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Dated: November 15, 2010.

Ronald K. Lorentzen,

Deputy Assistant Secretary for Import Administration.

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Footnotes

1.  The Department also collapsed a third affiliated company, Lamina y Placa Monterrey, which engaged in similar tolling operations.

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[FR Doc. 2010-29384 Filed 11-19-10; 8:45 am]

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