Notice of Preliminary Results of Countervailing Duty Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of Korea, 11397-11402 [E6-3174]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 71, Number 44 (Tuesday, March 7, 2006)]
[Notices]
[Pages 11397-11402]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-3174]


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DEPARTMENT OF COMMERCE

International Trade Administration

(C-580-837)


Notice of Preliminary Results of Countervailing Duty 
Administrative Review: Certain Cut-to-Length Carbon-Quality Steel Plate 
from the Republic of Korea

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the countervailing duty (CVD) order on certain 
cut-to-length carbon-quality steel plate (CLT plate) from the Republic 
of Korea (Korea) for the period January 1, 2004, through December 31, 
2004, the period of review (POR). For information on the net subsidy 
rate for the reviewed company, see 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: March 7, 2006.

FOR FURTHER INFORMATION CONTACT: Tipten Troidl or Eric B. Greynolds, 
AD/

[[Page 11398]]

CVD Operations, Office 3, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Room 4014, 14\th\ Street 
and Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 
482-1767 or (202) 482-6071, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On February 10, 2000, the Department published in the Federal 
Register the CVD order on CTL plate from Korea. See Notice of Amended 
Final Determination: Certain Cut-to-Length Carbon-Quality Steel Plate 
from India and the Republic of Korea; and Notice of Countervailing Duty 
Orders: Certain Cut-to-Length Carbon-Quality Steel Plate from France, 
India, Indonesia, Italy, and the Republic of Korea, 65 FR 6587 
(February 10, 2000) (CTL Plate Order). On February 1, 2005, the 
Department published a notice of opportunity to request an 
administrative review of this CVD order. See Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation; 
Opportunity to Request Administrative Review, 70 FR 5136 (February 1, 
2005). On February 28, 2005, we received a timely request for review 
from Dongkuk Steel Mill Co., Ltd. (DSM), a Korean producer and exporter 
of subject merchandise. On March 23, 2005, the Department initiated an 
administrative review of the CVD order on CTL plate from Korea, 
covering January 1, 2004, through December 31, 2004. See Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and Requests 
for Revocation in Part, 70 FR 14643 (March 23, 2005).
    On May 16, 2005, the Department issued a questionnaire to the 
Government of Korea (GOK) and DSM. We received questionnaire responses 
from DSM and the GOK on July 15, 2005. On September 27, 2005, we issued 
supplemental questionnaires to the GOK and DSM; the responses were 
received on October 11, 2005, from the DSM and on October 17, 2005, 
from the GOK. On February 22, 2006, we issued a second supplemental to 
DSM and received a response on February 24, 2006.
    On October 13, 2005, the Department published in the Federal 
Register an extension of the deadline for the preliminary results. See 
Notice of Extension of Time Limits for Preliminary Results of 
Countervailing Duty Administrative Review: Certain Cut-to-Length 
Carbon-Quality Steel Plate from Korea, 70 FR 59722 (October 13, 2005).
    In accordance with 19 CFR 351.213(b), this review covers only those 
producers or exporters for which a review was specifically requested. 
The only company subject to this review is DSM. This review covers 19 
programs.

Scope of Order

    The products covered by the CVD order are certain hot-rolled 
carbon-quality steel: (1) universal mill plates (i.e., flat-rolled 
products rolled on four faces or in a closed box pass, of a width 
exceeding 150 mm but not exceeding 1250 mm, and of a nominal or actual 
thickness of not less than 4 mm, which are cut-to-length (not in coils) 
and without patterns in relief), of iron or non-alloy-quality steel; 
and (2) flat-rolled products, hot-rolled, of a nominal or actual 
thickness of 4.75 mm or more and of a width which exceeds 150 mm and 
measures at least twice the thickness, and which are cut-to-length (not 
in coils). Steel products to be included in the scope of the order are 
of rectangular, square, circular or other shape and of rectangular or 
non-rectangular cross-section where such non-rectangular cross-section 
is achieved subsequent to the rolling process (i.e., products which 
have been ``worked after rolling'')--for example, products which have 
been beveled or rounded at the edges. Steel products that meet the 
noted physical characteristics that are painted, varnished or coated 
with plastic or other non-metallic substances are included within this 
scope. Also, specifically included in the scope of the order are high 
strength, low alloy (HSLA) steels. HSLA steels are recognized as steels 
with micro-alloying levels of elements such as chromium, copper, 
niobium, titanium, vanadium, and molybdenum. Steel products to be 
included in this scope, regardless of Harmonized Tariff Schedule of the 
United States (HTSUS) definitions, are products in which: (1) iron 
predominates, by weight, over each of the other contained elements; (2) 
the carbon content is two percent or less, by weight; and (3) none of 
the elements listed below is equal to or exceeds the quantity, by 
weight, respectively indicated: 1.80 percent of manganese, or 1.50 
percent of silicon, or 1.00 percent of copper, or 0.50 percent of 
aluminum, or 1.25 percent of chromium, or 0.30 percent of cobalt, or 
0.40 percent of lead, or 1.25 percent of nickel, or 0.30 percent of 
tungsten, or 0.10 percent of molybdenum, or 0.10 percent of niobium, or 
0.41 percent of titanium, or 0.15 percent of vanadium, or 0.15 percent 
zirconium. All products that meet the written physical description, and 
in which the chemistry quantities do not equal or exceed any one of the 
levels listed above, are within the scope of this order unless 
otherwise specifically excluded. The following products are 
specifically excluded from the order: (1) products clad, plated, or 
coated with metal, whether or not painted, varnished or coated with 
plastic or other non-metallic substances; (2) SAE grades (formerly AISI 
grades) of series 2300 and above; (3) products made to ASTM A710 and 
A736 or their proprietary equivalents; (4) abrasion-resistant steels 
(i.e., USS AR 400, USS AR 500); (5) products made to ASTM A202, A225, 
A514 grade S, A517 grade S, or their proprietary equivalents; (6) ball 
bearing steels; (7) tool steels; and (8) silicon manganese steel or 
silicon electric steel.
    The merchandise subject to the order is currently classifiable 
under the HTSUS under subheadings: 7208.40.3030, 7208.40.3060, 
7208.51.0030, 7208.51.0045, 7208.51.0060, 7208.52.0000, 7208.53.0000, 
7208.90.0000, 7210.70.3000, 7210.90.9000, 7211.13.0000, 7211.14.0030, 
7211.14.0045, 7211.90.0000, 7212.40.1000, 7212.40.5000, 7212.50.0000, 
7225.40.3050, 7225.40.7000, 7225.50.6000, 7225.99.0090, 7226.91.5000, 
7226.91.7000, 7226.91.8000, 7226.99.0000.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the merchandise covered by 
the order is dispositive.

SUBSIDIES VALUATION INFORMATION

A. Allocation Period
    In CTL Plate Investigation, the Department determined that the 
Average Useful Life (AUL) listed in the IRS table reasonably reflects 
the AUL of renewable physical assets for the firm or industry under 
investigation. See Final Affirmative Countervailing Duty Determination: 
Certain Cut-to-Length Carbon-Quality Steel Plate from the Republic of 
Korea, 64 FR 73176, 73177 (December 29, 1999) (CTL Plate 
Investigation). No interested parties have claimed that the AUL of 15 
years is unreasonable. Therefore, in accordance with 19 CFR 
351.524(d)(2), we continue to allocate DSM's non-recurring subsidies 
over 15 years.
B. Benchmarks for Loans and Discount Rate

Benchmark for Long-Term Loans issued through 2004

    During the POR, DSM had both won- and foreign currency denominated 
long-term loans outstanding which they

[[Page 11399]]

received from government-owned banks, and Korean commercial banks. 
Based on our findings on this issue in prior investigations, we are 
using the following benchmarks to calculate the subsidies attributable 
to respondent's long-term loans obtained in the years 1992 through 
2004:
    (1) For foreign-currency denominated loans, pursuant to 19 CFR 
351.505(a)(2)(i), our preference is to use the company-specific 
weighted-average foreign currency-denominated interest rates on the 
company's loans from foreign bank branches in Korea, foreign 
securities, and direct foreign loans received after April 1999. We note 
that these benchmarks are consistent with the decisions in Plate in 
Coils and Stainless Steel Sheet and Strip, in which the Department 
determined that the GOK did not control access to foreign currency 
loans from Korean branches of foreign banks. See Final Negative 
Countervailing Duty Determination: Stainless Steel Plate in Coils from 
the Republic of Korea, 64 FR 15530, 15533 (March 31, 1999) (Plate in 
Coils) and Final Affirmative Countervailing Duty Determination: 
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 64 
FR 30636, 30642 (June 8, 1999) (Stainless Steel Sheet and Strip). For 
variable-rate loans outstanding during the POR, pursuant to 19 CFR 
351.505(a)(2)(i), our preference is to use, as the benchmark, an 
interest rate of a lending instrument issued during the POR; and for 
fixed-rate loans, pursuant to 19 CFR 351.505(a)(2)(iii), our preference 
is to use a benchmark rate issued in the same year that the loan was 
issued. However, no such benchmark instruments were available, and 
consistent with our methodology in 2001 Sheet and Strip we relied on 
the lending rates as reported by the IMF's International Financial 
Statistics Yearbook. See Final Results and Partial Rescission of 
Countervailing Duty Administrative Review: Stainless Steel Sheet and 
Strip in Coils from the Republic of Korea, 69 FR 2113 (January 14, 
2004) (2001 Sheet and Strip), and the ``Subsidies Valuation 
Information'' section of the accompanying Issues and Decision 
Memorandum (2001 Sheet and Strip Decision Memorandum).
    (2) For won-denominated long-term loans, we used the company-
specific corporate bond rate on the company's public and private bonds. 
We note that this benchmark is consistent with our decision in Plate in 
Coils, 64 FR at 15531, in which we determined that the GOK did not 
control the Korean domestic bond market after 1991, and that the 
interest rate on domestic bonds may serve as an appropriate benchmark 
interest rate.

Programs Preliminarily Determined To Be Countervailable

1. The GOK's Direction of Credit
    The Department determined in H-Beams that the Korean steel industry 
received a disproportionate amount of long-term financing as a result 
of the GOK's effective control and direction of government loans, 
government-directed long-term commercial loans, and government-directed 
foreign loans. See Final Affirmative Countervailing Duty Determination: 
Structural Steel Beams from the Republic of Korea, 65 FR 41051 (July 3, 
2000) (H-Beams) and the ``The GOK's Direction of Credit Policies'' 
section of the accompanying Issues and Decision Memorandum (H-Beams 
Decision Memorandum). Thus, the Department determined that the GOK's 
direction of credit policies were specific to the Korean steel industry 
through 1991 pursuant to section 771(5A)(D)(iii) of the Tariff Act of 
1930, as amended (the Act). The Department further determined that the 
provision of long-term loans provided a financial contribution and a 
benefit within the meaning of sections 771(5)(D)(i) and 771(5)(E)(ii) 
of the Act, respectively. Id.
    In other Korean CVD proceedings, the Department determined that the 
GOK controlled and directed lending through year 2001\1\. DSM had 
outstanding loans that were received prior to the 2001 period. DSM did 
not provide any new information that would warrant a change in our 
methodology, therefore we continue to find that this program provides a 
countervailable subsidy for loans from government-owned or controlled 
banks through 2001.
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    \1\ The Department determined in the following cases that the 
GOK controlled or directed credit to the steel industry: (1992 
through 1997) Plate in Coils, 64 FR at 15332 and Stainless Steel 
Sheet and Strip, 64 FR at 30641, (1998) H-Beams Decision Memorandum 
at ``The GOK's Direction of Credit'' section, (1999) Final Results 
and Partial Rescission of Countervailing Duty Administrative Review: 
Stainless Steel Sheet and Strip in Coils from the Republic of Korea, 
67 FR 1964 (January 15, 2002) (1999 Sheet and Strip) and ``The GOK's 
Direction of Credit'' section of the accompanying Issues and 
Decision Memorandum (1999 Sheet and Strip Decision Memorandum), 
(2000) Notice of Final Affirmative Countervailing Duty 
Determination: Certain Cold-Rolled Carbon Steel Flat Products from 
the Republic of Korea, 67 FR 62101 (October 3, 2002) (Cold-Rolled 
from Korea) and ``The GOK's Direction of Credit'' section of the 
accompanying Issues and Decision Memorandum, (Cold-Rolled Decision 
Memorandum), and (2001) 2001 Sheet and Strip Decision Memorandum at 
``The GOK's Direction of Credit'' section.
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    DSM had outstanding loans during the POR that it received from 
government-owned or controlled lending institutions between 2002 and 
2004. We asked the GOK for information pertaining to the GOK's 
direction of credit policies for the period between 2002 and 2004. The 
GOK did not provide any additional information, stating instead that,
    ``the Government of Korea continues to believe that the evidence 
demonstrates that there has been no direction of credit to the Korean 
steel industry. Nevertheless, the Department has consistently found 
that long-term loans received by Korean steel producers were the result 
of the Korean Government's direction, despite the Government's repeated 
submission of evidence to the contrary. . . Consequently, in this 
review, the Government will not contest the Department's findings on 
direction of long-term loans.''
See July 15, 2005 GOK submission at page 11. Because the GOK withheld 
the requested information on its lending policies, the Department does 
not have the necessary information on the record to determine whether 
the GOK has continued its direction of credit policies from 2002 
through 2004; therefore, the Department must base its determination on 
facts otherwise available. See section 776(a)(2)(A) of the Act. In 
making determinations based on facts available, the Department may 
resort to adverse inferences if it finds that a respondent has failed 
to cooperate to the best of its ability in complying with the 
Department's requests for information. See section 776(b) of the Act. 
In this case, the GOK refused to supply requested information which was 
in its possession and which it had provided in the past. See Plate in 
Coils and CTL Plate Investigation. Therefore, the Department finds that 
the GOK did not act to the best of its ability and is employing an 
adverse inference in selecting from among the facts otherwise 
available. See also, ``The GOK's Direction of Credit'' section in the 
2001 Sheet and Strip Decision Memorandum. As adverse facts available, 
we therefore, find that the GOK's direction of credit policies 
continued from 2002 through 2004. As noted above, the GOK's direction 
of credit policies provide a financial contribution and a benefit, and 
are specific pursuant to sections 771(5)(D)(i), 771(5)(E)(ii), and 
771(5A)(D)(iii) of the Act, respectively. Therefore, we preliminarily 
find that lending from domestic banks and from government-owned banks 
during the 2002 and 2004 period are countervailable. Therefore, any of 
DSM's loans received during 2002 and 2004 from domestic banks and

[[Page 11400]]

government-owned banks that were outstanding during the POR are 
countervailable.
    DSM received long-term fixed and variable rate loans from GOK-owned 
or controlled institutions that were outstanding during the POR. DSM 
had both won- and foreign currency denominated loans outstanding during 
the POR. We calculated the benefit for each as follows:

Won-Denominated Loans:

    There is no information on the record of this review that indicates 
that DSM received a benefit from any special repayment terms (i.e., 
abnormally long grace periods or maturities, etc.) on their long-term, 
fixed-rate loans. Therefore, in accordance with 19 CFR 351.505(c)(2), 
to calculate the benefit for both fixed- and variable-rate loans 
received from GOK-owned or controlled banks, we used the difference 
between the interest payments on the directed loans and the benchmark 
interest payments. For benchmark information see ``Subsidies Valuation 
Information'' section of this notice. We then summed the benefits from 
DSM's long-term fixed- and variable-rate won-denominated loans.

Foreign Currency Denominated Loans:

    DSM did not have foreign currency denominated loans outstanding 
during the POR which could be used for benchmark purposes. For the 
foreign currency denominated loans we used the lending rates as 
reported by the IMF's Financial Statistics Yearbook. See ``Subsidies 
Valuation Information'' section above.
    To calculate the benefit, we used the difference between the 
interest payments that DSM made and the benchmark interest payments. As 
the interest payments were in foreign currencies, we multiplied the 
benefit amount by the exchange rate to establish a Korean won benefit.
    To calculate the total benefit for all directed credit, we added 
the benefit received from foreign currency loans in Korean won to the 
benefit received from won-denominated loans. Because this program is 
not tied to exports, we used total sales as the denominator. We then 
divided the total benefit by DSM's total f.o.b. sales value during the 
POR. On this basis, we determine the countervailable subsidy to be 0.04 
percent ad valorem for DSM.
2. Asset Revaluation under Tax Programs under the Tax Reduction and 
Exemption Control Act (TERCL) Article 56(2)
    During the investigation, the Department determined that DSM 
benefitted from the revaluation of its assets pursuant to TERCL Article 
56(2). See CTL Plate Investigation, 65 FR at 73182-73183. The 
Department determined that this program was specific under section 
771(5A)(D)(iii) of the Act, and that a financial contribution was 
provided in the form of tax revenue foregone pursuant to 771(5)(D)(ii) 
of the Act. Id. Moreover, the Department determined that a benefit was 
conferred on those companies that were able to revalue their assets 
under TERCL Article 56(2) because the revaluation resulted in 
participants paying fewer taxes than they would otherwise pay absent 
the program. Id. See also 771(5)(E) of the Act.
    In 1998 DSM revalued its assets. This revaluation was not pursuant 
to TERCL Article 56(2) and, according to the GOK, was consistent with 
Korean Generally Accepted Accounting Principles (GAAP). DSM claims that 
the asset revaluations that were adopted in 1988 under Article 56(2) of 
TERCL were superseded when it revalued its assets in 1998. Hence, the 
1988 asset revaluation would only affect the calculation of 
depreciation costs for tax years prior to 1998. However, there were 
certain assets that were not revalued in 1998. For those assets which 
were not revalued in 1998, we identified the total amount of the change 
in depreciation expense attributable to the 1988 asset revaluation for 
2003, (the tax return submitted during the POR). We then multiplied 
this amount by the tax rate for 2003 to determine the benefit under 
this program. As this program is not tied to exports we used the 
benefit amount as the numerator and DSM's total sales as the 
denominator. Using this methodology, we preliminarily determine the 
countervailable subsidy from this program to be less than 0.005 percent 
ad valorem, which, according to the Department's practice, is 
considered not measurable and is not included in the calculation of the 
countervailing duty rate. See, e.g., Notice of Preliminary Results of 
Countervailing Duty Administrative Review: Certain Softwood Lumber 
Products from Canada, 70 FR 33088, 33091 (June 7, 2005).
3. Research and Development under Korea Research Association of New 
Iron and Steelmaking Technology (KANIST) (formerly KNISTRA)
    During the CTL Plate Investigation, the Department determined that 
the GOK, through the Ministry of Commerce, Industry and Energy (MOCIE) 
provided R&D grants to support numerous projects designed to foster the 
development of efficient technology for industrial development. See CTL 
Plate Investigation, 64 FR at 73185. We found this program to be 
specific as the grants were provided directly to respondents and their 
affiliates that are steel-related, and that the grants provided a 
financial contribution. Id. see also sections 771(5A)(D)(ii) and 
771(5)(D)(i) of the Act. Moreover, pursuant to section 771(5)(E) of the 
Act, the Department determined that the benefit was the amount of the 
GOK's contribution allocated to the percentage of the company's 
contribution and was conferred at the time of receipt. Pursuant to 19 
CFR 351.524(b)(2), the Department allocates non-recurring benefits 
provided under a particular subsidy program to the year in which the 
benefits are received if the total amount approved under the subsidy 
program is less that 0.5 percent of the relevant sales of the firm in 
question, during the year in which the subsidy was approved. However, 
neither the GOK nor DSM provided the total approved amount nor the date 
of approval. Therefore, for the preliminary results, the Department 
performed the 0.5 percent test by dividing DSM's portion of the GOK 
contribution at the time of receipt by DSM's total sales at the time of 
receipt. Using this approach, the calculated percentages were less than 
0.5 percent. Therefore, pursuant to 19 CFR 351.524(b)(2), we expensed 
all of the GOK grants provided under the program to the respective 
years or receipt. Based on this methodology, we preliminarily 
determined that for the GOK's contributions made in 2002 and 2003, the 
benefits were expensed during the years of receipt and, therefore, are 
not subject to this review. For those grants that were received during 
the 2004 POR, we preliminarily determine that they were fully expensed 
in the year of receipt. We, therefore, preliminarily calculate a rate 
of 0.01 percent ad valorem.

[[Page 11401]]

Programs Preliminarily Determined Not To Be Used

1. Special Cases of Tax for Balanced Development Among Areas (TERCL 
Articles 41, 42, 43, 44, and 45

    In past Korean cases, the Department determined that Korean 
manufacturing companies using facilities outside the Seoul metropolitan 
area benefit from programs falling under the category of special cases 
of tax for balanced development among areas and includes TERCL Articles 
41, 42, 43, 44, and 45. DSM stated that it did not claim any tax 
reductions or exemptions under these articles during the POR. 
Therefore, we preliminarily determine that DSM did not use this program 
during the POR.

2. Price Discount for DSM Land Purchase at Asan Bay

    In the CTL Plate Investigation the Department determined that the 
GOK forewent revenue that it normally would have collected on land sold 
to DSM. See CTL Plate Investigation, 64 FR at 73184. The Department 
determined that the reduced fees and waived management fees constituted 
a countervailable subsidy. The Department determined that this program 
was specific under section 771(5A)(D)(iii)(I) of the Act, as it was 
specific to DSM. Id. Moreover, the Department determined that the GOK 
provided a financial contribution pursuant to section 771(5)(D)(ii) of 
the Act, because it forewent revenue. Id. Pursuant to section 771(5)(E) 
of the Act, the benefit was equal to the amount of fees that DSM did 
not pay to the GOK. While this is a non-recurring benefit, the amount 
of the benefit was less than 0.5 percent of DSM's total sales and was, 
therefore, expensed during the year of receipt which was prior to the 
POR of this administrative review. Id.
    DSM was also initially exempted from the acquisition tax and 
registration tax on its purchase of land at Asan Bay. In addition, DSM 
was initially exempted from payment of the education tax and special 
tax for rural development. These exemptions were conditioned on DSM's 
constructing facilities within three years of purchase. DSM claims that 
as it did not construct any facilities at Asan Bay within the required 
three years of its land purchase, and, thus, it was required in 2002 to 
pay the acquisition and registration taxes from which it had previously 
been exempted. See DSM's July 15, 2005, submission page 32. Based on 
this information, we preliminarily find that DSM did not use this 
program during the POR.
    In addition to the above programs, the next twelve programs were 
also not used.
3. Requested Load Adjustment (RLA)
4. Local Tax Exemption on Land Outside of Metropolitan Area
5. Exemption of VAT on Anthracite Coal
6. Emergency Load Reduction Program (ELR)
7. Private Capital Inducement Act (PCIA)
8. Social Indirect Capital Investment Reserve Funds (TERCL Article 28)
9 Energy-Savings Facilities Investment Reserve Funds (TERCL Article 29)
10. Industry Promotion and Research and Development Subsidies
    a. Highly Advanced National Project Fund
    b. Steel Campaign for the 21\st\ Century
11. Export Insurance Rates Provided by the Korean Export Insurance 
Corporation
12. Export Industry Facility Loans (EIFL) and Speciality Facility Loans
13. Scrap Reserve Fund
14. Excessive Duty Drawback

Program Previously Found Not To Be Countervailable

1. TERCL and the Restriction of Special Taxation Act (RSTA)

    In Cold-Rolled from Korea, the Department found that tax credits 
under RSTA Articles 24 and 25 (TERCL Articles 25 and 26) are not 
countervailable for investments made after April 10, 1998. Id. The tax 
credits DSM claimed under RSTA Articles 24 and 25 were related to 
investments made after April 10, 1998; therefore, we preliminarily find 
that the tax credits claimed under RSTA Articles 24 and 25 are not 
countervailable.

Program Preliminarily Found to be not Countervailable

1. Electricity Discounts under Direct Load Interruption (DLI)

    During the POR, both Korea Electric Power Corporation (KEPCO) and 
Korea Energy Management Corporation (KEMCO) administered the DLI 
program. The DLI program was established in 2001 and governed by the 
Regulation of Electricity Supply Options. The GOK describes the program 
as a long-term demand side management strategy for curtaining 
electricity during peak demand periods. The DLI program is designated 
for general, industrial and educational customers who agree to allow 
the supply of at least 300 kilowatts of electricity to their plants to 
be interrupted during peak demand periods. By agreeing to allow the 
possible interruption of service to occur during July and August, a 
company receives a rebate from either KEPCO or KEMCO. If a company 
applies for and participates in the DLI program, KEPCO/KEMCO installs 
equipment to control the usage of electricity during the designated 
periods, at KEPCO/KEMCO's discretion. The company is compensated for 
giving up an assured electricity supply by a flat fee that is paid in 
July and August regardless of whether the supply is interrupted. 
Moreover, the participating company receives an additional fee based on 
the actual interruptions in the electricity supplied to it, if any. The 
additional fees depend on the amount of advance warning to the customer 
and the extent of the interruption of electricity supply.
    During the POR, DSM's Inchon plant used this program in conjunction 
with KEPCO and DSM's Pohang plant had an agreement under the program 
with KEMCO. DSM's Pusan plant did not use this program during the POR.
    KEPCO installed equipment at DSM's Inchon plant, allowing it to 
control the usage of electricity at KEPCO's discretion; and KEMCO 
installed equipment in DSM's Pohang plant, allowing KEMPCO to control 
the usage at the Pohang plant. During the POR, DSM received 
compensation from KEPCO and KEMCO in exchange for foregoing an assured 
electricity supply during July and August.
    KEPCO bases the standard electricity rates it charges DSM on a 
published tariff schedule. The electricity rates for the Pohang (Plate 
Mill and Section Mill) and Inchon plants were based on the ``Industrial 
Service-C/High Voltage Power-B/Option III'' tariff schedule. The 
electricity rates applicable to DSM's Pohang (Steel Center) were based 
on the ``Industrial Service-B/High Voltage Power-A/Option II'' tariff 
schedule.
    In conducting the Department's investigation of the DLI electricity 
program, the Department must determine whether the program is specific 
within the meaning of section 771(5A) of the Act. We preliminarily 
determine that the DLI program is not de jure specific within the 
meaning of sections 771(5A)(D)(i) and (ii) of the Act, because (1) it 
is not based on exportation (2) it is not contingent on the use of 
domestic goods over imported goods, and (3) the legislation and/or 
regulations do not expressly limit the access to the subsidy to an 
enterprise or industry, as a matter of law.
    As the Department is preliminarily determining that the DLI program 
is not de jure specific, it must then examine the program under section 
771(5A)(D)(iii) of the Act. If the Department finds that one of the 
following factors exist, then the program is de facto specific.

[[Page 11402]]

    (I) The actual recipients of the subsidy, whether considered on an 
enterprise or industry basis, are limited in number.
    (II) An enterprise or industry is a predominant user of the 
subsidy.
    (III) An enterprise or industry receives a disproportionately large 
amount of the subsidy.
    (IV) The manner in which the authority providing the subsidy has 
exercised discretion in the decision to grant the subsidy indicates 
that an enterprise or industry is favored over others.
    Pursuant to section 771(5A)(D)(iii)(I) of the Act, the Department 
preliminarily finds that under DLI program, the actual recipients of 
the subsidy are not limited in number, as there are many users of the 
program that fall into 31 industries. See GOK's July 15, 2005, 
submission at Exhibit G-4-M.
    Sections 771(5A)(D)(iii)(II) and (III) of the Act direct the 
Department to examine whether an enterprise or an industry is a 
predominant user of the subsidy or receives a disproportionately large 
amount of the subsidy. Although the steel industry received a greater 
monetary benefit from the program than did other participants, that is 
not determinative of whether the steel industry was a dominant user or 
received disproportionate benefits. For example, in CTL Plate 
Investigation, the Department found that respondent steel companies 
were not dominant or disproportionate users of a similar electricity 
program. See CTL Plate Investigation, 64 FR at 73186. The Department 
also stated that ``the fact that certain companies are necessarily 
large consumers of electricity does not make an electricity program 
providing tariff reductions to those companies countervailable.'' Id. 
Furthermore, the U.S. Court of International Trade (CIT) upheld the 
Department's decision in Bethlehem Steel Corp. v. United States, 140 
F.Supp 2d 1354 (CIT 2001). The CIT found that the Department's 
methodology was reasonable and reflected the commercial realities of 
the industry in question. Id, at 1369.
    Consistent with our finding in CTL Plate Investigation, we 
preliminarily determine that although the steel industry is a large 
consumer of electricity and, therefore, a large recipient of the tariff 
reduction, this does not support a conclusion that the percentage of 
the benefits DSM or the steel industry received were disproportionately 
high or that the company or the industry was a dominant user. 
Accordingly, we preliminarily find that the DLI program is not de facto 
specific and is, therefore, not countervailable.

Preliminary Results of Review

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated a subsidy 
rate for DSM for 2004. We preliminarily determine the total estimated 
net countervailable subsidy rate for DSM is 0.05 percent ad valorem for 
2004, which is de minimis. See 19 CFR 351.106(c)(1).
    If the final results of this review remain the same as these 
preliminary results, the Department intends to instruct U.S. Customs 
and Border Protection (CBP), within 15 days of publication of the final 
results, to liquidate shipments of certain cut-to-length carbon-quality 
steel from DSM, entered, or withdrawn from warehouse, for consumption 
from January 1, 2004, through December 31, 2004, at 0.00 percent. Also, 
the Department intends to instruct CBP to require a new cash deposit 
rate for estimated countervailing duties of 0.00 percent for all 
shipments of certain cut-to-length carbon-quality steel plate from DSM, 
entered, or withdrawn from warehouse, for consumption on or after the 
publication of the final results of this administrative review. The 
Department will issue appropriate instructions directly to CBP within 
15 days of the final results of this review.
    We will instruct CBP to continue to collect cash deposits for non-
reviewed companies at the most recent company-specific or country-wide 
rate applicable to the company. Accordingly, the cash deposit rates 
that will be applied to non-reviewed companies covered by this order 
are those established in the most recently completed administrative 
proceeding. See CTL Plate Order, 65 FR 6589. These rates shall apply to 
all non-reviewed companies until a review of a company assigned these 
rates is requested.

Public Comment

    Pursuant to 19 CFR 351.224(b), the Department will disclose to 
parties to the proceeding any calculations performed in connection with 
these preliminary results within five days after the date of the public 
announcement of this notice. Pursuant to 19 CFR 351.309(b)(1), 
interested parties may submit written arguments in response to these 
preliminary results. Unless otherwise indicated by the Department, case 
briefs must be submitted within 30 days after the date of publication 
of this notice, and rebuttal briefs, limited to arguments raised in 
case briefs, must be submitted no later than five days after the time 
limit for filing case briefs. See 19 CFR 351.309(c)(1)(ii). Parties who 
submit written arguments in this proceeding are requested to submit 
with the written argument: (1) a statement of the issue, and (2) a 
brief summary of the argument. Parties submitting case and/or rebuttal 
briefs are requested to provide the Department copies of the public 
version on disk. Case and rebuttal briefs must be served on interested 
parties in accordance with 19 CFR 351.303(f). Also, pursuant to 19 CFR 
351.310, within 30 days of the date of publication of this notice, 
interested parties may request a public hearing on arguments to be 
raised in the case and rebuttal briefs. Unless the Secretary specifies 
otherwise, the hearing, if requested, will be held two days after the 
date for submission of rebuttal briefs, that is, 37 days after the date 
of publication of these preliminary results.
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under 19 CFR 351.309(c)(1)(ii), are due. The 
Department will publish the final results of this administrative 
review, including the results of its analysis of arguments made in any 
case or rebuttal briefs.
    This administrative review is issued and published in accordance 
with sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: February 28, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-3174 Filed 3-6-06; 8:45 am]
BILLING CODE 3510-DS-S