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Code · REGISTER · 2006-06-21 · Import Administration, International Trade Administration, Department of Commerce · Notices

Notices. Notice of Preliminary Results of Antidumping Duty Administrative Review

16,738 words·~76 min read·/register/2006/06/21/06-5551

A research copy — for the controlling text, always check the official state or federal source. Not legal advice.

BILLING CODE 3510-DR-P DEPARTMENT OF COMMERCE International Trade Administration [A-201-822] Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review AGENCY: Import Administration, International Trade Administration, Department of Commerce. ACTION: Notice of Preliminary Results of Antidumping Duty Administrative Review. SUMMARY: In response to requests from respondent ThyssenKrupp Mexinox S.A. de C.V. (Mexinox S.A.) and Mexinox USA, Inc.
(Mexinox USA) (collectively, Mexinox) and petitioners, 1 the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on stainless steel sheet and strip in coils (S4 in coils) from Mexico. This administrative review covers imports of subject merchandise from Mexinox S.A. during the period July 1, 2004, to June 30, 2005. 1 Petitioners are Allegheny Ludlum Corporation, North American Stainless, United Auto Workers Local 3303, Zanesville Armco Independent Organization, Inc. and the United Steelworkers of America, AFL-CIO/CLC.
We preliminarily determine that sales of S4 in coils from Mexico have been made below normal value (NV). If these preliminary results are adopted in our final results of administrative review, we will instruct United States Customs and Border Protection
(CBP)to assess antidumping duties based on the difference between the constructed export price
(CEP)and NV. Interested parties are invited to comment on these preliminary results. Parties who submit argument in these proceedings are requested to submit with the argument:
(1)A statement of the issues,
(2)a brief summary of the argument, and
(3)a table of authorities. EFFECTIVE DATE: June 21, 2006. FOR FURTHER INFORMATION CONTACT: Maryanne Burke or Robert James, AD/CVD Operations, Enforcement Office 7, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230; telephone:
(202)482-5604 or
(202)482-0649, respectively. SUPPLEMENTARY INFORMATION: Background On July 27, 1999, the Department published in the **Federal Register** the *Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils from Mexico* , 64 FR 40560 (July 27, 1999). On July 1, 2005, the Department published a notice entitled *Antidumping or Countervailing Duty Order, Finding, or Suspended Investigation; Opportunity To Request Administrative Review* , covering *inter alia* , S4 in coils from Mexico for the period July 1, 2004, through June 30, 2005, 70 FR 38099 (July 1, 2005). In accordance with 19 CFR 351.213(b)(1), Mexinox and petitioners requested that we conduct an administrative review. On August 29, 2005, we published in the **Federal Register** a notice of initiation of this antidumping duty administrative review covering the period July 1, 2004, through June 30, 2005. *See Initiation of Antidumping and Countervailing Duty Administrative Reviews and Requests for Revocation in Part* , 70 FR 51009 (August 29, 2005). On September 7, 2005, the Department issued an antidumping duty questionnaire to Mexinox. Mexinox submitted its response to section A of the questionnaire on September 29, 2005, and its response to sections B through E of the questionnaire on November 8, 2005. On January 27, 2006, the Department issued its first supplemental questionnaire 2 for sections A through C, as well as for section E, which pertains to an affiliated U.S. reseller, Ken-Mac Metals, Inc. (Ken-Mac). Mexinox responded to this first supplemental questionnaire on March 8, 2006. The Department also issued a supplemental questionnaire for section D on February 16, 2006, to which Mexinox submitted its response on March 21, 2006. On May 4, 2006, the Department issued a second supplemental questionnaire for sections A through C, and Mexinox filed its response on May 23, 2006. 2 On February 6, 2006, the Department issued a revised version of the January 27, 2006, supplemental questionnaire correcting specific invoice numbers with respect to certain questions. Because it was not practicable to complete this review within the normal time frame, on March 10, 2006, we published in the **Federal Register** our notice of the extension of time limits for this review. *Stainless Steel Sheet and Strip in Coils from Mexico; Extension of Time Limit for Preliminary Results of Antidumping Duty Administrative Review* , 71 FR 12343 (March 10, 2006). This extension established the deadline for these preliminary results as June 14, 2006. Period of Review The period of review
(POR)is July 1, 2004, through June 30, 2005. Scope of the Order For purposes of this order, the products covered are certain stainless steel sheet and strip in coils. Stainless steel is an alloy steel containing, by weight, 1.2 percent or less of carbon and 10.5 percent or more of chromium, with or without other elements. The subject sheet and strip is a flat-rolled product in coils that is greater than 9.5 mm in width and less than 4.75 mm in thickness, and that is annealed or otherwise heat treated and pickled or otherwise descaled. The subject sheet and strip may also be further processed ( *e.g.* , cold-rolled, polished, aluminized, coated, *etc.* ) provided that it maintains the specific dimensions of sheet and strip following such processing. The merchandise subject to this order is currently classifiable in the Harmonized Tariff Schedule of the United States (HTSUS) at subheadings: 7219.13.00.31, 7219.13.00.51, 7219.13.00.71, 7219.13.00.81, 7219.14.00.30, 7219.14.00.65, 7219.14.00.90, 7219.32.00.05, 7219.32.00.20, 7219.32.00.25, 7219.32.00.35, 7219.32.00.36, 7219.32.00.38, 7219.32.00.42, 7219.32.00.44, 7219.33.00.05, 7219.33.00.20, 7219.33.00.25, 7219.33.00.35, 7219.33.00.36, 7219.33.00.38, 7219.33.00.42, 7219.33.00.44, 7219.34.00.05, 7219.34.00.20, 7219.34.00.25, 7219.34.00.30, 7219.34.00.35, 7219.35.00.05, 7219.35.00.15, 7219.35.00.30, 7219.35.00.35, 7219.90.00.10, 7219.90.00.20, 7219.90.00.25, 7219.90.00.60, 7219.90.00.80, 7220.12.10.00, 7220.12.50.00, 7220.20.10.10, 7220.20.10.15, 7220.20.10.60, 7220.20.10.80, 7220.20.60.05, 7220.20.60.10, 7220.20.60.15, 7220.20.60.60, 7220.20.60.80, 7220.20.70.05, 7220.20.70.10, 7220.20.70.15, 7220.20.70.60, 7220.20.70.80, 7220.20.80.00, 7220.20.90.30, 7220.20.90.60, 7220.90.00.10, 7220.90.00.15, 7220.90.00.60, and 7220.90.00.80. Although the HTSUS subheadings are provided for convenience and customs purposes, the Department's written description of the merchandise under review is dispositive. Excluded from the scope of this order are the following:
(1)Sheet and strip that is not annealed or otherwise heat treated and pickled or otherwise descaled;
(2)sheet and strip that is cut to length;
(3)plate ( *i.e.* , flat-rolled stainless steel products of a thickness of 4.75 mm or more);
(4)flat wire ( *i.e.* , cold-rolled sections, with a prepared edge, rectangular in shape, of a width of not more than 9.5 mm); and 5) razor blade steel. Razor blade steel is a flat-rolled product of stainless steel, not further worked than cold-rolled (cold-reduced), in coils, of a width of not more than 23 mm and a thickness of 0.266 mm or less, containing, by weight, 12.5 to 14.5 percent chromium, and certified at the time of entry to be used in the manufacture of razor blades. *See* Chapter 72 of the HTSUS, “Additional U.S. Note” 1(d). In response to comments by interested parties, the Department has determined that certain specialty stainless steel products are also excluded from the scope of this order. These excluded products are described below. Flapper valve steel is defined as stainless steel strip in coils containing, by weight, between 0.37 and 0.43 percent carbon, between 1.15 and 1.35 percent molybdenum, and between 0.20 and 0.80 percent manganese. This steel also contains, by weight, phosphorus of 0.025 percent or less, silicon of between 0.20 and 0.50 percent, and sulfur of 0.020 percent or less. The product is manufactured by means of vacuum arc remelting, with inclusion controls for sulphide of no more than 0.04 percent and for oxide of no more than 0.05 percent. Flapper valve steel has a tensile strength of between 210 and 300 ksi, yield strength of between 170 and 270 ksi, plus or minus 8 ksi, and a hardness
(Hv)of between 460 and 590. Flapper valve steel is most commonly used to produce specialty flapper valves for compressors. Also excluded is a product referred to as suspension foil, a specialty steel product used in the manufacture of suspension assemblies for computer disk drives. Suspension foil is described as 302/304 grade or 202 grade stainless steel of a thickness between 14 and 127 microns, with a thickness tolerance of plus-or-minus 2.01 microns, and surface glossiness of 200 to 700 percent Gs. Suspension foil must be supplied in coil widths of not more than 407 mm, and with a mass of 225 kg or less. Roll marks may only be visible on one side, with no scratches of measurable depth. The material must exhibit residual stresses of 2 mm maximum deflection, and flatness of 1.6 mm over 685 mm length. Certain stainless steel foil for automotive catalytic converters is also excluded from the scope of this order. This stainless steel strip in coils is a specialty foil with a thickness of between 20 and 110 microns used to produce a metallic substrate with a honeycomb structure for use in automotive catalytic converters. The steel contains, by weight, carbon of no more than 0.030 percent, silicon of no more than 1.0 percent, manganese of no more than 1.0 percent, chromium of between 19 and 22 percent, aluminum of no less than 5.0 percent, phosphorus of no more than 0.045 percent, sulfur of no more than 0.03 percent, lanthanum of between 0.002 and 0.05 percent, and total rare earth elements of more than 0.06 percent, with the balance iron. Permanent magnet iron-chromium-cobalt alloy stainless strip is also excluded from the scope of this order. This ductile stainless steel strip contains, by weight, 26 to 30 percent chromium, and 7 to 10 percent cobalt, with the remainder of iron, in widths 228.6 mm or less, and a thickness between 0.127 and 1.270 mm. It exhibits magnetic remanence between 9,000 and 12,000 gauss, and a coercivity of between 50 and 300 oersteds. This product is most commonly used in electronic sensors and is currently available under proprietary trade names such as “Arnokrome III.” 3 3 “Arnokrome III” is a trademark of the Arnold Engineering Company. Certain electrical resistance alloy steel is also excluded from the scope of this order. This product is defined as a non-magnetic stainless steel manufactured to American Society of Testing and Materials
(ASTM)specification B344 and containing, by weight, 36 percent nickel, 18 percent chromium, and 46 percent iron, and is most notable for its resistance to high temperature corrosion. It has a melting point of 1390 degrees Celsius and displays a creep rupture limit of 4 kilograms per square millimeter at 1000 degrees Celsius. This steel is most commonly used in the production of heating ribbons for circuit breakers and industrial furnaces, and in rheostats for railway locomotives. The product is currently available under proprietary trade names such as “Gilphy 36.” 4 4 “Gilphy 36” is a trademark of Imphy, S.A. Certain martensitic precipitation-hardenable stainless steel is also excluded from the scope of this order. This high-strength, ductile stainless steel product is designated under the Unified Numbering System
(UNS)as S45500-grade steel, and contains, by weight, 11 to 13 percent chromium, and 7 to 10 percent nickel. Carbon, manganese, silicon and molybdenum each comprise, by weight, 0.05 percent or less, with phosphorus and sulfur each comprising, by weight, 0.03 percent or less. This steel has copper, niobium, and titanium added to achieve aging, and will exhibit yield strengths as high as 1700 Mpa and ultimate tensile strengths as high as 1750 Mpa after aging, with elongation percentages of 3 percent or less in 50 mm. It is generally provided in thicknesses between 0.635 and 0.787 mm, and in widths of 25.4 mm. This product is most commonly used in the manufacture of television tubes and is currently available under proprietary trade names such as “Durphynox 17.” 5 5 “Durphynox 17” is a trademark of Imphy, S.A. Finally, three specialty stainless steels typically used in certain industrial blades and surgical and medical instruments are also excluded from the scope of this order. These include stainless steel strip in coils used in the production of textile cutting tools ( *e.g.* , carpet knives). 6 This steel is similar to ASTM grade 440F, but containing, by weight, 0.5 to 0.7 percent of molybdenum. The steel also contains, by weight, carbon of between 1.0 and 1.1 percent, sulfur of 0.020 percent or less, and includes between 0.20 and 0.30 percent copper and between 0.20 and 0.50 percent cobalt. This steel is sold under proprietary names such as “GIN4 Mo.” The second excluded stainless steel strip in coils is similar to AISI 420-J2 and contains, by weight, carbon of between 0.62 and 0.70 percent, silicon of between 0.20 and 0.50 percent, manganese of between 0.45 and 0.80 percent, phosphorus of no more than 0.025 percent and sulfur of no more than 0.020 percent. This steel has a carbide density on average of 100 carbide particles per square micron. An example of this product is “GIN5” steel. The third specialty steel has a chemical composition similar to AISI 420 F, with carbon of between 0.37 and 0.43 percent, molybdenum of between 1.15 and 1.35 percent, but lower manganese of between 0.20 and 0.80 percent, phosphorus of no more than 0.025 percent, silicon of between 0.20 and 0.50 percent, and sulfur of no more than 0.020 percent. This product is supplied with a hardness of more than Hv 500 guaranteed after customer processing, and is supplied as, for example, “GIN6.” 7 6 This list of uses is illustrative and provided for descriptive purposes only. 7 “GIN4 Mo,” “GIN5” and “GIN6” are the proprietary grades of Hitachi Metals America, Ltd. Sales Made Through Affiliated Resellers A. U.S. Market Mexinox USA, a wholly-owned subsidiary of Mexinox S.A., which in turn is a subsidiary of ThyssenKrupp AG, sold subject merchandise in the United States during the POR to unaffiliated customers. Mexinox USA also made sales of subject merchandise to an affiliated company, Ken-Mac, located in the United States. Ken-Mac is an operating division of ThyssenKrupp Materials Inc., which is a subsidiary of ThyssenKrupp USA, Inc. (TKUSA), the primary holding company for ThyssenKrupp AG in the U.S. market. Ken-Mac purchased subject merchandise from Mexinox USA and further manufactured and/or resold the subject merchandise to unaffiliated customers in the United States. *See* Mexinox's September 29, 2005, questionnaire response at A-10, A-18 and A-38 through A-39. For purposes of this review, we have included both Mexinox USA's and Ken-Mac's sales of subject merchandise to unaffiliated customers in the United States in our margin calculation. B. Home Market Mexinox Trading, S.A. de C.V. (Mexinox Trading), a wholly-owned subsidiary of Mexinox S.A., resold the foreign like product as well as other merchandise in the home market. Mexinox S.A.'s sales to Mexinox Trading represented a small portion of Mexinox S.A.'s total sales of the foreign like product in the home market and constituted less than five percent of all home market sales. *See* , *e.g.* , Mexinox's September 29, 2005, questionnaire response at A-3 to A-4 and its March 8, 2006, supplemental questionnaire response at Attachment A-12 (quantity and value chart). Because sales to Mexinox Trading of the foreign like product were below the five percent threshold established under 19 CFR 351.403(d), we did not require Mexinox S.A. to report Mexinox Trading's downstream sales to its first unaffiliated customer. This is consistent to date with our practice and the methodology we have employed in past administrative reviews of S4 in coils from Mexico. *See* , *e.g.* , *Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review* , 70 FR 73444 (December 12, 2005) and accompanying Issues and Decisions Memorandum at Comment 2 ( *2003-2004 Final Results* ). Fair Value Comparisons To determine whether sales of S4 in coils from Mexico to the United States were made at less than fair value, we compared CEP sales made in the United States by Mexinox USA to unaffiliated purchasers, to NV as described in the “Constructed Export Price” and “Normal Value” sections of this notice, below. In accordance with section 777A(d)(2) of the Tariff Act of 1930, as amended (the Tariff Act), we compared individual CEPs to monthly weighted-average NVs. Product Comparisons In accordance with section 771(16) of the Tariff Act we considered all products produced by Mexinox S.A. covered by the description in the “Scope of the Review” section, above, and sold in the home market during the POR, to be foreign like products for purposes of determining appropriate product comparisons to U.S. sales. We relied on nine characteristics to match U.S. sales of subject merchandise to comparison sales of the foreign like product (listed in order of priority):
(1)Grade;
(2)cold/hot rolled;
(3)gauge;
(4)surface finish;
(5)metallic coating;
(6)non-metallic coating;
(7)width;
(8)temper; and
(9)edge trim. Where there were no sales of identical merchandise in the home market to compare to U.S. sales, we compared U.S. sales to the next most similar foreign like product on the basis of the characteristics and reporting instructions listed in the Department's September 7, 2005, questionnaire. Level of Trade In accordance with section 773(a)(1)(B) of the Tariff Act, to the extent practicable, we base NV on sales made in the comparison market at the same level of trade
(LOT)as the export transaction. The NV LOT is defined as the starting-price sales in the home market or, when NV is based on constructed value (CV), as the sales from which selling, general, and administrative (SG&A) expenses and profit are derived. With respect to CEP transactions in the U.S. market, the CEP LOT is defined as the level of the constructed sale from the exporter to the importer. *See* section 773(a)(7)(A) of the Tariff Act. To determine whether NV sales are at a different LOT than CEP sales, we examine stages in the marketing process and selling functions along the chain of distribution between the producer and the unaffiliated customer. *See* 19 CFR 351.412(c)(2). If the comparison-market sales are at a different LOT, and the difference affects price comparability, as manifested in a pattern of consistent price differences between the sales on which NV is based and comparison-market sales at the LOT of the export transaction, we make a LOT adjustment under section 773(a)(7)(A) of the Tariff Act. For CEP sales, if the NV level is more remote from the factory than the CEP level and there is no basis for determining whether the difference in the levels between NV and CEP affects price comparability, we adjust NV under section 773(a)(7)(B) of the Tariff Act (the CEP offset provision). *See* , *e.g.* , *Final Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes From Canada* , 67 FR 8781 (February 26, 2002) and accompanying Issues and Decisions Memorandum at Comment 8; *see also Certain Hot-Rolled Flat-Rolled Carbon Quality Steel Products from Brazil; Preliminary Results of Antidumping Duty Administrative Review* , 70 FR 17406, 17410 (April 6, 2005); unchanged in * Notice of Final Results of Antidumping Duty Administrative Review of Certain Hot- Rolled Flat-Rolled Carbon Quality Steel Products from Brazil * , 70 FR 58683 (October 7, 2005). For CEP sales, we consider only the selling activities reflected in the price after the deduction of expenses and CEP profit under section 772(d) of the Tariff Act. *See Micron Technology, Inc. v. United States* , 243 F.3d 1301, 1314-1315 (Fed. Cir. 2001). We expect that if the claimed LOTs are the same, the functions and activities of the seller should be similar. Conversely, if a party claims that the LOTs are different for different groups of sales, the functions and activities of the seller should be dissimilar. *See Porcelain-on-Steel Cookware from Mexico: Final Results of Administrative Review* , 65 FR 30068 (May 10, 2000) and accompanying Issues and Decisions Memorandum at Comment 6 . We obtained information from Mexinox regarding the marketing stages involved in making its reported foreign market and U.S. sales to both affiliated and unaffiliated customers. Mexinox provided a description of all selling activities performed, along with a flowchart and tables comparing the levels of trade among each channel of distribution and customer category for both markets. *See* Mexinox's September 29, 2005, questionnaire response at A-30 through A-35 and Attachments A-4-A through A-4-C; *see also* Mexinox's March 8, 2006, supplemental questionnaire response at Attachment A-18. Mexinox sold S4 in coils to end-users and retailers/distributors in the home market and to end-users and distributors/service centers in the United States. For the home market, Mexinox identified two channels of distribution described as follows:
(1)Direct shipments ( *i.e.* , products produced to order) and
(2)sales from inventory. Within each of these two channels of distribution, Mexinox S.A. made sales to affiliated and unaffiliated distributors/retailers and end-users. *See* Mexinox's September 29, 2005, questionnaire response at A-3 and A-22 through A-23. We reviewed the performance intensity of all selling functions with respect to channel of distribution and customer category. In certain activities, such as pre-sale technical assistance, processing of customer orders, sample analysis, prototypes and trial lots, freight and delivery, price negotiation/customer communications, sales calls and visits and warranty services, the level of performance for both direct shipments and sales through inventory was identical across all types of customers. Only a few functions exhibited differences, including inventory maintenance/just-in-time performance, further processing, credit collection, low volume orders and shipment of small packages. *See* Mexinox's March 8, 2006, supplemental questionnaire response at Attachment A-18. In regards to Mexinox S.A.'s affiliated home market reseller, Mexinox Trading, only credit collection differed in comparison to Mexinox S.A.'s performance to unaffiliated distributors/retailers. While we find differences in the levels of intensity performed for some of these functions, such differences are minor and do not establish distinct, multiple levels of trade in Mexico. Based on our analysis of all of Mexinox S.A.'s home market selling functions, we find all home market sales were made at the same LOT, the NV LOT. We then compared the NV LOT, based on the selling activities associated with the transactions between Mexinox S.A. and its unaffiliated customers in the home market, to the CEP LOT, which is based on the selling activities associated with the transaction between Mexinox S.A. and its affiliated importer, Mexinox USA. Our analysis indicates the selling functions performed for home market customers are either performed at a higher degree of intensity or are greater in number than the selling functions performed for Mexinox USA. For example, in comparing Mexinox's selling activities, we find there are more functions performed in the home market which are not a part of CEP transactions ( *e.g.* , pre-sale technical assistance, sample analysis, prototypes and trial lots, price negotiation/customer communications, inventory maintenance, just-in-time performance, sales calls and visits, and warranty services). For selling activities performed for both home market sales and CEP sales ( *e.g.* , processing customer orders, freight and delivery arrangements), we find Mexinox S.A. actually performed each activity at a higher level of intensity in the home market. We note that CEP sales from Mexinox S.A. to Mexinox USA generally occur at the beginning of the distribution chain, representing essentially a logistical transfer of inventory that resembles ex-factory sales. In contrast, all sales in the home market occur closer to the end of the distribution chain and involve smaller volumes and more customer interaction which, in turn, require the performance of more selling functions. *See* Mexinox's September 29, 2005, questionnaire response at A-31 through A-35 and Attachments A-4-A through A-4-C; *see also* Mexinox's March 8, 2006, supplemental questionnaire response at Attachment A-18. Based on the foregoing, we conclude that the NV LOT is at a more advanced stage than the CEP LOT. Because we found the home market and U.S. sales were made at different LOTs, we examined whether a LOT adjustment or a CEP offset may be appropriate in this review. As we found only one LOT in the home market, it was not possible to make a LOT adjustment to home market sales, because such an adjustment is dependent on our ability to identify a pattern of consistent price differences between the home market sales on which NV is based and home market sales at the LOT of the export transaction. *See* 19 CFR 351.412(d)(1)(ii). Furthermore, we have no other information that provides an appropriate basis for determining a LOT adjustment. Because the data available do not form an appropriate basis for making a LOT adjustment, and because the NV LOT is at a more advanced stage of distribution than the CEP LOT, we have made a CEP offset to NV in accordance with section 773(a)(7)(B) of the Tariff Act. Constructed Export Price Mexinox indicated it made CEP sales through its U.S. affiliate, Mexinox USA, through the following four channels of distribution:
(1)Direct shipments to unaffiliated customers;
(2)stock sales from the San Luis Potosi
(SLP)factory;
(3)sales to unaffiliated customers through Mexinox USA's inventory/warehouses; and
(4)sales through Ken-Mac. *See* Mexinox's September 29, 2005, questionnaire response at A-23 through A-25. Ken-Mac is an affiliated service center located in the United States which purchases S4 in coils produced by Mexinox S.A. and then resells the merchandise (after, in some instances, further manufacturing) to unaffiliated U.S. customers. In accordance with section 772(b) of the Tariff Act, CEP is the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise, or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter. We find Mexinox properly classified all of its U.S. sales of subject merchandise as CEP transactions because such sales were made in the United States by Mexinox S.A.'s affiliate, Mexinox USA, to unaffiliated purchasers. We based CEP on packed prices to unaffiliated purchasers in the United States sold by Mexinox USA or its affiliated processor Ken Mac. We made adjustments for billing adjustments, discounts and rebates, and commissions, where applicable. We also made deductions for movement expenses in accordance with section 772(c)(2)(A) of the Tariff Act. These expenses included, where appropriate: foreign inland freight, foreign brokerage and handling, inland insurance, U.S. customs duties, U.S. inland freight, U.S. brokerage, and U.S. warehousing expenses. As directed by section 772(d)(1) of the Tariff Act, we deducted those selling expenses associated with economic activities occurring in the United States, including direct selling expenses ( *i.e.* , credit costs, warranty expenses, and another expense not subject to public disclosure), inventory carrying costs, and other indirect selling expenses. We also made an adjustment for profit in accordance with section 772(d)(3) of the Tariff Act. We used the adjustments as reported by Mexinox, with the exception of the U.S. indirect selling expense ratio which we recalculated. *See* Analysis of Data Submitted by ThyssenKrupp Mexinox S.A. de C.V. for the Preliminary Results of the Antidumping Duty Administrative Review of S4 in Coils from Mexico (Preliminary Analysis Memorandum) from Maryanne Burke to the File dated June 14, 2006. For sales in which the material was sent to an unaffiliated U.S. processor, we made an adjustment based on the transaction-specific further-processing expenses incurred by Mexinox USA. In addition, the U.S. affiliated reseller Ken-Mac performed some further manufacturing for its sales to unaffiliated U.S. customers. For these sales, we deducted the cost of further processing in accordance with section 772(d)(2) of the Tariff Act. In calculating the cost of further manufacturing for Ken-Mac, we relied upon Ken-Mac's reported cost of further manufacturing materials, labor and overhead. We also included amounts for further manufacturing general and administrative expenses (G&A), as reported in the March 21, 2006, supplemental section D questionnaire response, and revised financial expense ratio (INTEX). *See* the Department's Cost of Production and Constructed Value Calculation Adjustments for the Preliminary Results - ThyssenKrupp Mexinox S.A. de C.V. from Margaret Pusey to Neal M. Halper, dated June 14, 2006 (Cost Calculation Memorandum), and Preliminary Analysis Memorandum. Normal Value A. Selection of Comparison Market To determine whether there is a sufficient volume of sales in the home market to serve as a viable basis for calculating NV ( *i.e.* , the aggregate volume of home market sales of the foreign like product is greater than five percent of the aggregate volume of U.S. sales), we compared Mexinox's volume of home market sales of the foreign like product to the volume of its U.S. sales of the subject merchandise, in accordance with section 773(a)(1)(B) of the Tariff Act. Because Mexinox's aggregate volume of home market sales of the foreign like product was greater than five percent of its aggregate volume of U.S. sales for subject merchandise, we determined the home market was viable. *See* , *e.g.* , Mexinox's March 8, 2006, supplemental questionnaire response at Attachment A-12. B. Affiliated-Party Transactions and Arm's-Length Test Sales to affiliated customers in the home market not made at arm's-length prices are excluded from our analysis because we consider them to be outside the ordinary course of trade. *See* section 773(f)(2) of the Tariff Act; *see* , *also* 19 CFR 351.102(b). Consistent with 19 CFR 351.403(c) and
(d)and agency practice to date, “the Department may calculate NV based on sales to affiliates if satisfied that the transactions were made at arm's length.” *See China Steel Corp. v. United States* , 264 F. Supp. 2d 1339, 1365 (CIT 2003). To test whether the sales to affiliates were made at arm's-length prices, we compared on a model-specific basis, the starting prices of sales to affiliated and unaffiliated customers, net of all direct selling expenses, discounts and rebates, movement charges and packing. Where prices to the affiliated party were, on average, within a range of 98 to 102 percent of the price of identical or comparable merchandise to the unaffiliated parties, we determined that the sales made to the affiliated party were at arm's length. *See Antidumping Proceedings: Affiliated Party Sales in the Ordinary Course of Trade* , 67 FR 69186, 69194 (November 15, 2002). We found one affiliated home market customer failed the arm's length test and, in accordance with the Department's practice, we excluded sales to this affiliate from our analysis. C. Cost of Production Analysis Because we disregarded sales of certain products made at prices below the cost of production
(COP)in the most recently completed review of S4 in coils from Mexico ( *see Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review* , 69 FR 47905, 47909 (August 6, 2004); unchanged in *Stainless Steel Sheet and Strip in Coils from Mexico; Final Results of Antidumping Duty Administrative Review* , 70 FR 3677 (January 26, 2005) ( *2002-2003 Final Results* ), we had reasonable grounds to believe or suspect that sales of the foreign like product under consideration for the determination of NV in this review for Mexinox may have been made at prices below the COP, as provided by section 773(b)(2)(A)(ii) of the Tariff Act. Pursuant to section 773(b)(1) of the Tariff Act, we initiated a COP investigation of sales by Mexinox. We adjusted material costs from the transfer price to market price in accordance with section 773(f)(2) of the Act. We also recalculated Mexinox's G&A to include employee profit sharing in the numerator and exclude production and planning and market administration expenses from the cost of goods sold denominator. In addition, we revised INTEX to exclude the interest income offset for accounts receivable and miscellaneous net financial expenses and adjusted ThyssenKrupp AG's cost of goods sold to exclude packing expenses. *See* Cost Calculation Memorandum and Preliminary Analysis Memorandum. We added material and fabrication costs for the foreign like product, plus amounts for SG&A and packing costs, in accordance with section 773(b)(3) of the Tariff Act. To determine whether these sales had been made at prices below the COP, we computed weighted-average COPs during the POR, and compared the weighted-average COP figures to home market sales prices of the foreign like product as required under section 773(b) of the Tariff Act. On a product-specific basis, we compared the COP to the home market prices net of billing adjustments, discounts and rebates, any applicable movement charges, selling expenses and packing expenses. In determining whether to disregard home market sales made at prices below the COP, we examined, in accordance with sections 773(b)(1)(A) and
(B)of the Tariff Act, whether, within an extended period of time, such sales were made in substantial quantities, and whether such sales were made at prices which permitted the recovery of all costs within a reasonable period of time in the normal course of trade. Where less than 20 percent of the respondent's home market sales of a given model were at prices below the COP, we did not disregard any below-cost sales of that model because we determined that the below-cost sales were not made within an extended period of time and in “substantial quantities.” Where 20 percent or more of the respondent's home market sales of a given model were at prices less than the COP, we disregarded the below-cost sales because:
(1)they were made within an extended period of time in “substantial quantities,” in accordance with sections 773(b)(2)(B) and
(C)of the Tariff Act; and
(2)based on our comparison of prices to the weighted-average COPs for the POR, they were at prices which would not permit the recovery of all costs within a reasonable period of time, in accordance with section 773(b)(2)(D) of the Tariff Act. Our cost test for Mexinox revealed that, for home market sales of certain models, less than 20 percent of the sales of those models were at prices below the COP. We therefore retained all such sales in our analysis and used them as the basis for determining NV. Our cost test also indicated that for home market sales of other models, more than 20 percent were sold at prices below the COP within an extended period of time and were at prices which would not permit the recovery of all costs within a reasonable period of time. Thus, in accordance with section 773(b)(1) of the Tariff Act, we excluded these below-cost sales from our analysis and used the remaining above-cost sales as the basis for determining NV. D. Constructed Value In accordance with section 773(e) of the Tariff Act, we calculated CV based on the sum of Mexinox's material and fabrication costs, SG&A expenses, profit, and U.S. packing costs. We calculated the COP component of CV as described above in the “Cost of Production Analysis” section of this notice. In accordance with section 773(e)(2)(A) of the Tariff Act, we based SG&A expenses and profit on the amounts incurred and realized by the respondent in connection with the production and sale of the foreign like product in the ordinary course of trade, for consumption in the foreign country. E. Price-to-Price Comparisons We calculated NV based on prices to unaffiliated customers or prices to affiliated customers we determined to be at arm's length. Mexinox S.A. reported home market sales in Mexican pesos, but noted certain home market sales were invoiced in U.S. dollars during the POR. *See* Mexinox's November 8, 2005, questionnaire response at B-26. In our margin calculation we used the currency of the sale invoice at issue and applied relevant adjustments in the currency invoiced or incurred by Mexinox. We accounted for billing adjustments, discounts, rebates and interest revenue, where appropriate. We made deductions, where appropriate, for foreign inland freight, insurance, handling, and warehousing, pursuant to section 773(a)(6)(B) of the Tariff Act. In addition, we made adjustments for differences in cost attributable to differences in physical characteristics of the merchandise compared pursuant to section 773(a)(6)(C)(ii) of the Tariff Act and 19 CFR 351.411. We also made adjustments for differences in circumstances of sale
(COS)in accordance with section 773(a)(6)(C)(iii) of the Tariff Act and 19 CFR 351.410. We made COS adjustments for imputed credit expenses and warranty expenses. As noted above in the “Level of Trade” section of this notice, we also made an adjustment for the CEP offset in accordance with section 773(a)(7)(B) of the Tariff Act. Finally, we deducted home market packing costs and added U.S. packing costs in accordance with sections 773(a)(6)(A) and
(B)of the Tariff Act. We used Mexinox's adjustments and deductions as reported, except for certain handling expenses and imputed credit expenses. We have recalculated the handling expenses incurred by home market affiliate, Mexinox Trading, and applied the revised ratio to those home market sales where Mexinox reported a handling expense. We calculated imputed credit expenses based on the short-term borrowing rate associated with the currency of each home market sale transaction. *See* Preliminary Analysis Memorandum. Our methodology for calculating handling charges and imputed credit expenses are consistent with past administrative reviews of this case. *See* , *e.g., 2003-2004 Final Results* , 70 FR 73444 and accompanying Issues and Decisions Memorandum at Comment 1. F. Price-to-CV Comparisons If we were unable to find a home market match of such or similar merchandise, in accordance with section 773(a)(4) of the Tariff Act, we based NV on CV. Where appropriate, we made adjustments to CV in accordance with section 773(a)(8) of the Tariff Act. Facts Available In accordance with section 776(a)(1) of the Tariff Act, for these preliminary results we find it necessary to use partial facts available in those instances where the respondent did not provide certain information necessary to conduct our analysis. In our September 7, 2005, questionnaire at G-6, we requested that Mexinox provide sales and cost data for all affiliates involved with the production or sale of the merchandise under review during the POR in both home and U.S. markets. In its September 29, 2005, questionnaire response at A-2, Mexinox indicated that its affiliated reseller, Ken-Mac, sold subject merchandise in the United States during the POR which it had purchased from various suppliers, both affiliated and unaffiliated. In its November 8, 2005, submission at KMC-2 and KMC-3, Mexinox provided data related to Ken-Mac's resales of subject merchandise to unaffiliated customers in the United States and notified the Department that a small subset of sale transactions could not be traced to an original stock item or supplier. In its supplemental questionnaire response dated March 8, 2006, Mexinox reported those sale transactions (unattributed sales) where the origin of the original stock item could not be determined. *See* Mexinox's March 8, 2006, supplemental questionnaire response at 71. Because of the unknown origin of certain of Ken-Mac resales, Mexinox was not able to provide all the information necessary to complete our analysis. Pursuant to section 776(a)(1) of the Tariff Act, it is appropriate to use the facts otherwise available in calculating a margin on Ken-Mac's unattributed sales. Section 776(a)(1) of the Tariff Act provides that the Department will, subject to section 782(d) of the Tariff Act, use the facts otherwise available in reaching a determination if “necessary information is not available on the record.” For these preliminary results, we have calculated a margin on Ken-Mac's unattributed sales by applying the overall margin calculated on Mexinox's other U.S. sales of subject merchandise to the weighted-average price of Ken-Mac's unattributed sales. This methodology is consistent to date with that employed in past administrative reviews of S4 in coils from Mexico. *See* , *e.g.* , *Stainless Steel Sheet and Strip in Coils from Mexico; Preliminary Results of Antidumping Duty Administrative Review* , 70 FR 45675, 45681 (August 8, 2005); unchanged in *2003-2004 Final Results* . Prior to applying the overall margin calculated on other sales/resales of subject merchandise to Ken-Mac's unattributed sales, we calculated the portion of the unattributed sales quantity that could be reasonably allocated to subject stainless steel merchandise purchased from Mexinox. We based our allocation on the relative percentage (by volume) of subject stainless steel merchandise that Ken-Mac had purchased from Mexinox as compared to the total stainless steel merchandise it had purchased from all vendors. See Mexinox's March 8, 2006, supplemental questionnaire response at Attachment KMC-12. The Department finds that Mexinox, to the best of its ability, complied with the Department's request for information; thus, the application of an adverse inference, as provided under section 776(b) of the Tariff Act, is not warranted in calculating a margin on Ken-Mac's unattributed sales. Currency Conversion We made currency conversions into U.S. dollars based on the exchange rates in effect on the dates of the U.S. sales, as certified by the Federal Reserve Bank, in accordance with section 773A(a) of the Tariff Act. Preliminary Results of Review As a result of our review we preliminarily determine the following weighted-average dumping margin exists for the period July 1, 2003 through June 30, 2004: Manufacturer / Exporter Weighted Average Margin (percentage) ThyssenKrupp Mexinox S.A. de C.V. 1.22%% The Department will disclose calculations performed within five days of the date of publication of this notice in accordance with 19 CFR 351.224(b). An interested party may request a hearing within thirty days of publication of these preliminary results. *See* 19 CFR 351.310(c). Any hearing, if requested, will be held 37 days after the date of publication, or the first business day thereafter, unless the Department alters the date per 19 CFR 351.310(d). Interested parties may submit case briefs no later than 30 days after the date of publication of these preliminary results of review. *See* 19 CFR 351.309 (c). Rebuttal briefs limited to issues raised in the case briefs, may be filed no later than 35 days after the date of publication of this notice. *See* 19 CFR 351.309(d). Parties who submit argument in these proceedings are requested to submit with the argument:
(1)A statement of the issue,
(2)a brief summary of the argument and
(3)a table of authorities. Further, parties submitting case briefs and/or rebuttal briefs are requested to provide the Department with an additional copy of the public version of any such argument on diskette. The Department will issue final results of this administrative review, including the results of our analysis of the issues in any such argument or at a hearing, within 120 days of publication of these preliminary results. Duty Assessment Upon completion of this administrative review, the Department shall determine, and United States Customs and Border Protection
(CBP)shall assess, antidumping duties on all appropriate entries. In accordance with 19 CFR 351.212(b)(1), we will calculate importer-specific *ad valorem* assessment rates for the merchandise based on the ratio of the total amount of antidumping duties calculated for the examined sales made during the POR to the total customs value of the sales used to calculate those duties. The total customs value is based on the entered value reported by Mexinox for all U.S. entries of subject merchandise initially purchased for consumption to the United States made during the POR. *See* Preliminary Analysis Memorandum. In accordance with 19 CFR 356.8(a), the Department will issue appropriate assessment instructions directly to CBP on or after 41 days following the publication of the final results of review. The Department clarified its “automatic assessment” regulation on May 6, 2003. *See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties* , 68 FR 23954 (May 6, 2003). This clarification will apply to entries of subject merchandise during the POR produced by the company included in these preliminary results for which the reviewed company did not know their merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company or companies involved in the transaction. Cash Deposit Requirements Furthermore, the following cash deposit requirements will be effective for all shipments of S4 in coils from Mexico entered, or withdrawn from warehouse, for consumption on or after the publication date of the final results of this administrative review, as provided by section 751(a)(2)(C) of the Tariff Act:
(1)the cash deposit rate for the reviewed company will be the rate established in the final results of this review, except if the rate is less than 0.50 percent ( *de minimis* within the meaning of 19 CFR 351.106(c)(1)), the cash deposit will be zero;
(2)for previously investigated companies not listed above, the cash deposit rate will continue to be the company-specific rate published for the most recent period;
(3)if the exporter is not a firm covered in this review, or the original less than fair value
(LTFV)investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recent period for the manufacturer of the merchandise; and
(4)the cash deposit rate for all other manufacturers or exporters will continue to be the “all others” rate of 30.85 percent, which is the “All Others” rate established in the LTFV investigation. *Notice of Amended Final Determination of Sales at Less Than Fair Value and Antidumping Duty Order; Stainless Steel Sheet and Strip in Coils from Mexico* , 64 FR 40560 (July 27, 1999). These deposit requirements, when imposed, shall remain in effect until publication of the final results of the next administrative review. Notification to Importers This notice serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Secretary's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties. We are issuing and publishing this notice in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act. Dated: June 14, 2006. David Spooner, Assistant Secretary for Import Administration. [FR Doc. E6-9768 Filed 6-20-06; 8:45 am] BILLING CODE 3510-DS-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [I.D. 061406B] Magnuson-Stevens Act Provisions; General Provisions for Domestic Fisheries; Application for Exempted Fishing Permit AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notice; request for comments. SUMMARY: The Assistant Regional Administrator for Sustainable Fisheries, Northeast Region, NMFS (Assistant Regional Administrator) has made a preliminary determination that the subject Exempted Fishing Permit
(EFP)application from the Massachusetts Division of Marine Fisheries (MADMF) for an exemption from the gear requirements of the Eastern U.S./Canada Area, for the purpose of testing a cod-avoiding haddock trawl, contains all of the required information and warrants further consideration. The Assistant Regional Administrator has also made a preliminary determination that the activities authorized under the EFP would be consistent with the goals and objectives of the Northeast
(NE)Multispecies Fishery Management Plan (FMP). However, further review and consultation may be necessary before a final determination is made to issue the EFP. Therefore, NMFS announces that the Assistant Regional Administrator proposes to issue an EFP that would allow vessels to conduct fishing operations that are otherwise restricted by the regulations governing the fisheries of the Northeastern United States. Regulations under the Magnuson-Stevens Fishery Conservation and Management Act require publication of this notification to provide interested parties the opportunity to comment on applications for proposed EFPs. DATES: Comments must be received on or before July 6, 2006. ADDRESSES: Comments on this notice may be submitted by e-mail. The mailbox address for providing e-mail comments is *DA6_153@noaa.gov* . Include in the subject line of the e-mail comment the following document identifier: “Comments on MADMF haddock trawl (DA6-153).” Written comments should be sent to Patricia A. Kurkul, Regional Administrator, NMFS, Northeast Regional Office, 1 Blackburn Drive, Gloucester, MA 01930. Mark the outside of the envelope “Comments on MADMF haddock trawl (DA6-153).” Comments may also be sent via facsimile
(fax)to
(978)281-9135. FOR FURTHER INFORMATION CONTACT: Moira Kelly, Fishery Management Specialist, phone: 978-281-9218, fax: 978-281-9135. SUPPLEMENTARY INFORMATION: An application for an EFP was submitted by MADMF, on May 8, 2006. The EFP would exempt one federally permitted commercial fishing vessel from the following requirement of the FMP: Gear requirements of vessels fishing in the Eastern U.S./Canada Area, as specified at § 648.85(a)(3)(iii)(A). MADMF has requested an exemption from the gear requirements of the Eastern U.S./Canada Area (i.e., an exemption from the requirement to fish with either a haddock separator trawl or a flounder net) in order to test the effectiveness of a sweepless raised footrope trawl, designed to minimize the catch of Atlantic cod ( *Gadus morhua* ) while maximizing the catch of haddock ( *Melanogrammus aeglefinus* ). This project is funded under the MADMF/SMAST/MRI Program. The project proposes that a twin trawl with one experimental net and one standard trawl net would be fished under A days-at-sea
(DAS)in the Eastern U.S./Canada Area, outside of Closed Area II, by one vessel. The experimental portion of the twin trawl, the five-point trawl, is a sweepless (no ground gear) raised footrope trawl, which was designed based on differences in behavior of haddock and cod in relation to towed gears. Similar to the haddock separator trawl, this experimental net proposes to reduce cod mortality; however, it avoids some of the complexities associated with separator trawls, since the cod would not pass through meshes, or encounter grids or escape vents. Although this study would focus on reducing cod-haddock interactions, this net could also reduce the bycatch of flatfish species such as winter flounder, witch flounder, and American plaice. MADMF staff would be aboard the vessel at all times during testing. The experimental design calls for 200 hours of towing time from June 2006 through December 2006. Two trawl nets, with similar footrope lengths, would be towed simultaneously from the same vessel. Both the experimental and the control net would conform to or exceed the minimum regulation standards with regard to mesh sizes and shapes throughout the body, extension, and codend. The experimental portion of the twin trawl would be a modified three-bridle, four-panel box trawl, modeled after the sweepless raised footrope trawl, which is a semi-pelagic net that fishes about 1-2 m off the bottom. This design is expected to allow cod to pass under the net, while retaining the haddock that swim upward into the net. The control net would be a standard, non-separator trawl net, with legal mesh size. The two-warp twin trawl uses one set of doors, with a weight/sled in the middle bridle. This design allows the nets to fish independently of each other, while trying to ensure identical fishing conditions for both the control and the experimental catches. Underwater video would be used to show cod escapement and haddock capture of the experimental net. The researchers expect an average level of interaction with regulated groundfish. The researchers have concluded that the twin trawl would be less efficient than two standard (non-separator, non-twin) trawls, and have estimated the potential catch rates for the project based on these calculations. The researchers estimate the following removal rates: Atlantic cod 5.7 mt Haddock 23 mt Pollock 0.6 mt Yellowtail Flounder 2.6 mt Winter Flounder 13.1 mt Vessels would be subject to all applicable trip limits and would be prohibited from fishing in the Eastern U.S./Canada Area, should the area close due to the attainment of any of the U.S./Canada total allowable catches
(TAC)of cod, haddock, or yellowtail flounder. All of the catch caught under this experiment would be applied to any and all applicable TAC limitations. Legal catch would be sold and the proceeds would be retained and recycled into the project by MADMF. The applicant may make requests to NMFS for minor modifications and extensions to the EFP throughout the year. EFP modifications and extensions may be granted by NMFS without further notice if they are deemed essential to facilitate completion of the proposed experiment and result in only a minimal change in the scope or impact of the initially approved EFP request. In accordance with NOAA Administrative Order 216-6, a Categorical Exclusion, or other appropriate NEPA document, would be completed prior to the issuance of the EFP. Further review and consultation may be necessary before a final determination is made to issue the EFP. After publication of this document in the **Federal Register** , the EFP, if approved, may become effective following a 15-day public comment period. Authority: 16 U.S.C. 1801 *et seq.* Dated: June 15, 2006. James P. Burgess, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E6-9702 Filed 6-20-06; 8:45 am] BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [I.D. 061506B] Mid-Atlantic Fishery Management Council; Public Meetings AGENCY: National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce. ACTION: Notice of public meetings. SUMMARY: The Mid-Atlantic Fishery Management Council's (Council) Summer Flounder Monitoring Committee, Scup Monitoring Committee, Black Sea Bass Monitoring Committee, and Bluefish Monitoring Committee will hold public meetings. DATES: The meetings will be held on Tuesday, July 18, 2006, beginning at 10 a.m. ADDRESSES: The meetings will be held at the Renaissance Philadelphia Airport, 500 Stevens Drive, Philadelphia, PA 19113; telephone:
(610)521-5900. *Council address* : Mid-Atlantic Fishery Management Council, Room 2115, 300 S. New Street, Dover, DE 19904. FOR FURTHER INFORMATION CONTACT: Daniel T. Furlong, Executive Director, Mid-Atlantic Fishery Management Council; telephone:
(302)674-2331, ext. 19. SUPPLEMENTARY INFORMATION: The purpose of these meetings is to recommend the 2007 commercial management measures, commercial quotas, and recreational harvest limits for the summer flounder, scup, and black sea bass fisheries. The Bluefish Monitoring Committee will meet to recommend commercial management measures, recreational management measures, and a commercial quota for the bluefish fishery for 2007. Although non-emergency issues not contained in this agenda may come before these groups for discussion, those issues may not be the subject of formal action during the meetings. Action will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the Council's intent to take final action to address the emergency. Special Accommodations The meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Jan Saunders,
(302)674-2331 ext: 18, at the Council office at least 5 days prior to the meeting date. Dated: June 16, 2006. Tracey L. Thompson, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service. [FR Doc. E6-9703 Filed 6-20-06; 8:45 am] BILLING CODE 3510-22-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [I.D. 061306C] U.S. Climate Change Science Program Synthesis and Assessment Product 2.1 AGENCY: National Oceanic and Atmospheric Administration (NOAA), Department of Commerce. ACTION: Notice of availability and request for public comments. SUMMARY: The National Oceanic and Atmospheric Administration publishes this notice to announce the availability of the U.S. Climate Change Science Program
(CCSP)Synthesis and Assessment draft Product 2.1 addressing the CCSP Topic: “Scenarios of Greenhouse Gas Emissions and Atmospheric Concentrations and Review of Integrated Scenario Development and Application” for public comment. Following the public comment period, the lead authors will revise the Product, taking into consideration the submitted comments. The lead agency will then submit the revised Synthesis and Assessment Product to the CCSP Interagency Committee for approval and eventual release in accordance with the procedure described in the approved Prospectus for Synthesis and Assessment Product 2.1 that is posted on the CCSP Program Office web site: *http://www.climatescience.gov/Library/* *sap/sap2-1/default.htm* DATES: Comments must be received by August 7, 2006. ADDRESSES: The Synthesis and Assessment draft Product and detailed instructions for making comments on the draft Product are posted, along with the Prospectus, on the CCSP Program Office Web site at *http://www.climatescience.gov/Library/* *sap/sap2-1/default.htm.* Please make certain that submitted comments are prepared in accordance with these instructions. FOR FURTHER INFORMATION CONTACT: Vanessa Richardson,Climate Change Science Program Office, 1717 Pennsylvania Avenue NW., Suite 250, Washington, DC 20006, Telephone:
(202)419-3465. SUPPLEMENTARY INFORMATION: The CCSP was established by the President in 2002 to coordinate and integrate scientific research on global and climate changes sponsored by 13 participating departments and agencies of the U.S. Government. The CCSP is charged with preparing information resources that support climate-related discussions and decisions, including scientific synthesis and assessment analyses that support evaluation of important policy issues. The Synthesis and Assessment draft Product addressing the CCSP Topic: “Scenarios of Greenhouse Gas Emissions and Atmospheric Concentrations and Review of Integrated Scenario Development and Application” is one of 21 such products that will be produced by the CCSP. Dated: June 15, 2006. Conrad C. Lautenbacher, Jr., Vice Admiral, U.S. Navy (Ret.), Under Secretary of Commerce for Oceans and Atmosphere. [FR Doc. E6-9744 Filed 6-20-06; 8:45 am] BILLING CODE 3510-12-S DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration [I.D. 061306D] U.S. Climate Change Science Program Synthesis and Assessment Product Prospectus AGENCY: National Oceanic and Atmospheric Administration (NOAA),Department of Commerce. ACTION: Notice of availability and request for public comments. SUMMARY: The National Oceanic and Atmospheric Administration publish this notice to announce the availability of the draft Prospectus for one of the U.S. Climate Change Science Program
(CCSP)Synthesis and Assessment Products (Products) for public comment. This draft Prospectus addresses the following CCSP Topic: Product 4.3 The Effects of Climate Change on Agriculture, Biodiversity, Land, and Water Resources After consideration of comments received on the draft Prospectus, the final Prospectus along with the comments received will be published on the CCSP web site. DATES: Comments must be received by July 21, 2006. ADDRESSES: The draft Prospectus is posted on the CCSP Program Office web site. The web addresses to access the draft Prospectus is: Product 4.3 (Resources): *http://www.climatescience.gov/Library* */sap/sap4-3/default.htm* Detailed instructions for making comments on the draft Prospectus is provided with the Prospectus. Comments should be prepared in accordance with these instructions. FOR FURTHER INFORMATION CONTACT: Vanessa Richardson, Climate Change Science Program Office, 1717 Pennsylvania Avenue NW., Suite 250, Washington, DC 20006, Telephone:
(202)419-3465. SUPPLEMENTARY INFORMATION: The CCSP was established by the President in 2002 to coordinate and integrate scientific research on global change and climate change sponsored by 13 participating departments and agencies of the U.S. Government. The CCSP is charged with preparing information resources that support climate-related discussions and decisions, including scientific synthesis and assessment analyses that support evaluation of important policy issues. The Prospectus addressed by this notice provides a topical overview and describes plans for scoping, drafting, reviewing, producing, and disseminating one of 21 final synthesis and assessment Products that will be produced by the CCSP. Dated: June 15, 2006. Conrad C. Lautenbacher, Jr., Vice Admiral, U.S. Navy (Ret.), Under Secretary of Commerce for Oceans and Atmosphere. [FR Doc. E6-9745 Filed 6-20-06; 8:45 am] BILLING CODE 3510-12-S DEPARTMENT OF COMMERCE Patent and Trademark Office [Docket No. PTO-P-2006-0035] Grant of Interim Extension of the Term of U.S. Patent No. 4,826,811; PolyHeme® (Acellular Red Blood Cell Substitute) AGENCY: United States Patent and Trademark Office, DOC. ACTION: Notice of interim patent term extension. SUMMARY: The United States Patent and Trademark Office has issued a certificate under 35 U.S.C. 156(d)(5) for a fourth one-year interim extension of the term of U.S. Patent No. 4,826,811. FOR FURTHER INFORMATION CONTACT: Mary C. Till by telephone at
(571)272-7755; by mail marked to her attention and addressed to the Commissioner for Patents, Mail Stop Patent Ext., P.O. Box 1450, Alexandria, VA 22313-1450; by fax marked to her attention at
(571)273-7755, or by e-mail to *Mary.Till@uspto.gov* . SUPPLEMENTARY INFORMATION: Section 156 of Title 35, United States Code, generally provides that the term of a patent may be extended for a period of up to five years if the patent claims a product, or a method of making or using a product, that has been subject to certain defined regulatory review, and that the patent may be extended for interim periods of up to a year if the regulatory review is anticipated to extend beyond the expiration date of the patent. On May 31, 2006, patent owner, Northfield Laboratories Inc., timely filed an application under 35 U.S.C. 156(d)(5) for an interim extension of the term of U.S. Patent No. 4,826,811. The patent claims the human biological product PolyHeme® (acellular red blood cell substitute), a method of use of the biological product, and a method of manufacturing the biological product. The application indicates, and the Food and Drug Administration has confirmed, that an investigational new drug application for the human biological product PolyHeme® has been filed and is currently undergoing regulatory review before the Food and Drug Administration for permission to market or use the product commercially. Review of the application indicates that, except for permission to market or use the product commercially, the subject patent would be eligible for an extension of the patent term under 35 U.S.C. 156, and that the patent should be extended for an additional year as required by 35 U.S.C. 156(d)(5)(B). Because it is apparent that the regulatory review period will continue beyond the extended expiration date of the patent (June 20, 2006), interim extension of the patent term under 35 U.S.C. 156(d)(5) is appropriate. An interim extension under 35 U.S.C. 156(d)(5) of the term of U.S. Patent No. 4,826,611 is granted for a period of one year from the extended expiration date of the patent, i.e., until June 20, 2007. Dated: June 15, 2006. Jon W. Dudas, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office. [FR Doc. E6-9767 Filed 6-20-06; 8:45 am] BILLING CODE 3510-16-P COMMODITY FUTURES TRADING COMMISSION Comprehensive Review of the Commitments of Traders Reporting Program AGENCY: Commodity Futures Trading Commission. ACTION: Request for comments. SUMMARY: The Commitments of Traders (“COT”) reports are weekly reports, published by the Commodity Futures Trading Commission (“CFTC” or “Commission”), showing aggregate trader positions in certain futures and options markets. Over time, both the trading activity that is the subject of the COT reports, and the reports themselves, have continued to change and evolve. As part of its ongoing efforts both to maintain an information system that reflects changing market conditions, and to provide the public with useful information regarding futures and options markets, the Commission is undertaking a comprehensive review of the COT reporting program. This release is intended to:
(1)Provide useful background information regarding the COT reports;
(2)lay out various issues and questions regarding the COT reports; and
(3)solicit public comment regarding the reports, including suggestions as to possible changes in the COT reporting system. DATES: Responses must be received by August 21, 2006. ADDRESSES: Written responses should be sent to Eileen Donovan, Acting Secretary, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street, NW., Washington, DC 20581. Responses may also be submitted via e-mail at *secretary@cftc.gov.* “COT reports” must be in the subject field of responses submitted via e-mail, and clearly indicated in written submissions. This document is also available for comment at *http://www.regulations.gov* . FOR FURTHER INFORMATION CONTACT: Donald H Heitman, Senior Special Counsel, Division of Market Oversight, Commodity Futures Trading Commission, Three Lafayette Center, 1155 21st Street, NW., Washington, DC 20581. Telephone: 202-418-5041. E-mail: *dheitman@cftc.gov* . SUPPLEMENTARY INFORMATION: I. Background A. The COT Reports The COT reports provide a breakdown of each Tuesday's open interest 1 for all futures and option markets in which 20 or more traders hold positions equal to or above the reporting levels 2 established by the CFTC. The weekly reports for *Futures-Only Commitments of Traders* and for *Futures-and-Options-Combined Commitments of Traders* are released every Friday at 3:30 p.m. Eastern time. Reports are available in both a short and long format. The short report shows open interest separately by reportable and nonreportable 3 positions. For reportable positions, additional data are provided for commercial and non-commercial holdings. 1 Open interest is the total of all futures and/or option contracts entered into and not yet offset by a transaction, by delivery, by exercise, *etc* . The aggregate of all long open interest is equal to the aggregate of all short open interest. Open interest held or controlled by a trader is referred to as that trader's position. For the *COT Futures & Options Combined* report, option open interest and traders' option positions are computed on a futures-equivalent basis using delta factors supplied by the exchanges. Long-call and short-put open interest are converted to long futures-equivalent open interest. Likewise, short-call and long-put open interest are converted to short futures-equivalent open interest. For example, a trader holding a long put position of 500 contracts with a delta factor of 0.50 is considered to be holding a short futures-equivalent position of 250 contracts. A trader's long and short futures-equivalent positions are added to the trader's long and short futures positions to give “combined-long” and “combined-short” positions. Open interest, as reported to the Commission and as used in the COT report, does not include open futures contracts against which notices of deliveries have been stopped by a trader or issued by the clearing organization of an exchange. 2 Clearing members, futures commission merchants, and foreign brokers (collectively called “reporting firms”) file daily reports with the Commission. Those reports show the futures and option positions of traders that hold positions above specific reporting levels set by CFTC regulations. These reporting levels range from 25 contracts for new or relatively small markets to 3,000 contracts for three-month Eurodollar time deposit rates ( *See* 17 CFR 15.03). If, at the daily market close, a reporting firm has a trader with a position at or above the Commission's reporting level in any single futures month or option expiration, it reports that trader's entire position in all futures and options expiration months in that commodity, regardless of size. The aggregate of all traders' positions reported to the Commission usually represents 70 to 90 percent of the total open interest in any given market. From time to time, the Commission will raise or lower the reporting levels in specific markets to strike a balance between collecting sufficient information to oversee the markets and minimizing the reporting burden on the futures industry. 3 The long and short open interest shown as “Nonreportable Positions” are derived by subtracting total long and short “Reportable Positions” from the total open interest. Accordingly, for “Nonreportable Positions,” the number of traders involved and the commercial/non-commercial classification of each trader are unknown. When an individual reportable trader is identified to the Commission, the trader is classified either as “commercial” or “non-commercial.” All of a trader's reported futures positions in a commodity are classified as commercial if the trader uses futures contracts in that particular commodity for hedging as defined in the Commission's regulations (17 CFR 1.3(z)). A trading entity generally gets classified as a “commercial” by filing a statement with the Commission (on CFTC Form 40) that it is commercially “ * * * engaged in business activities hedged by the use of the futures or option markets.” In order to ensure that traders are classified with accuracy and consistency, the Commission staff reviews this self-classification and may re-classify a trader if the staff has additional information about the trader's use of the markets. A trader may be classified as a commercial in some commodities and as a non-commercial in other commodities. A single trading entity cannot be classified as both a commercial and non-commercial in the same commodity. Nonetheless, a multi-functional organization that has more than one trading entity may have each trading entity classified separately in a commodity. For example, a financial organization trading in financial futures may have a banking entity whose positions are classified as commercial and have a separate money-management entity whose positions are classified as non-commercial. The short report also provides additional data for reportable positions regarding spreading, 4 changes from the previous report, 5 percent of open interest by category, 6 and numbers of traders. 7 The long report, in addition to the information in the short report, also groups the data by crop year, 8 where appropriate, and shows the concentration of positions held by the largest four and eight reportable traders, without regard to whether they are classified as commercial or non-commercial. Current COT data are available on the internet at the Commission's Web site, *http://www.cftc.gov.* 9 4 For the futures-only report, spreading measures the extent to which each non-commercial trader holds equal long and short futures positions. For the options-and-futures-combined report, spreading measures the extent to which each non-commercial trader holds equal combined-long and combined-short positions. For example, if a non-commercial trader in Eurodollar futures holds 5,000 long contracts and 4,500 short contracts, 500 contracts will appear in the “Long” category and 4,500 contracts will appear in the “Spreading” category. These figures do not include intermarket spreading ( *e.g.* , spreading Eurodollar futures against Treasury Note futures). 5 Changes in commitments from the previous report represent the differences between the data for the current report date and the data published in the previous report. 6 Percents are calculated against the total open interest for the futures-only report and against the total futures-equivalent open interest for the options-and-futures-combined report. Percents less than 0.05 are shown as 0.0, and the percents may not add to exactly 100.0 due to rounding. 7 To determine the total number of reportable traders in a market, a trader is counted only once regardless whether the trader appears in more than one category (non-commercial traders may be long or short only and may be spreading; commercial traders may be long and short). To determine the number of traders in each category, however, a trader is counted in each category in which the trader holds a position. Therefore, the sum of the numbers of traders in each category will often exceed the “Total” number of traders in that market. 8 For selected commodities where there is a well-defined marketing season or crop year, the COT data are broken down by “old” and “other” crop years. 9 Also available at that site are historical COT data going back to 1986 for futures-only reports and to 1995 for option-and-futures-combined reports. B. Evolution of the COT Reports and the Marketplace The COT reports can trace their antecedents all the way back to 1924. In that year, the U.S. Department of Agriculture's (“USDA”) Grain Futures Administration, predecessor of the USDA's Commodity Exchange Authority, which is in turn the predecessor of the Commission, published its first comprehensive annual report. The report was published pursuant to the provisions of the Grain Futures Act of 1922, 10 the predecessor statute of today's Commodity Exchange Act (“CEA” or “the Act”), which was enacted in 1936. 11 10 42 Stat. 998, September 21, 1922. 11 49 Stat. 1491, June 15, 1936, 7 U.S.C. 1 *et seq.* . The Grain Futures Administration noted that the general objectives of the Grain Futures Act included “[t]o obtain for the use of Congress and the enlightenment of the public authentic and comprehensive information regarding trading in grain futures.” 12 To that end, that legislation imposed recordkeeping and reporting requirements on boards of trade. One requirement of the implementing regulations was that records should be made in such a manner as to show whether the persons for whom transactions were executed were “engaged in the cash grain business.” 13 The express purpose of this requirement was 12 Annual Reports of the Department of Agriculture for 1924, Report of the Grain Futures Administration on Administration of the Grain Futures Act, at 2, September 9, 1924. 13 *Id* . at 6. to insure that the basic records of all transactions in grain futures will contain information which can be utilized for distinguishing transactions originating with persons engaged in the cash grain business (and therefore presumably representing in considerable part “hedging”) from transactions originating with persons not so engaged (and therefore presumably representing for the most part “speculation”). 14 14 *Id* . The report characterized the distinction between hedging and speculation as being of “fundamental significance from the public point of view” and one that “deserves systematic reflection in the records kept of transactions in grain futures.” Over the years, the Grain Futures Administration and, after 1936, its successor organization the Commodity Exchange Authority, continued to publish annual statistics concerning hedging versus speculative transactions. Beginning with the adoption of the Commodity Exchange Act in 1936, and as part of amendments to that Act on a number of subsequent occasions, the Commodity Exchange Authority's jurisdiction was expanded beyond grains to cover additional agricultural commodities. The Commodity Exchange Authority designated the exchanges where futures contracts in those commodities were traded as “contract markets” in such commodities. 15 As contract markets in additional commodities were designated, the Authority expanded its annual reports of hedging and speculative positions in futures markets to include additional commodities. 16 15 In this context, a “contract market designation” refers to designating an exchange where futures contracts on a particular commodity are traded as a “contract market” in that commodity. For example, after the 1936 Act brought a number of additional agricultural commodities within the Commodity Exchange Authority's jurisdiction, the Authority designated the New York Cotton Exchange as a contract market in cotton and the Chicago Mercantile Exchange as a contract market in butter, eggs and potatoes. As subsequent amendments brought additional commodities within the scope of the Act, further contract market designations followed, including soybeans (1940), soybean oil (1950), soybean meal (1951), frozen concentrated orange juice (1968), and livestock futures (live and feeder cattle, live hogs and frozen pork bellies—all in 1968). Under the Commodity Futures Modernization Act of 2000 (“CFMA”), however, a “contract market designation” refers to the Commission designating (licensing) a board of trade (exchange) as a “designated contract market” (“DCM”). Once designated, a DCM can trade any number of commodities. A DCM can list any new product by filing with the Commission a copy of the rules pursuant to which the product will trade, along with a certification that the product complies with the Act and the Commission's rules thereunder. 16 In addition, starting in 1942, the Commodity Exchange Authority began issuing “Commodity Futures Statistics” as a separate publication, distinct from the USDA annual report. The Commodity Futures Statistics were also expanded to include monthly data, but were still published only on an annual basis. In 1962, the Commodity Exchange Authority took what it called “another step forward in the policy of providing the public with current and basic data on futures market operations” by moving beyond an annual statistical recap and initiating the publication of monthly COT reports. The original COT reports were compiled on an end-of-month basis and published on the 11th or 12th calendar day of the following month. The first COT report, covering 13 agricultural commodities, was published on June 13, 1962. Over the 44 years since then, both the COT reports and the underlying futures markets have undergone a number of significant changes. With respect to the COT reports, the number of commodities covered in the COT reports has continued to expand. In April 1975, the newly formed CFTC succeeded the Commodity Exchange Authority. The Commission continued to publish the COT reports, but expanded the reports' content to include new commodities first brought under the Commission's jurisdiction by the Commodity Futures Trading Commission Act of 1974. 17 In the years since then, scores of new futures and option products have been listed for trading on designated futures exchanges. As noted above, not all these commodities are included in the COT reports, since reports are published only for commodities in which 20 or more traders hold reportable positions. The most recent COT reports published cover 85 to 90 commodities trading on six different DCMs. 18 17 Public Law 93-463, 88 Stat. 1389, October 23, 1974. The new commodities added in 1974 included coffee, sugar, cocoa, metals, energy products and financial products, among other things. 18 The COT reports are the most frequently visited section of the Commission's Web site. During 2005, nearly half of the visitors to the Commission's Web site were there primarily to access the COT reports, with approximately 460,000 visitors viewing the reports. In addition to covering additional commodities, the Commission has improved the COT reports in several other ways as well. The Commission has changed the publication schedule several times to provide information to the public more frequently—switching publication from monthly to twice monthly (mid-month and month-end) in 1990, to every two weeks in 1992, and to weekly in 2000. The Commission has also acted to improve the timeliness of the reports—moving publication to the sixth business day after the “as of” date in 1990, and then to the third business day after the “as of” date in 1992. The Commission has also expanded the scope of the information included in the reports—adding data on the numbers of traders in each category, a crop-year breakout and concentration ratios in the early 1970s and adding data on option positions in 1992. Finally, the Commission has made the COT reports more widely available—moving from a paid subscription-based mailing list to fee-based electronic access in 1993 and, since 1995, making the COT data freely available on the Commission's internet website. C. Issues Regarding COT Data 1. Elimination of the Series '03 Reports One of the historical changes in the COT reports has raised questions with respect to the usage of the COT data in today's market environment. In 1981, the Commission adopted regulations 19 to eliminate the routine filing of series '03 reports by large traders. 20 The purpose of these rules was to reduce paperwork burdens on large traders and the Commission. 19 46 FR 59960, December 8, 1981. 20 Series '03 reports were required to be filed with the Commission by any trader who owned or controlled a reportable futures position. Once traders acquired a reportable position in a commodity, they were required to report trades, positions, exchanges of futures for physicals and delivery information regarding that commodity on series '03 reports, and to classify how much of their position was speculative and how much was hedging. Because the series '03 reports included both position information for all reportable traders and the traders' classification of how much of their positions was speculative and how much was hedging, the series '03 reports had provided the data that went to make up the COT reports. In its rulemaking eliminating the series '03 reports, the Commission stated its intention to continue publishing the COT reports using data from the series '01 reports and Form 102, 21 as well as the Form 40, Statement(s) of Reporting Trader. 22 However, publication of the COT reports was suspended for approximately 18 months in order to implement computer system changes that would enable the Commission to generate COT data under the revised reporting system. 23 When the COT reports resumed, reportable positions were no longer classified as “hedging” or “speculative” (the series '03 forms that required traders to make these classifications no longer being available). Rather, reportable positions were classified as “commercial” or “non-commercial,” based on the declarations made in the reporting traders” Form 40 statements. 21 Series '01 reports are reports filed by futures commission merchants (“FCMs”), foreign brokers and exchange clearing members clearing their own trades, with respect to all customer or (for the exchange clearing members) proprietary accounts that attain a reportable position. A series '01 report itemizes the account number and certain positions, deliveries and exchanges of futures (including exchanges of futures for physicals [“EFPs”], swaps [“EFSs”], risk [“EFRs”] and options [“EFOs”] or other exchanges of futures for a commodity or for a derivatives position) associated with each account carrying a reportable position ( *See* 17 CFR 17.00). The name, address and occupation of the person or persons who own such accounts are separately identified on Form 102 ( *See* 17 CFR 17.01). By aggregating the series '01 and Form 102 information filed with respect to traders with accounts at multiple FCMs or foreign brokers, the Commission can determine the size of each reportable trader's overall position. 22 Each person that holds or controls a reportable position is required to file a Form 40. The Form 40 requires a trader to list its principal business or occupation and to state whether it is “commercially engaged in business activities hedged by the use of the futures or option markets.” If the trader answers “yes,” it is instructed to complete a separate schedule “listing the futures or option contract used, the cash commodity(ies) hedged, or the risk exposure covered, and the marketing occupations associated with hedging uses.” 23 The Commission notes that eliminating the series '03 forms as the basis for the COT reports improved the timing and accuracy of the COT reports because:
(1)Series '03 forms were mostly mailed to the Commission from wherever the trader resided, in some cases taking several days to arrive and be processed, whereas series '01 reports are filed electronically by the following morning; and
(2)series '03 forms were only required to be filed when a reportable trader's position changed, so that a trader's delay or failure to file a report often led to an erroneous assumption that the position had not changed. The Commission believes that the public perception was, and is, that the “commercial vs. non-commercial” classification in current COT reports is analogous (if not identical) to the “hedging vs. speculation” distinction in the pre-1982 COT reports. Over time, however, derivatives markets (including both exchange-traded and over-the-counter [”OTC”] markets), as well as derivatives trading patterns and practices, have evolved tremendously. Changes have been particularly evident over the last 15 years. As a result of these changes in markets and trading practices, questions have been raised as to whether the “commercial” and “non-commercial” categories of today's COT reports appropriately classify trading practices that were not contemplated when the “hedging vs. speculation” categories were removed in 1982. 2. The Impact of Speculative Position Limit and Hedge Exemption Rules To protect futures markets from excessive speculation that can cause unreasonable or unwarranted price fluctuations, and to reduce the potential threat of market manipulation, the Act and Commission regulations require the Commission 24 and the exchanges 25 to impose limits on the size of speculative positions in futures markets. For certain agricultural markets, the speculative limits are determined by the Commission and set out in federal regulations. 26 For all other markets, the speculative limits are determined as necessary by the exchanges according to standards established by the Commission. 27 The Commission and exchanges grant exemptions from their respective speculative position limits for “bona fide hedging.” A hedge is a futures or option transaction or position that normally represents a substitute for transactions to be made or positions to be taken at a later time in a physical marketing channel. Hedges must be “economically appropriate to the reduction of risks in the conduct and management of a *commercial enterprise* ” [emphasis supplied] and must arise from a change in the value of a hedger's (current or anticipated) assets or liabilities. 28 24 *See* section 4a of the Act. 25 *See* section 5(d)(5) of the Act and 17 CFR 150.5. 26 Speculative position limits for corn, oats, wheat, soybeans, soybean oil, soybean meal, and cotton are set out at 17 CFR 150.2. 27 Pursuant to those standards, some markets are subject to position accountability rules in lieu of speculative position limits. 28 *See* 17 CFR 1.3(z) for the full regulatory definition of “bona fide hedging.” 3. Hedge Exemptions and the COT Reports Because both the hedge exemption rules and the standards whereby positions are classified for purposes of the COT reports refer to “commercial” positions, the Commission has considered the classification of a position as “commercial” under the hedge exemption rule as being an appropriate indicator for how the position, and the trader holding it, should be classified for COT purposes. In other words, if an entity holding a particular futures or option position has received a hedge exemption with respect to that position, the position is, by definition, held by a “commercial enterprise.” Accordingly, that position should be reported (via the series '01 reports, Forms 102 and Forms 40) to the Commission as a “commercial” position, and it would be included within the “commercial” category on the COT reports. Entities in the same type of business, holding similar hedge positions (as reported on their Form 40) are likewise treated as commercials for purposes of the COT reports, even though the entities may not have sought hedge exemptions because they are trading below the level of the position limit so no exemption is required. As trading practices in the derivatives markets (both exchange and OTC) have continued to evolve over the past 5 years, the Commission has granted hedge exemptions from the Commission speculative limits for certain agricultural commodities to entities whose futures positions reflected various innovative, non-traditional risk management strategies. Based on their classification for hedge exemption purposes, positions based on these non-traditional strategies have been classified in the COT reports as “commercial.” The result is that, over time, the nature of the positions carried in the COT reports for some commodities has changed significantly, raising questions as to whether the COT reports should be reviewed to determine if revisions are needed to reflect changing market conditions. This issue may be illustrated by reviewing the history of hedge exemption requests. 29 For example, in 1991, the Commission received a request from a “large commodity merchandising firm,” that “engage[d] in commodity related swaps 30 as a part of a commercial line of business.” The firm, through an affiliate, wished to enter into an OTC swap transaction, with a qualified counterparty (a large pension fund), involving an index based on the returns afforded by investments in exchange-traded futures contracts on certain non-financial commodities meeting specified criteria. The commodities making up the index included wheat, corn and soybeans, all of which were (and still are) subject to Commission speculative position limits. As a result of the swap, the swap dealing firm would, in effect, be going short the index. In other words, it would be required to make payments to the counterparty if the value of the index was higher at the end of the swap payment period than at the beginning. In order to hedge itself against this risk, the swap dealer planned to establish a portfolio of long futures positions in the commodities making up the index, in such amounts as would replicate its exposure under the swap transaction. By design, the index did not include contract months that had entered the delivery period and the swap dealer, in replicating the index, stated that it would not maintain futures positions based on index-related swap activity into the delivery month. The result of the hedge was that the composite return on the futures portfolio would offset the net payments the swap dealer would be required to make to the counterparty. 29 Specific requests, and the Commission's responses granting or denying those requests, by their very nature, include information regarding the nature of the requesting entity's trading activities. The express terms of the Act prohibit the Commission from publicly disclosing such information. Section 8(a)(1) of the Act provides in relevant part that “the Commission may not publish data and information that would separately disclose the business transactions or market positions of any person and trade secrets or names of customers.” However, it is possible, without disclosing prohibited information, to provide an overview of certain hedge exemption letters that will illustrate how the nature of the information included in the COT reports has changed over time. 30 A swap is a privately negotiated exchange of one asset or cash flow for another asset or cash flow. In a commodity swap, at least one of the assets or cash flows is related to the price of one or more commodities. Because the futures positions the swap dealer would have to establish to hedge its exposure on the swap transaction would be in excess of the speculative position limits on wheat, corn and soybeans, it requested, and was granted, a hedge exemption for those positions. As discussed above, when those reportable futures positions were incorporated into the COT reports, they were reported as “commercial” positions. Similar hedge exemptions were subsequently granted in other cases where the futures positions clearly offset risks related to swaps or similar OTC positions involving both individual commodities and commodity indexes. These non-traditional hedges were all subject to the same limitations as the original hedge exemption—that the futures positions must offset specific price exposure on a non-discretionary basis ( *i.e.* , would not over-weight or under-weight the size or mix of futures based upon a market outlook), would be of equal dollar value to the underlying risk ( *i.e.* , be unleveraged), and would not be carried into the delivery month. 4. The Effect on the COT Report The effect of the entry of these non-traditional hedgers into the marketplace has been to change the composition of the COT reports. Prior to 1991, both the long and the short side of the commercial open interest listed in the COT reports represented traditional hedgers (producers, processors, manufacturers or merchants handling the commodity or its products or byproducts). Since that time, though, trading practices have evolved to such an extent that today, a significant proportion of the long side open interest in a number of major physical commodity futures contracts is held by non-traditional hedgers ( *e.g.* , swap dealers), while the traditional hedgers may be either net long or net short (more often, the latter). This has raised questions as to whether the COT report can reliably be used to assess futures hedging activity by persons hedging exposure in the underlying physical commodity markets. It should be noted that the Commission's treatment of professionally managed funds 31 in the COT reports generally does not raise the same issue. Professionally managed funds, although they may be appropriately treated as commercials with respect to markets in financial commodities, 32 are usually treated as non-commercials for COT purposes in the markets for physical commodities (including not only agricultural commodities, but energy products, metals and other physical commodities as well). 31 For these purposes, “professionally managed funds” includes traders registered as commodity trading advisors and commodity pool operators, as well as funds commonly referred to as “hedge funds.” A hedge fund has been described as a private investment fund or pool that trades and invests in various assets such as securities, commodities, currency, and derivatives on behalf of its clients. 32 A professionally managed fund trading in futures markets for financial products (equity, debt or foreign currency) might very well be hedging various OTC or exchange-traded products. II. Alternatives in Addressing Issues Related to the COT Reports In view of the changes in markets and trading patterns described above, the Commission is now seeking public comment concerning whether it should adopt any changes to the way data are presented in the COT reports. Such action could be taken as part of the Commission's ongoing efforts both to maintain an information system that reflects changing market conditions, and to provide the public with useful information regarding futures and option markets. In addition, the Commission is seeking comment as to whether it should stop publishing the COT reports altogether if it is determined that either:
(1)There are data anomalies in the reports for which no satisfactory solution can be found; or
(2)the data in the reports provide no public benefit. 33 33 The COT reporting program is not mandated by either the Act or Commission regulations. Therefore, if, after reviewing the comments received in response to this notice, the Commission decides to take any action with respect to the COT reporting program, it can do so without further notice or opportunity for comment. III. Questions The Commission has formulated the following questions based upon its initial review of issues relating to the COT reports. Responses from interested parties will advance the Commission's understanding of these issues and, it is hoped, point the way to a satisfactory resolution of any problems that are identified regarding the COT reports. Each enumerated question should be addressed individually. Interested parties are also welcome to address other topics or issues that they believe are relevant to the COT reports. 1. What types of traders in the futures and option markets use the COT reports in their current form, and how are they using the COT data? More specifically:
(a)How do traders use the COT information on commercial positions?
(b)How do they use the COT information on non-commercial positions?
(c)In particular, with respect to information on non-commercial positions, what information or insights do traders gain from the COT reports regarding the possible impact of futures trading on the underlying cash market? 2. Are other individuals or entities (academic researchers or others) using the COT reports and, if so, how? 3. Do the COT reports, in their current form, provide any particular segment of traders with an unfair advantage? 4. Should the Commission continue to publish the COT reports? 5. If the Commission continues to publish the COT reports, should the reports be revised to include additional categories of data—for example, non-traditional commercial positions, such as those held by swap dealers? 6. As a general matter, would creating a separate category in the COT report for “non-traditional commercials” potentially put swap dealers or other non-traditional commercials at a competitive disadvantage (since other market participants would generally know that their positions are usually long, are concentrated in a single futures month, and are typically rolled to a deferred month on a specific schedule before the spot month)? 7. More specifically, if the data in the COT reports are made subject to further, and finer, distinctions, such as adding a category for non-traditional commercials:
(a)Would it increase the likelihood that persons reading the reports would be able to deduce the identity of the position holders, or other proprietary information, from the reports?
(b)Could such persons use information gleaned from the reports to gain a trading advantage over the reported position holders?
(c)In such case, in order to reduce the likelihood of publishing categories with few traders, which might provide information giving other traders a competitive advantage over the reported traders, should the Commission consider raising the threshold number of reportable traders needed to publish data for a market from 20 traders to some larger number of traders? 8. If the data in the COT reports are made subject to further, and finer, distinctions, should the reports be revised for all commodities, or only for those physical commodity markets in which non-traditional commercials participate? 9. If a non-traditional commercial category were added to markets in physical commodities, what should be done with financial commodities, where “non-traditional commercials” would be essentially an empty category (since, in financial commodities, swap dealers would fall within the pre-existing “commercial” category)? 10. The Commission has observed that the non-traditional commercials tend to be long only and tend not to shift their futures positions dramatically—even in the face of substantial price movements. If the data in the COT reports are made subject to further, and finer, distinctions, would issuing the additional data on a periodic basis, in the form of a quarterly or monthly supplement, be sufficient? 11. Some reportable traders engage in both traditional (physical) and non-traditional (financial) commercial activity in the same commodity market. If the data in the COT reports are made subject to further, and finer, distinctions, such traders would have to break out their non-traditional commercial OTC hedging activity into a separate account. Would such a requirement represent an undue burden to those traders? Issued in Washington, DC, on June 15, 2006, by the Commission. Eileen Donovan, Acting Secretary of the Commission. [FR Doc. E6-9722 Filed 6-20-06; 8:45 am] BILLING CODE 6351-01-P DEPARTMENT OF DEFENSE Office of the Secretary [DOD-2006-OS-0150] Privacy Act of 1974; System of Records AGENCY: Office of the Secretary, DoD. ACTION: Notice to add a system of records. SUMMARY: The Office of the Secretary of Defense proposes to add a system of records to its inventory of record systems subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended. DATES: The changes will be effective on July 21, 2006 unless comments are received that would result in a contrary determination. ADDRESSES: Send comments to OSD Privacy Act Coordinator, Records Management Section, Washington Headquarters Services, 1155 Defense Pentagon, Washington, DC 20301-1155. FOR FURTHER INFORMATION CONTACT: Ms. Juanita Irvin at
(703)696-4940. SUPPLEMENTARY INFORMATION: The Office of the Secretary of Defense notices for systems of records subject to the Privacy Act of 1974 (5 U.S.C. 552a), as amended, have been published in the **Federal Register** and are available from the address above. The proposed systems reports, as required by 5 U.S.C. 552a(r) of the Privacy Act of 1974, as amended, were submitted on June 14, 2006, to the House Committee on Government Reform, the Senate Committee on Homeland Security and Governmental Affairs, and the Office of Management and Budget
(OMB)pursuant to paragraph 4c of Appendix I to OMB Circular No. A-130, “Federal Agency Responsibilities for Maintaining Records About Individuals,” dated February 8, 1996 (February 20, 1996, 61 FR 6427). Dated: June 15, 2006. C.R. Choate, Alternate, OSD Federal Register Liaison Officer, Department of Defense. DHA14 System name: Computer/Electronic Accommodations Program for People with Disabilities. System Location: Computer/Electronic Accommodations Program
(CAP)Data Management System (eCMDS), 5109 Leesburg Pike, Sky 6, Suite 504, Falls Church, VA 22041-3891. Categories of individuals covered by the system: Prospective DoD and other Federal agency employees, current DoD and other Federal agency employees, and members of the Armed Forces. Categories of records in the system: Information includes but is not limited to name, address, phone number, medical and disability data, history of accommodations being sought and their disposition, and other documentation, e.g., CAP Speech Form, Telework Agreement, etc., used in support of the request for an assistive technology solution. Product and vendor contact information to include order/invoices/declination/cancellation data for the product and identification of vendors, vendor products used, and product costs. Authority for maintenance of the system: Rehabilitation Act of 1973, as amended; EEOC Enforcement Guidance: Reasonable Accommodation and Undue Hardship Under the Americans with Disabilities Act, March 1, 1999 and Special Work Arrangements As Accommodations for Individuals with disabilities, USD(P&R) Memorandum, February 26, 1999; E.O. 13160, 23 June 2000. Purpose(s): To administer the Computer/Electronic Accommodations Program, a centrally funded Federal program, which provides assistive (computer/electronic) technology solutions to individuals who have disabilities so that an accessible work environment is provided to individuals with hearing, visual, dexterity, cognitive, and/or communications impairments. The system identifies the computer/electronic accommodations being provided and tracks all such accommodations for DoD as well as 64 partner agencies. Routine uses of records maintained in the system, including categories of users and the purpose of such uses: In addition to those disclosures generally permitted under 5 U.S.C. 552a(b) of the Privacy Act , these records or information contained therein may specifically be disclosed outside the DoD as a routine use pursuant to U.S.C. 552a(b)(3) as follows: To Federal agencies participating in the Computer/Electronic Accommodations Program for purposes of providing information as necessary to permit the agency to carry out its responsibilities under the program. To commercial vendors for purposes of providing information as necessary to permit the vendor to identify and provide assistive technology solutions for individuals with disabilities. The DoD “Blanket Routine uses” set forth at the beginning of OSD's compilation of systems of records notices apply to this system. Policies and practices for storing, retrieving, accessing, retaining, and disposing of records in the system: Storage: Records are maintained on electronic storage media. Retrievability: Records are retrieved by employee name address, telephone, and disability information. Safeguards: Records are maintained in controlled areas accessible only to authorized personnel. Access to personal information is further restricted by the use of passwords. Paper records are maintained in a controlled facility where physical entry is restricted by the use of locks, guards, or administrative procedures. Retention and disposal: Records are destroyed 6 years, 3 months after the record is closed. System Manager(s) and address: Computer/Electronic Accommodations Program
(CAP)Data Management System (eCMDS), 5109 Leesburg Pike, Sky 6, Suite 504, Falls Church, VA 22041-3891. Notification procedure: Individuals seeking to determine whether information about themselves is contained in this system should address written inquiries to the TRICARE Management Activity, Department of Defense, ATTN: TMA Privacy Officer, 5111 Leesburg Pike, Suite 810, Falls Church, VA 22041-3206. Request should contain full name, address and telephone number. Record access procedures: Individuals seeking access to information about themselves contained in this system of records should address written inquiries to Computer/Electronic Accommodations Program
(CAP)Data Management System (eCMDS), 5109 Leesburg Pike, Sky 6, Suite 504, Falls Church, VA 22041-3891. Request should contain full name, address and telephone number. Contesting record procedures: The OSD rules for accessing records, for contesting contents and appealing initial agency determinations are contained in OSD Administrative Instruction 81; 32 CFR part 311; or may be obtained from the system manager. Record source categories: Information is obtained from the individual and Human Resources databases. Exemptions claimed for the system: None. [FR Doc. 06-5551 Filed 6-20-06; 8:45 am]
Connectionstraces to 26
Traces to 26 documents
CFR
4 references not yet in our index
  • 243 F.3d 1301
  • 264 F. Supp. 2d 1339
  • Pub. L. 93-463
  • 32 CFR 311
Citation graph
cites case law
Notices
Notice of Preliminary Results of Antidumping Duty Administrative Review
C.F.R.§ 351.213
C.F.R.§ 351.403
C.F.R.§ 351.412
C.F.R.§ 351.102
C.F.R.§ 351.411
C.F.R.§ 351.410
C.F.R.§ 351.224
C.F.R.§ 351.310
C.F.R.§ 351.309
F. App'x243 F.3d 1301
F. Supp.264 F. Supp. 2d 1339
Pub. L.Pub. L. 93-463
Cites 30 · showing 12Cited by 0 across 0 sources
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