Notice of Preliminary Determination of Sales at Less Than Fair Value and Affirmative Preliminary Determination of Critical Circumstances: Electrolytic Manganese Dioxide from Australia, 15982-15988 [E8-6167]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 73, Number 59 (Wednesday, March 26, 2008)]
[Notices]
[Pages 15982-15988]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-6167]


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DEPARTMENT OF COMMERCE

International Trade Administration

(A-602-806)


Notice of Preliminary Determination of Sales at Less Than Fair 
Value and Affirmative Preliminary Determination of Critical 
Circumstances: Electrolytic Manganese Dioxide from Australia

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.
SUMMARY: We preliminarily determine that imports of electrolytic 
manganese dioxide from Australia are being, or are likely to be, sold 
in the United States at less than fair value, as provided in section 
733(b) of the Tariff Act of 1930, as amended (the Act). Interested 
parties are invited to comment on this preliminary determination. We 
will make our final determination within 75 days after the date of this 
preliminary determination.

FOR FURTHER INFORMATION CONTACT: Hermes Pinilla or Minoo Hatten, AD/CVD 
Operations, Office 5, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
3477 or (202) 482-1690, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On September 17, 2007, the Department of Commerce (the Department) 
published in the Federal Register the initiation of antidumping duty 
investigations of electrolytic manganese dioxide from Australia and the 
People's Republic of China. See Notice of Initiation of Antidumping 
Duty Investigations: Electrolytic Manganese Dioxide from Australia and 
the People's Republic of China, 72 FR 52850 (September 17, 2007) 
(Initiation Notice). The Department set aside a period for all 
interested parties to raise issues regarding product coverage. The 
Department encouraged all interested parties to submit such comments 
within 20 days from publication of the initiation notice, that is, by 
October 9, 2007. See Initiation Notice, 72 FR at 52851; see also 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 
27323 (May 19, 1997) (Final Rule).
    On October 24, 2007, the United States International Trade 
Commission (ITC) preliminarily determined that there is a reasonable 
indication that imports of electrolytic manganese dioxide from 
Australia are materially injuring the U.S. industry and the ITC 
notified the Department of its findings. See Electrolytic Manganese 
Dioxide from Australia and the People's Republic of China, 
Investigation Nos. 731-TA-1124 1125 (Preliminary), 72 FR 60388-60389 
(October 24, 2007) (ITC Preliminary Notice).
    On January 15, 2008, we postponed the deadline for the preliminary 
determinations under section 733(c)(1)(A) of the Act by 50 days to 
March 19, 2008. See Postponement of Preliminary Determinations of 
Antidumping Duty Investigations: Electrolytic Manganese Dioxide from 
Australia and the People's Republic of China, 73 FR 2445 (January 15, 
2008).

Period of Investigation

    The period of investigation (POI) is July 1, 2006, through June 30, 
2007.

Scope of Investigation

    The merchandise covered by this investigation includes all 
manganese dioxide (MnO[bdi2]) that has been manufactured in an 
electrolysis process, whether in powder, chip, or plate form (EMD). 
Excluded from the scope are natural manganese dioxide (NMD) and 
chemical manganese dioxide (CMD). The merchandise subject to this 
investigation is classified in the Harmonized Tariff Schedule of the 
United States (HTSUS) at subheading 2820.10.00.00. While the HTSUS 
subheading is provided for convenience and customs purposes, the 
written description of the scope of this investigation is dispositive.

Scope Comments

    In accordance with the preamble to our regulations, we set aside a 
period of time for parties to raise issues regarding product coverage 
in the Initiation Notice and encouraged all parties to submit comments 
within 20 calendar days of publication of the Initiation Notice. See 
Final Rule, 62 FR at 27323. We did not receive comments from any 
interested parties in this investigation.

Respondent Identification

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual weighted-average dumping margins for each known exporter and 
producer of the subject merchandise. Section 777A(c)(2) of the Act also 
gives the Department discretion to examine a reasonable number of such 
exporters and producers when it is not practicable to examine all 
exporters and producers. In order to identify the universe of 
producers/exporters in Australia to investigate for purposes of this 
less-than-fair-value investigation on EMD, we analyzed information from 
various sources, including data from U.S. Customs and Border Protection 
(CBP).
    Using information obtained from the petition, an internet search, 
and CBP statistical information on U.S. imports of EMD during the POI, 
we identified one respondent, Delta Australia Pty Ltd (Delta). For a 
detailed analysis of our respondent-identification procedure, see 
Memorandum to Laurie Parkhill, ``Antidumping Duty Investigation on 
Electrolytic Manganese Dioxide from Australia Respondent 
Identification,'' dated October 25, 2007, on file in the Central 
Records Unit (CRU) in room 1117.

Delta

    On October 31, 2007, we issued a questionnaire to Delta and 
requested that it respond by December 7, 2007. On November 27, 2007, we 
granted Delta an extension until December 28, 2007, to respond to all 
sections of the questionnaire. On December 28, 2007, we received 
Delta's sections A and C responses. We granted Delta an extension until 
February 8, 2008, to respond to sections B and D of the questionnaire. 
On January 31, 2008, we received a letter from Delta explaining that, 
due to the closing of its plant facility in Australia, it did not have 
resources to provide adequate responses to the questionnaire or to 
continue active participation in this investigation. Thus, Delta did 
not submit any further questionnaire responses, including sections B 
and D due on February 8, 2008, or a response to the Department's 
supplemental questionnaire (sections A and C) due on February 14, 2008.

[[Page 15983]]

Use of Adverse Facts Available

    For the reasons discussed below, we determine that the use of 
adverse facts available (AFA) is appropriate for the preliminary 
determination with respect to Delta.
A. Use of Facts Available
    Section 776(a)(2) of the Act provides that, if an interested party 
withholds information requested by the administering authority, fails 
to provide such information by the deadlines for submission of the 
information and in the form or manner requested, subject to subsections 
(c)(1) and (e) of section 782 of the Act, significantly impedes a 
proceeding under this title, or provides such information but the 
information cannot be verified as provided in section 782(i), the 
administering authority shall use, subject to section 782(d) of the 
Act, facts otherwise available in reaching the applicable 
determination. Section 782(e) of the Act states further that the 
Department shall not decline to consider submitted information if all 
of the following requirements are met: (1) the information is submitted 
by the established deadline; (2) the information can be verified; (3) 
the information is not so incomplete that it cannot serve as a reliable 
basis for reaching the applicable determination; (4) the interested 
party has demonstrated that it acted to the best of its ability; and 
(5) the information can be used without undue difficulties.
    On January 31, 2008, forty-eight days before the Department's 
preliminary determination, Delta informed the Department that it did 
not have resources to continue active participation in the instant 
investigation. See Letter from Delta, ``Notification of Intent Not to 
Participate Due to Closure of Australian EMD Facility'' (January 31, 
2008). Because Delta ceased participation in the instant investigation, 
Delta did not provide pertinent information necessary to calculate an 
antidumping margin for the preliminary determination. Specifically, 
Delta did not respond to sections B and D of the Department's 
questionnaire and did not respond to the January 30, 2008, supplemental 
questionnaire concerning its already-filed responses to sections A and 
C. Thus, by not providing the pertinent information we requested that 
is necessary to calculate an antidumping margin for the preliminary 
determination, Delta has failed to cooperate to the best of its 
ability. Therefore, we find that the application of total facts 
available for Delta is warranted in this preliminary determination.
B. Application of Adverse Inferences for Facts Available
    In selecting from among the facts otherwise available, section 
776(b) of the Act provides that, if the administering authority finds 
that an interested party has failed to cooperate by not acting to the 
best of its ability to comply with a request for information from the 
administering authority, in reaching the applicable determination under 
this title, the administering authority may use an inference adverse to 
the interests of that party in selecting from among the facts otherwise 
available. See, e.g., Notice of Final Determination of Sales at Less 
than Fair Value: Circular Seamless Stainless Steel Hollow Products from 
Japan, 65 FR 42985, 42986 (July 12, 2000) (CSSSHP Final Determination) 
(the Department applied total AFA where the respondent failed to 
respond to the antidumping questionnaire).
    Adverse inferences are appropriate ``to ensure that the party does 
not obtain a more favorable result by failing to cooperate than if it 
had cooperated fully.'' See, e.g., Statement of Administrative Action 
accompanying the Uruguay Round Agreements Act, H. Doc. No. 103-316, at 
870 (1994) (SAA). Furthermore, ``affirmative evidence of bad faith, or 
willfulness, on the part of a respondent is not required before the 
Department may make an adverse inference.'' See Antidumping Duties; 
Countervailing Duties, 62 FR 27296, 27340 (May 19, 1997). Although the 
Department provided Delta with 58 days to respond to sections A and C 
of the questionnaire and 93 days to respond to sections B and D of the 
questionnaire, Delta did not respond adequately to the Department's 
questionnaire. While Delta has provided a reason for not participating 
in this investigation, this constitutes a failure on the part of Delta 
to cooperate to the best of its ability to comply with a request for 
information by the Department within the meaning of sections 776(b) and 
782(d) of the Act. Because Delta did not provide the information 
requested, section 782(e) of the Act is not applicable. Therefore, the 
Department preliminarily finds that, in selecting from among the facts 
otherwise available, an adverse inference is warranted. See, e.g., 
CSSSHP Final Determination, 65 FR at 42986.
C. Selection and Corroboration of Information Used as Facts Available
    Where the Department applies AFA because a respondent failed to 
cooperate by not acting to the best of its ability to comply with a 
request for information, section 776(b) of the Act authorizes the 
Department to rely on information derived from the petition, a final 
determination, a previous administrative review, or other information 
placed on the record. See also 19 CFR 351.308(c). It is the 
Department's practice to use the highest calculated rate from the 
petition in an investigation when a respondent fails to act to the best 
of its ability to provide the necessary information and there are no 
other respondents. See, e.g., Notice of Preliminary Determination of 
Sales at Less Than Fair Value and Postponement of Final Determination: 
Purified Carboxymethylcellulose From Finland, 69 FR 77216, 77218 
(December 27, 2004) (unchanged in final determination, 70 FR 28279 (May 
17, 2005)). Therefore, because an adverse inference is warranted, we 
have assigned Delta a rate of 120.59 percent based on the rate alleged 
in the petition, as recalculated in this preliminary determination and 
discussed below. See Antidumping Duty Petitions on Electrolytic 
Manganese Dioxide from Australia and the People's Republic of China 
(August 22, 2007) (Petition), September 4, 2007, Supplements to the 
Petition (addressing the Department's requests for additional 
information and clarification on certain areas in the Petition), 
Initiation Notice, 72 FR at 52854, and the Preliminary Determination 
Analysis Memorandum (March 19, 2008).
    When using facts otherwise available, section 776(c) of the Act 
provides that, when the Department relies on secondary information 
(such as the petition) rather than on information obtained in the 
course of an investigation, it must corroborate, to the extent 
practicable, information from independent sources that are reasonably 
available at its disposal.
    The SAA clarifies that ``corroborate'' means the Department will 
satisfy itself that the secondary information to be used has probative 
value. See SAA at 870. To corroborate secondary information, the 
Department will examine, to the extent practicable, the reliability and 
relevance of the information used. See Tapered Roller Bearings and 
Parts Thereof, Finished and Unfinished, from Japan, and Tapered Roller 
Bearings, Four Inches or Less in Outside Diameter, and Components 
Thereof, from Japan; Preliminary Results of Antidumping Duty 
Administrative Reviews and Partial Termination of Administrative 
Reviews, 61 FR 57391, 57392 (November 6, 1996) (unchanged in final 
results, 62

[[Page 15984]]

FR 11825, 11843 (March 13, 1997)). The Department's regulations state 
that independent sources used to corroborate such evidence may include, 
for example, published price lists, official import statistics and 
customs data, and information obtained from interested parties during 
the particular investigation. See 19 CFR 351.308(d).
    For the purposes of this investigation, to the extent appropriate 
information was available, we reviewed the adequacy and accuracy of the 
information in the Petition during our pre-initiation analysis and 
again for purposes of this preliminary determination. See Antidumping 
Duty Investigation Initiation Checklist: Electrolytic Manganese Dioxide 
from Australia (September 11, 2007) (Australia Initiation Checklist). 
We examined evidence supporting the calculations in the Petition to 
determine the probative value of the margins alleged in the Petition 
for use as AFA for purposes of this preliminary determination. During 
our pre-initiation analysis, we examined the key elements of the 
export-price and normal-value calculations used in the Petition to 
derive margins. During our pre-initiation analysis, we also examined 
information from various independent sources provided either in the 
Petition or in the supplements to the Petition that corroborates key 
elements of the export-price and normal-value calculation used in the 
Petition to derive an estimated margin.

U.S. Price

    The petitioner calculated a single U.S. price using the POI-average 
unit customs values (AUVs) for U.S. import data, as reported on the 
ITC's Dataweb for the POI. The petitioner deducted an amount for 
foreign inland-freight costs. See Petition, at Exhibit 11, Supplemental 
Responses at Exhibit R, and Australia Initiation Checklist, at 5-6. The 
petitioner provided an affidavit from an individual attesting to the 
validity of the inland-freight costs it used in the calculation of net 
U.S. price. See Petition, at Exhibit 13. In calculating the export 
price, the petitioner relied exclusively on AUV data with respect to 
U.S. imports from Australia under the HTSUS number 2820.10.00.00. This 
HTSUS number is a ``basket category'' as it includes both subject EMD 
and non-subject CMD and NMD. The petitioner used PIERS data to 
demonstrate that the imports under HTSUS number 2820.10.00.00 are, in 
fact, overwhelmingly subject merchandise because PIERS provides more 
specific product-identification information than official U.S. Census 
data as reported on the ITC's Dataweb import statistics. See Petition, 
at Exhibit 10. U.S. official import statistics are sources that we 
consider reliable and thus require no further corroboration. See, e.g., 
Notice of Preliminary Determination of Sales at Less Than Fair Value: 
Superalloy Degassed Chromium from Japan, 70 FR 48538 (August 18, 2005), 
and Memorandum to the File from Dmitry Vladimirov entitled 
``Preliminary Determination in the Antidumping Duty Investigation of 
Superalloy Degassed Chromium from Japan: Corroboration of Total Adverse 
Facts Available Rate,'' at 3, August 11, 2005 (Chromium from Japan) 
(unchanged in final determination, 70 FR 65886 (November 1, 2005)). In 
addition, the petitioner provided information that indicates that there 
are no producers of CMD or NMD in Australia and that the majority of 
imports under this HTSUS number are from a company that only produces 
EMD. Further, we obtained no other information that would make us 
question the reliability of the pricing information provided in the 
Petition.
    Based on our examination of the aforementioned information, we 
consider the petitioner's calculation of net U.S. prices to be reliable 
and relevant. Because the rate is both reliable and relevant it is 
corroborated.
    On February 19, 2008, the petitioner provided comments with respect 
to U.S. price. Specifically, the petitioner requests that the 
Department adjust the petition rate by using information in Delta's 
U.S. database to calculate net U.S. price. The petitioner argues that 
the Department should use Delta's U.S. database to derive U.S. price 
because it is more accurate than the information contained in the 
petition. According to the petitioner, using this information will 
ensure that Delta is not unfairly rewarded for its failure to cooperate 
in this investigation.
    Because we have not had an opportunity to confirm that we would be 
relying upon accurate information for purposes of calculating a dumping 
margin as accurately as possible in the instant case, we find 
information contained in Delta's U.S. database to be unreliable in this 
investigation. See sections 776(a)(2) and 782(i) of the Act. As such, 
we have preliminarily determined not to use any data submitted by Delta 
in this proceeding.

Normal Value

    With respect to normal value, the petitioner provided information 
that there were no sales in commercial quantities of EMD in the home 
market during the POI and that home-market prices were not reasonably 
available. The petitioner proposed Japan as the largest third-country 
comparison market and demonstrated that Japan is a viable third-country 
market. See Petition, at Exhibit 15. The petitioner provided Global 
Trade Atlas EMD import data for exports from Australia into Japan and 
compared them with U.S. EMD import data for imports from Australia. 
According to these figures, the sales volume to Japan was greater than 
five percent of the sales volume to the United States. The petitioner 
compared third-country prices with an estimate of the cost of producing 
EMD in powder form by Delta. Because these data indicated that sales of 
EMD were made at prices below the product's cost of production (COP), 
pursuant to sections 773(a)(4), 773(b), and 773(e) of the Act, the 
petitioner based normal value for sales of EMD in Japan on constructed 
value.
    Pursuant to section 773(b)(3) of the Act, the COP consists of the 
cost of manufacturing (COM), selling, general, and administrative 
expenses (SG&A), and packing expenses. To calculate the COM, the 
petitioner relied on its own costs during the 2006 fiscal year, 
adjusted for known differences between the costs in the United States 
and the costs in Australia. The petitioner obtained all of the cost 
differences between the United States and Australia that were used to 
calculate the COM from public sources. The petitioner used its own 
factory-overhead costs (FOH) as a conservative estimate of the 
Australian FOH. This is because the petitioner's facilities are older 
than Delta's and would thus likely have lower depreciation because more 
of the assets making up the petitioner's facilities would likely have 
reached the end of their service lives and, thus, have no book value. 
Because Delta's unconsolidated financial statements were not reasonably 
available, the petitioner used the financial statements of an 
Australian zinc producer because, it asserted, zinc undergoes a 
production process similar to EMD. For purposes of the Initiation 
Notice, we adjusted the petitioner's calculation of SG&A and profit 
ratios by using information from Delta PLC's consolidated financial 
statement pertinent to the Australian EMD segment of its business. We 
used Delta PLC's financial records because these records included 
Delta's actual costs of producing the merchandise under consideration. 
See Australia Initiation Checklist for a full description of the 
petitioner's methodology and the adjustments we made to those 
calculations for the initiation decision.

[[Page 15985]]

    In the Australia Initiation Checklist, we stated that the 
petitioner provided information demonstrating reasonable grounds to 
believe or suspect that sales of EMD were made at prices below the 
fully absorbed COP within the meaning of section 773(b) of the Act. See 
Australia Initiation Checklist, at 7. Consequently, we found reasonable 
grounds to believe or suspect that sales of the foreign like product 
were made below the COP, within the meaning of section 773(b)(2)(A)(i) 
of the Act. Accordingly, we initiated a country-wide, sales-below-cost 
investigation.
    With regard to profit, we stated in our Australia Initiation 
Checklist that we did not include an amount for profit in our 
calculation of constructed value because the manganese segment of Delta 
PLC had a net loss for the year ending 2006. See Australia Initiation 
Checklist, at 9. We also stated that we would examine different options 
for calculating a profit later in this proceeding if it becomes 
necessary to calculate a constructed value from the Petition 
information. Id. at 9.
    Section 773(e)(2)(B)(iii) of the Act requires the Department to use 
the amounts incurred and realized for SG&A and for profits based on any 
other reasonable method if actual data are not available with respect 
to SG&A and profit. In accordance with our practice, to determine an 
appropriate profit rate we have considered several factors in the 
instant case: 1) the similarity of the potential surrogate company's 
business operations and products to Delta's; 2) the contemporaneity of 
the surrogate data to the POI. See Notice of Final Determination of 
Sales at Less Than Fair Value: Pure Magnesium From Israel, 66 FR 49349 
(September 27, 2001), and the accompanying Decision Memorandum at 
Comment 8. The greater the similarity in business operations and 
products, the more likely that there is a greater correlation in the 
profit experience of the two companies. Contemporaneity is important 
because markets change over time and the more current the data the more 
reflective it would be of the market in which the respondent is 
operating. Id.
    In its February 19, 2008, comments the petitioner requested that 
the Department adjust the petition rate by adding an amount for profit 
to the calculation of constructed value. The petitioner asserts that, 
in situations such as those found in this case, the Department's 
general practice is to assign to the non-cooperating respondent the 
highest margin alleged in the petition, as an adverse inference, in 
accordance with section 776(b) of the Act. The petitioner argues that, 
although the petition rate was based on constructed value, in its 
notice of initiation of the investigation the Department did not apply 
an amount for profit in its constructed-value recalculation and 
indicated explicitly that it would correct this deficiency if it became 
necessary to apply adverse inferences using the petition rate. The 
petitioner asserts that, because Delta is the only EMD producer in 
Australia and because Delta PLC's 2007 interim report indicates that 
its EMD division is still generating an operating loss, the Department 
has essentially two options for identifying a usable profit rate for 
recalculating constructed value. Specifically, the petitioner argues, 
the Department can either use the profit rate of Zinifex Limited, an 
Australian producer of merchandise comparable to EMD, or use the profit 
rate of a non-Australian EMD producer. The petitioner contends that, if 
the Department decides to use the profit rate of an Australian producer 
of comparable merchandise, it recommends that the Department use the 
profit rate contained in the 2007 Annual Report of Zinifex Limited. See 
Petitioner's Submission, ``Electrolytic Manganese Dioxide from 
Australia; Application of Facts Available for Preliminary 
Determination'' at 5 (February 19, 2008). Citing Certain Steel Nails 
from the United Arab Emirates: Initiation of Antidumping Duty 
Investigation, 72 FR 38816, 38820 (July 16, 2007), the petitioner 
argues that the Department has an established practice of accepting 
surrogate financial ratios of comparable companies in the same country 
for purposes of initiation.
    The petitioner asserts that, if the Department decides to apply the 
surrogate profit rate of an EMD producer, then the Department must look 
to contemporaneous information for a company located outside Australia. 
The petitioner claims that it is aware of only one EMD producer in 
India that had a positive profit during the relevant period.
    Based on the information on the record, we have preliminarily 
determined to use Zinifex Limited as a surrogate company from which to 
select a reasonable profit rate for use in the calculation of 
constructed value. For purposes of contemporaneity, we derived the 
surrogate profit rate from Zinifex Limited's 2006 financial statement. 
Using this statement as a source for a profit rate ensures that the 
data is contemporaneous with the data used in the Petition, which was 
based solely on 2006 cost experience. Our decision to use Zinifex 
Limited was based on the fact that it is an Australian zinc producer 
with similar production processes to that of EMD production, which 
involves electrolysis. Specifically, both production processes use the 
electrolytic process to produce zinc. See Petition at page 21 and 
Exhibit 8. Using Zinifex Limited's financial statements yields a profit 
rate of 44.27 percent. See Preliminary Determination Analysis 
Memorandum (March 19, 2008).
    Because the petitioner had demonstrated, and we confirmed, the 
validity of the input-usage quantities it used in its COP/constructed 
value build-up, used public sources of information, such as official 
import statistics that we confirmed were accurate to value inputs of 
production, and used Delta PLC's (Delta's consolidated parent company) 
audited financial statements, which are publicly available, to compute 
Delta's finance expense that we confirmed were accurate, we consider 
the petitioner's calculation of normal value, based on constructed 
value, to be reliable. With regard to SG&A, as stated above, we 
recalculated the petitioner's calculation using Delta PLC's audited 
financial statements. In addition, with regard to profit, we calculated 
a profit rate using Zinifex Limited's audited financial statements, 
which are publicly available. Zinifex Limited is an Australian producer 
of comparable merchandise and thus its business operations and products 
are similar to that of the respondent's in the instant case. Further, 
we consider the petitioner's calculation of normal value corroborated 
because the bulk of the calculations relied on publicly available 
information or import statistics that do not require further 
corroboration. Therefore, because we confirmed the accuracy and 
validity of the information underlying the derivation of the margin we 
have calculated in this preliminary determination by examining source 
documents as well as publicly available information, we preliminarily 
determine that the margin based on the rate alleged in the Petition, as 
recalculated in this preliminary determination, is reliable for the 
purposes of this investigation.
    In making a determination as to the relevance aspect of 
corroboration, the Department will consider information reasonably at 
its disposal as to whether there are circumstances that would render a 
margin not relevant. Where circumstances indicate that the selected 
margin is not appropriate as AFA, the Department will disregard the 
margin and determine an appropriate margin. For example, in Fresh Cut 
Flowers from Mexico: Final Results of Antidumping Duty Administrative 
Review, 61 FR

[[Page 15986]]

6812, 6814 (February 22, 1996), the Department disregarded the highest 
margin as ``best information available'' (the predecessor to ``facts 
available'') because the margin was based on another company's 
uncharacteristic business expense that resulted in an unusually high 
dumping margin.
    In Am. Silicon Techs. v. United States, 273 F. Supp. 2d 1342, 1346 
(CIT 2003), the court found that the AFA rate bore a ``rational 
relationship'' to the respondent's ``commercial practices,'' and was, 
therefore, relevant. In the pre-initiation stage of this investigation, 
we confirmed that the calculation of the margin in the Petition 
reflects commercial practices of the particular industry during the 
POI. Further, no information has been presented in the investigation 
that calls into question the relevance of this information.
    As such, we preliminarily determine that the margin based on the 
rate alleged in the Petition, as recalculated in this preliminary 
determination, is relevant as the AFA rate for Delta in this 
investigation.
    Similar to our position in Polyethylene Retail Carrier Bags from 
Thailand: Preliminary Results of Antidumping Duty Administrative 
Review, 71 FR 53405, 53407 (September 11, 2006) (unchanged in final 
results, 72 FR 1982 (January 17, 2007)), because this is the first 
proceeding involving Delta, there are no probative alternatives. 
Accordingly, by using information that was corroborated in the pre-
initiation stage of this investigation and preliminarily determined to 
be relevant to Delta in this investigation, we have corroborated the 
AFA rate ``to the extent practicable.'' See section 776(c) of the Act, 
19 CFR 351.308(d), and NSK Ltd. v. United States, 346 F. Supp. 2d 1312, 
1336 (CIT 2004) (stating that ``pursuant to the to the extent 
practicable' language...the corroboration requirement itself is not 
mandatory when not feasible''). Therefore, we find that the estimated 
margin of 120.59 percent we have calculated in this preliminary 
determination has probative value. Consequently, in selecting AFA with 
respect to Delta, we have applied the margin rate of 120.59 percent, 
the highest estimated dumping margin set forth in this investigation. 
See Preliminary Determination Analysis Memorandum (March 19, 2008).
    Delta filed comments on the application of AFA and selection of a 
profit rate on March 11, 2008. We considered those comments for 
purposes of this preliminary determination. We will address comments 
parties raise in their case briefs in our final determination.

Targeted Dumping

    On January 17, 2008, Tronox LCC (the petitioner) filed a targeted-
dumping allegation concerning Delta under section 777A(d)(I)(B) of the 
Act. Because Delta decided not to participate in this investigation for 
the reasons stated above and, therefore, we have applied AFA to its 
exports, we find the issue of targeted dumping to be moot and have not 
addressed it in this preliminary determination.

All-Others Rate

    Section 735(c)(5)(B) of the Act provides that, where the estimated 
weighted-average dumping margins established for all exporters and 
producers individually investigated are zero or de minimis margins or 
are determined entirely under section 776 of the Act, the Department 
may use any reasonable method to establish the estimated all-others 
rate for exporters and producers not individually investigated. This 
provision contemplates that, if the data do not permit weight-averaging 
margins other than the zero, de minimis, or total facts-available 
margins, the Department may use any other reasonable methods. See also 
SAA, at 873. Because the petition contained only one estimated dumping 
margin and because there are no other respondents in this 
investigation, there are no additional estimated margins available with 
which to create the all-others rate. Therefore, we are using the 
preliminary determination margin of 120.59 percent as the all-others 
rate. In addition, because Delta provided incomplete information on the 
record that we were unable to verify, we were unable to calculate a 
margin for the all-others rate.

Critical Circumstances

A. Delta
    On February 19, 2008, the petitioner requested that the Department 
make a finding that critical circumstances exist with respect to 
imports of EMD from Australia. The petitioner alleged that there is a 
reasonable basis to believe or suspect that critical circumstances 
exist with respect to the subject merchandise. The petitioner based its 
allegation on evidence of massive imports of subject merchandise for 
the post-petition period of September through December 2007.
    Because this allegation was filed earlier than the deadline for the 
preliminary determination, we must issue our preliminary critical-
circumstances determination not later than the preliminary 
determination. See 19 CFR 351.206(c)(2).
    Section 733(e)(1) of the Act provides that the Department will 
preliminarily determine that critical circumstances exist if there is a 
reasonable basis to believe or suspect that:
    (A)(i) there is a history of dumping and material injury by reason 
of dumped imports in the United States or elsewhere of the subject 
merchandise, or (ii) the person by whom, or for whose account, the 
merchandise was imported knew or should have known that the exporter 
was selling the subject merchandise at less than its fair value and 
that there was likely to be material injury by reason of such sales, 
and (B) there have been massive imports of the subject merchandise over 
a relatively short period.
    In determining whether the relevant statutory criteria have been 
satisfied, the Department considered the evidence presented in the 
petitioner's February 19, 2008, submission and the ITC Preliminary 
Notice.
    To determine whether there is a history of injurious dumping of the 
merchandise under investigation, in accordance with section 
733(e)(1)(A)(i) of the Act, the Department normally considers evidence 
of an existing antidumping duty order on the subject merchandise in the 
United States or elsewhere to be sufficient. See, e.g., Notice of 
Preliminary Determination of Sales at Less Than Fair Value, 
Postponement of Final Determination, and Affirmative Preliminary 
Determination of Critical Circumstances in Part: Certain Lined Paper 
Products From India, 71 FR 19706 (April 17, 2006) (unchanged in final 
determination, 71 FR 45012 (August 8, 2006)). The petitioner has made 
no statement concerning a history of dumping of EMD from Australia. 
Moreover, we are not aware of any antidumping duty order on EMD from 
Australia in any other country. Therefore, the Department finds no 
history of injurious dumping of EMD from Australia pursuant to section 
733(e)(1)(A)(i) of the Act.
    To determine whether the person by whom, or for whose account, the 
merchandise was imported knew or should have known that the exporter 
was selling the subject merchandise at less than its fair value, in 
accordance with section 733(e)(1)(A)(ii) of the Act, the Department 
normally considers margins of 25 percent or more for export-price sales 
or 15 percent or more for constructed export-price (CEP) transactions 
sufficient to impute knowledge of dumping. See, e.g., Final 
Determination of Sales at Less Than

[[Page 15987]]

Fair Value: Certain Cut-to-Length Carbon Steel Plate from the People's 
Republic of China, 62 FR 61964, 61966 (November 20, 1997)). For the 
reasons explained above, we have assigned a margin of 120.59 percent to 
Delta. Based on this margin, we have imputed importer knowledge of 
dumping for imports from Delta.
    In determining whether there is a reasonable basis to believe or 
suspect that an importer knew or should have known that there was 
likely to be material injury by reason of dumped imports, consistent 
with section 733(e)(1)(A)(ii) of the Act, normally the Department will 
look to the preliminary injury determination of the ITC. See, e.g., 
Notice of Final Determination of Sales at Less Than Fair Value: 
Stainless Steel Sheet and Strip in Coils From Japan, 64 FR 30574, 30578 
(June 8, 1999) (Stainless Steel from Japan). The ITC preliminarily 
found a reasonable indication of material injury to the domestic 
industry due to imports of EMD from Australia which are alleged to be 
sold in the United States at less than fair value and, on this basis, 
the Department may impute knowledge of likelihood of injury to this 
respondent. See ITC Preliminary Notice, 72 FR at 60388. Thus, we 
determine that the knowledge criterion for ascertaining whether 
critical circumstances exist has been satisfied.
    Because Delta has met the first prong of the critical-circumstances 
test, according to section 733(e)(1)(A) of the Act we must examine 
whether imports from Delta were massive over a relatively short period 
of time. Section 733(e)(1)(B) of the Act provides that the Department 
will preliminarily determine that critical circumstances exist if there 
is a reasonable basis to believe or suspect that there have been 
massive imports of the subject merchandise over a relatively short 
period.
    Section 351.206(h)(1) of the Department's regulations provides 
that, in determining whether imports of the subject merchandise have 
been ``massive,'' the Department normally will examine the volume and 
value of the imports, seasonal trends, and the share of domestic 
consumption for which the imports accounted. In addition, 19 CFR 
351.206(h)(2) provides that an increase in imports of 15 percent during 
the ``relatively short period'' of time may be considered ``massive.''
    Section 351.206(i) of the Department's regulations defines 
``relatively short period'' as normally being the period beginning on 
the date the proceeding begins (i.e., the date on which the petition is 
filed) and ending at least three months later. The Department's 
regulations also provide that, if the Department finds that importers, 
exporters, or producers had reason to believe, at some time prior to 
the beginning of the proceeding, that a proceeding was likely, the 
Department may consider a period of not less than three months from 
that earlier time.
    Because we do not have verifiable data from Delta, we must base our 
``massive imports'' determination on the facts available, pursuant to 
section 776(a) of the Act.\1\ Because Delta failed to cooperate by not 
acting to the best of its ability to respond fully to our 
questionnaires, we may make an adverse inference in selecting the facts 
available, pursuant to section 776(b) of the Act.
---------------------------------------------------------------------------

    \1\ Because Delta did not respond fully to our questionnaires, 
we consider Delta a non-cooperating respondent and, accordingly, we 
did not request monthly shipment data from Delta, consistent with 
our practice. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Affirmative Preliminary Determination of 
Critical Circumstances: Wax and Wax/Resin Thermal Transfer Ribbons 
from Japan, 68 FR at 71078 (December 22, 2003) (TTR from Japan) 
(unchanged in final determination, 69 FR 11834 (March 12, 2004)).
---------------------------------------------------------------------------

    The Department's long-standing practice is to rely on respondent-
specific shipment data to determine whether imports were massive in the 
context of critical-circumstance determinations. Where such information 
does not exist because of the respondent's failure to cooperate to the 
best of its ability in the course of the investigation, the Department 
normally makes an adverse inference that imports were massive during 
the relevant time period. We do not normally rely on publicly available 
import data as facts available in such circumstances because such data 
are imprecise and often reflect the activity of multiple exporters and 
products, i.e., subject merchandise may have entered the United States 
during the relevant period under a broad HTSUS category. In this case, 
however, we are presented with unique circumstances such that Delta is 
the only known exporter of EMD from Australia and public information 
indicates that imports under the respective HTSUS category are of 
subject merchandise. Moreover, the data demonstrate that imports of 
merchandise produced and exported by Delta were massive over a 
relatively short period. Thus, under these unique circumstances, the 
Department believes it appropriate to rely on import data, as facts 
available with an adverse inference, in determining whether the 
massive-imports requirement for the critical-circumstances 
determination has been met with respect to Delta.
    Based on our determination that there is a reasonable basis to 
believe or suspect that the importer knew or should have known that 
Delta was selling EMD from Australia at less than fair value, that 
there was likely to be material injury by reason of such dumped 
imports, and that there have been massive imports of EMD from Delta 
over a relatively short period, we preliminarily determine that 
critical circumstances exist for imports from Australia of EMD produced 
by Delta.
    Delta filed comments on critical circumstances on March 10, 2008. 
We considered those comments for purposes of this preliminary 
determination. We will address any comments parties raise in their case 
briefs in our final determination.
B. All Others
    It is the Department's normal practice to conduct its critical-
circumstances analysis of companies in the all-others group based on 
the experience of investigated companies. See, e.g., Notice of Final 
Determination of Sales at Less Than Fair Value: Certain Steel Concrete 
Reinforcing Bars from Turkey, 62 FR 9737, 9741 (March 4, 1997), where 
the Department found that critical circumstances existed for the 
majority of the companies investigated and concluded that critical 
circumstances also existed for companies covered by the all-others 
rate. As we determined in Notice of Final Determination of Sales at 
Less Than Fair Value: Hot-Rolled Flat-Rolled Carbon-Quality Steel 
Products from Japan, 64 FR 24329, 24338 (May 6, 1999), applying that 
approach literally could produce anomalous results in certain cases. 
Thus, in deciding whether critical circumstances apply to companies 
covered by the all-others rate, the Department also considers the 
traditional critical-circumstances criteria.
    First, in determining whether there is a reasonable basis to 
believe or suspect that an importer knew or should have known that the 
exporter was selling EMD at less than fair value, we look to the all-
others rate. See TTR from Japan, 68 FR at 71077. The dumping margin for 
the all-others category, 120.59 percent, is greater than the 25-percent 
threshold necessary to impute knowledge of dumping consistent with 
section 733(e)(1)(A)(ii) of the Act. Second, based on the ITC's 
preliminary determination that there is a reasonable indication of 
material injury, we also find that importers knew or should have known 
that there would be material

[[Page 15988]]

injury from the dumped merchandise, consistent with 19 CFR 351.206. See 
ITC Preliminary Notice, 72 FR at 60388.
    Finally, with respect to massive imports, we are unable to base our 
determination on our findings for Delta because our determination for 
Delta was based on AFA. We have not inferred, as AFA, that massive 
imports exist for companies under the all-others category, because, 
unlike the uncooperative company in question, the all-others companies 
have not failed to cooperate in this investigation. Therefore, an 
adverse inference with respect to finding a massive surge in imports by 
the all-others companies is not appropriate. In addition, the record 
indicates that the only producer of EMD from Australia is Delta. See 
``Antidumping Duty Investigation on Electrolytic Manganese Dioxide from 
Australia Respondent Identification,'' October 25, 2007. Thus, we 
determine that there were no massive imports from companies in the all-
others category.
    Consequently, the criteria necessary for determining affirmative 
critical circumstances with respect to the all-others category have not 
been met. Therefore, we have preliminarily determined that critical 
circumstances do not exist for imports of EMD from Australia for 
companies in the all-others category, as there were no shipments of the 
foreign like product from any other companies during the relevant 
period.

Preliminary Determination

    We preliminarily determine that the following dumping margins exist 
for the period July 1, 2006, through June 30, 2007:

------------------------------------------------------------------------
              Manufacturer or Exporter                 Margin (percent)
------------------------------------------------------------------------
Delta...............................................              120.59
All Others..........................................              120.59
------------------------------------------------------------------------

Suspension of Liquidation

    In accordance with section 733(d) of the Act, we will instruct CBP 
to suspend liquidation of all entries of EMD from Australia that are 
entered, or withdrawn from warehouse, for consumption on or after the 
date of publication of this notice in the Federal Register. 
Additionally, for Delta we will instruct CBP to suspend liquidation of 
entries made on or after 90 days prior to the publication of this 
notice in accordance with section 733(e)(2) of the Act. We will 
instruct CBP to require a cash deposit or the posting of a bond equal 
to the margins, as indicated in the chart above, as follows: (1) the 
rate for Delta will be 120.59 percent; (2) if the exporter is not a 
firm identified in this investigation but the producer is, the rate 
will be the rate established for the producer of the subject 
merchandise; (3) the rate for all other producers or exporters will be 
120.59 percent. These suspension-of-liquidation instructions will 
remain in effect until further notice.

International Trade Commission Notification

    In accordance with section 733(f) of the Act, we have notified the 
ITC of our preliminary determination of sales at less than fair value. 
If our final antidumping determination is affirmative, the ITC will 
determine whether the imports covered by that determination are 
materially injuring, or threatening material injury to, the U.S. 
industry. The deadline for the Commission's determination would be the 
later of 120 days after the date of this preliminary determination or 
45 days after the date of our final determination, pursuant to section 
735(b)(2) of the Act.

Public Comment

    Case briefs for this investigation must be submitted no later than 
50 days after the publication of this notice, pursuant to 19 CFR 
351.309(c)(1)(i). Rebuttal briefs must be filed within five days after 
the deadline for submission of case briefs, consistent with 19 CFR 
351.309(d)(1). A list of authorities used, a table of contents, and an 
executive summary of issues should accompany any briefs submitted to 
the Department. Executive summaries should be limited to five pages 
total, including footnotes.
    Section 774 of the Act provides that the Department will hold a 
hearing to afford interested parties an opportunity to comment on 
arguments raised in case or rebuttal briefs, provided that such a 
hearing is requested by an interested party. If a request for a hearing 
is made in an investigation, the hearing normally will be held two days 
after the deadline for submission of the rebuttal briefs at the U.S. 
Department of Commerce, 14th Street and Constitution Avenue, N.W., 
Washington, DC 20230. See 19 CFR 351.310(d)(1). Parties should confirm 
by telephone the time, date, and place of the hearing 48 hours before 
the scheduled time.
    Interested parties who wish to request a hearing, or to participate 
if one is requested, must submit a written request within 30 days of 
the publication of this notice. See 19 CFR 351.310(c). Requests should 
specify the number of participants and provide a list of the issues to 
be discussed. Oral presentations will be limited to issues raised in 
the briefs.
    We will not be conducting a verification of Delta's responses 
because it has failed to file responses to all of our questionnaires, 
as discussed above in the Use of Adverse Facts Available section of 
this notice. Therefore, the deadline for submission of factual 
information in 19 CFR 351.301(b)(1) is not applicable. Thus, the 
deadline for submission of factual information in this investigation 
will be seven days after the date of publication of this notice.
     We will make our final determination within 75 days after the date 
of this preliminary determination, pursuant to section 735(a)(1) of the 
Act.
    This determination is issued and published pursuant to sections 
733(f) and 777(i)(1) of the Act.

    Dated: March 19, 2008.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E8-6167 Filed 3-25-08; 8:45 am]
BILLING CODE 3510-DS-S