(65 FR 11980, March 7, 2000) A-122-047 ARP: 12/01/97 - 11/30/98 Public Document ITA/IA/III/9: BF MEMORANDUM TO: Robert S. LaRussa Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary for Import Administration SUBJECT: Issues and Decision Memorandum for the Administrative Review of Elemental Sulphur from Canada - 12/01/97 through 11/30/98 Summary We have analyzed the comments and rebuttals of interested parties in the 1997- 1998 administrative review of the antidumping duty order covering Elemental Sulphur from Canada. As a result of our analysis, we have made changes from our preliminary results. We recommend that you approve the positions we have developed in the Discussion of the Issues section of this memorandum. Below is the complete list of the issues in this administrative review for which we received comments and rebuttal by interested parties: 1. Adverse Facts Available 2. Facts Available Corroboration 3. Facts Available Determination Background On September 7, 1999, the Department of Commerce ("the Department") published the preliminary results and partial rescission of its administrative review of the antidumping duty order on elemental sulphur from Canada (64 FR 48587) ("Preliminary Results"). The merchandise covered by this order is elemental sulphur. The period of review ("POR") is December 1, 1997, through November 30, 1998. We invited parties to comment on our preliminary results of review. We received written comments on October 7, 1999 from respondent Husky Oil, Ltd. ("Husky") and petitioner, Freeport McMoRan Sulphur, Inc. ("Freeport"). On October 13, 1999, we granted a one-week extension for rebuttal briefs. On October 21, 1999, we received a rebuttal brief from Freeport. We did not receive comments from Petrosul. Discussion of the Issues Husky Comment 1: Adverse Facts Available Husky argues that the Department, which assigned to Husky an adverse facts available margin of 40.38 percent in the Preliminary Results, disregarded the unusual circumstances of the case and its broad discretion to impose a neutral, rather than a punitive, facts available margin. See Preliminary Results, 64 FR at 48588. Husky claims that, in the Preliminary Results, the Department did not address its reasons for its withdrawal from the review, which are listed in its April 19, 1999 letter. Husky notes that it requested, in that letter, that the Department assign a neutral facts available dumping margin, and argues, citing section 776(b) of the Act and the preamble to the Department's new regulations (62 FR 27296, 27340 (May 19, 1997)), that the Department has discretion not to impose an adverse facts available dumping margin. Husky also argues that Borden, Inc. v. United States, 4 F. Supp. 2d 1221, 1246 (Ct. Int'l Trade 1998), makes clear that the Department may not automatically resort to adverse inferences once it has decided that a party has failed to comply with its requests. Husky contends that the Department's use of an adverse facts available dumping rate in the Preliminary Results was "automatic." Husky states that it determined that the costs of continuing with this administrative review were unjustified, and that it listed the following reasons in its April 19, 1999 letter: (1) sulphur is a low-value, non-discretionary by-product; (2) Husky sold an insignificant quantity of sulphur to the United States; and (3) the U.S. International Trade Commission ("ITC") has determined that this antidumping order should be revoked. Husky notes that, due to the sunset revocation effective January 1, 2000, the final margin established in this review will have no future impact on Husky, petitioner, or the U.S. sulphur market. Husky claims that one purpose of imposing facts available is to induce foreign exporters and producers to respond to the Department's questionnaires, and cites the SAA at 868, and D&L Supply Co. v. United States, 113 F.3d 1220, 1222- 23 (Fed. Cir. 1997). Husky also argues, citing D&L Supply Co. at 1223, that the courts have stated that the Department, in selecting a facts available margin, must take into consideration its accuracy. Husky argues that for a facts available margin to be considered accurate, it must be indicative of current market conditions. However, Husky argues, the adverse facts available margin selected by the Department in the Preliminary Results is not reflective of current industry practices. Also, citing Silicon Metal from Argentina: Final Results of Antidumping Duty Administrative Review and Termination in Part ("Silicon Metal from Argentina"), 60 FR 64416, 64419 (December 15, 1995) and D&L Supply Co., Husky argues that the Department has used neutral margins in other cases where use of a higher, adverse margin would not induce a respondent's cooperation with the Department's information requests. Finally, citing the SAA at 870, Husky argues that in determining whether to impose adverse facts available, the Department considers the extent to which a party may benefit from its own lack of cooperation. Husky further argues, citing Borden, 4 F. Supp. 2d at 1221 and 1246, that this is a case-specific inquiry. Husky contends that, because its margins in the previous three reviews were de minimis, any margin assigned by the Department in this case would be adverse. According to Husky, any non-de minimis margin assigned in this review would be adverse, and the Department's assignment of a 40.38 percent margin in the Preliminary Results is purely punitive. Citing Manifattura Emmepi S.p.A. v. United States, 799 F. Supp. 110, 115 (Ct. Int'l Trade 1992) and NTN Bearing Corp. v. United States, 74 F.3d 1204, 1208 (Fed. Cir. 1995), Husky argues that the antidumping laws are remedial, not punitive. Petitioner argues that Husky failed to cooperate by not acting to the best of its ability when it refused to answer all of the Department's questionnaire; thus, the statute, at sections 776(b) and (c), authorizes the Department to use an adverse facts available rate. Also, citing Chrome-Plated Lug Nuts from Taiwan: Final Results of Antidumping Duty Administrative Review, 64 FR 17314 (April 9, 1999) and Brass Sheet and Strip from Germany: Final Results of Antidumping Duty Administrative Review, 63 FR 42823 (August 11, 1998), petitioner argues that it is the Department's practice to apply an adverse facts available rate to a respondent that either does not respond to the Department's questionnaire or withdraws from the review. Furthermore, petitioner argues, in Silicon Metal from Argentina, the Department did not apply a neutral best information available ("BIA") margin, but an adverse facts available margin. Also, petitioner argues that Husky's stated rationale for not further participating in the review is not sufficient to warrant the application of non-adverse facts available. Specifically, petitioner notes that the Department has applied adverse facts available to a company that did not sufficiently respond to the Department's questionnaires due to pending bankruptcy in Certain Fresh Cut Flowers from Columbia: Preliminary Results and Partial Rescission and Partial Rescission of Antidumping Duty Administrative Review, 62 FR 16772, 16775 (April 8, 1997). Citing Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof from France, et al.; Final Results of Antidumping Duty Administrative Reviews, 62 FR 2081, 2088 (January 15, 1997), petitioner claims that the Department has developed the following factors to determine a respondent's ability to cooperate: (1) the experience of a respondent in antidumping duty proceedings; (2) whether the respondent was in control of data requested by the Department; and (3) the extent to which the respondent may benefit from its own lack of cooperation. In this regard, petitioner argues that Husky: (1) has past experience with antidumping proceedings; (2) has control over requested data; and (3) would benefit by not cooperating if the Department were to apply a low, neutral margin instead of the 40.38 percent margin calculated for Husky for the 1992-93 review. Also, petitioner asserts that inducement to respond is indeed a relevant concern because petitioner may request a review covering the 1998-99 POR. Petitioner argues that the Court of International Trade has upheld the Department's authority to apply adverse facts available when a respondent does not respond to the Department's questionnaires in Borden, 4 F. Supp. 2d at 1246 and Helmerich & Payne, Inc. v. United States, 24 F. Supp. 2d 304, 309 (Ct. Int'l Trade 1998). Also, petitioner rebuts Husky's interpretation of Borden, arguing that, in that case, the court was concerned about the Department's application of adverse facts available to a respondent without examining whether the respondent had cooperated to the best of its ability. In the instant case, petitioner notes that Husky did not fully respond to the Department's questionnaires, and thus, failed to cooperate to the best of its ability. Petitioner notes that section 776(b)(3) of the Act specifically allows the Department to use a margin from a prior review of a proceeding as adverse facts available. Citing Chrome-Plated Lug Nuts from Taiwan, 64 FR at 17317, petitioner also notes that the Department has consistently applied adverse facts available to non-cooperative respondents using margins from prior administrative reviews. Department's Position: We disagree with Husky's assertions that our application of a 40.38 percent adverse facts available rate in the Preliminary Results was inappropriate given the facts of this case and applicable law. As an initial matter, we note that none of the reasons articulated by Husky for failing to provide the requested information (i.e., Sections B, C, and D of the Department's questionnaire) suggests that Husky could not comply with our requests, or even that compliance would have caused undue hardship. Rather, Husky, a respondent with considerable experience in prior administrative reviews, appears to have taken a calculated risk that certain circumstances in this case would prompt the Department to apply a non-adverse facts available rate if it chose not to cooperate. Indeed, Husky's arguments suggest that it could have cooperated, but simply chose not to. As a consequence, Husky has failed to cooperate by not acting to the best of its ability in complying with the Department's information requests, and accordingly, an adverse inference pursuant to section 776(b) is appropriate. Husky correctly points out that the statute and SAA afford the Department some latitude in choosing the appropriate adverse inference. Husky is also correct that, in certain cases, special circumstances have motivated the Department not to apply adverse inferences. In this respect, Husky emphasizes the sunset revocation of this order, effective January 1, 2000, and claims that this review will have no meaningful impact on Husky, the petitioner, or the U.S. sulphur industry generally. The sunset determination, however, does not alter the Department's statutory obligation to conduct administrative reviews of entries, and to order assessment of antidumping duties on these entries, preceding that date. Indeed, petitioner has requested an administrative review covering Husky for the 1998/99 POR. Thus, one of the principal purposes for applying adverse inferences - inducing future cooperation - applies fully here. We find that Husky's other calculated non-de minimis rates from prior reviews (7.17 percent in the 1991/92 review and 3.38 percent in the 1993/94 review) are too low to accomplish this purpose. Husky's reliance on Silicon Metal from Argentina is fundamentally misplaced. For one, the circumstances of that case differed significantly from those present in this review. The respondent in Silicon Metal from Argentina represented to the Department that it had ceased producing and exporting the subject merchandise to the United States during the POR at issue. Id. at 64419. Husky, in contrast, has made no such representations to the Department. Moreover, Husky mischaracterizes the Department's decision in Silicon Metal from Argentina. In that case, the Department did not claim that it was applying a neutral BIA rate; rather, noting that the rate selected was sufficiently adverse to the respondent, it stated that "we have continued to use 24.62 percent as Silarsa's first-tier BIA rate." Id., 60 FR at 64420 (emphasis added). Finally, we note that Silicon Metal from Argentina reflects our practice before the URAA entered into effect. In applying the 40.38 percent rate, we also recognize the SAA's instruction that the Department "may employ adverse inferences about the missing information to ensure that the party does not obtain a more favorable result by failing to cooperate than if it had cooperated fully." SAA at 200. Here, we cannot presume, as Husky would have us do, that the missing data would show dumping at de minimis levels. Rather, we must presume that, if a de minimis margin was indeed warranted, Husky would have provided information demonstrating as much. See Koenig & Bauer-Albert AG v. United States, 15 F. Supp. 2d 834, 858 (Ct. Int'l Trade 1998). Husky's argument that the 40.38 percent rate is "aberrational" and "punitive" is unfounded. We acknowledge that the 40.38 percent rate is significantly higher than Husky's rates in some earlier reviews (i.e., 7.17 percent in the 1991/92 review, 40.38 percent in the 1992/93 review, 3.38 percent in the 1993/94 review, de minimis in the 1994/95 and 1996/97 reviews). However, the Department does not consider a calculated rate based on Husky's own sales and cost data to be aberrational. There is no legal requirement to remove a margin from consideration as adverse facts available simply because that margin exceeds the margins of dumping found for the same company in other years. To the contrary, it is well-established Department practice to assign the highest margin from a proceeding to a non-cooperating respondent. See, e.g., Brass Sheet and Strip from Germany; Final Results of Antidumping Duty Administrative Review, 63 FR 42823, 42824 (Aug. 11, 1998); Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate from Canada; Final Results of Antidumping Duty Administrative Review and Determination to Revoke in Part, 64 FR 2173, 2175-76 (Jan. 13, 1999). See our response to Comment 3 regarding Husky's argument that this 40.38 percent margin is no longer reflective of the industry and of the sulphur market. No case cited by Husky compels a different result. In Borden, the court held that the Department cannot automatically resort to adverse facts available for a respondent that provided information but where there was no evidence to support a finding that the respondent could have provided all the information the Department requested in a timely manner. See Borden, 4 F. Supp. 2d at 1246- 47. In this case, as noted above, Husky weighed the merits of responding fully, and determined that it could not justify the time and costs involved. It did not establish, much less claim, that it was unable to provide the requested information. We also disagree with Husky that D&L Supply Co. requires application of a rate other than the 40.38 percent rate. In that case, the Court of Appeals for the Federal Circuit determined that the Department could not use a BIA rate that had been invalidated in litigation related to the calculation of that rate, and no longer had "any utility as a rough index of conditions in the industry." D&L Supply Co., 113 F.3d at 1224. Here, no party contested the 40.38 percent rate upon completion of the 1992-93 administrative review; thus, there is no basis for concluding that the rate has been invalidated. Comment 2: Facts Available Corroboration Husky argues that the Department, which assigned to Husky an adverse facts available margin of 40.38 percent in the Preliminary Results, disregarded the law, which requires the Department to corroborate secondary information used as adverse facts available. See Preliminary Results, 64 FR at 48588. Husky argues that the Department should apply a margin that can be corroborated in the context of the current sulphur market and Husky's actual sales behavior. Husky notes that if the Department continues to apply an adverse inference for the final results of this administrative review, section 776(c) of the Act requires that the margin selected be corroborated. Husky argues that the Department did not properly corroborate the 40.38 percent margin under the provisions governing corroboration of secondary information. Husky also cites the WTO Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994 ("Antidumping Agreement"), at Annex II, para. 7, which requires administering authorities to check secondary information with other independent sources at their disposal. Husky asserts that certain types of secondary information may not be entirely reliable because, for example, the information may be from an administrative review pertaining to a different time period. In this case, Husky notes that the rate the Department used in the Preliminary Results was from the 1992-93 administrative review, and that the rate was based, in part, on facts available (i.e., BIA), and in the context of a different market situation. Husky argues that the Department violated the URAA and the WTO Antidumping Agreement when it stated, in the Preliminary Results, that because the Department used Husky's own calculated margin from a prior administrative review, the margin's reliability does not need to be questioned. See Preliminary Results, 64 FR at 48588. Husky argues, citing Ferro Union v. United States, 44 F. Supp. 2d 1310, 1334 (Ct. Int'l Trade 1999), that the Court of International Trade has ruled that the Department must do more than assume that any prior calculated margin for the industry is reliable and relevant. Husky asserts that Ferro Union requires that the Department must not proceed on the basis that prior margins are "ipso facto reliable." Ferro Union, 44 F. Supp. 2d at 1334. Husky also argues that the 40.38 percent rate is an aberrational rate compared to other rates calculated for Husky in other segments of this proceeding. Husky notes that the Department, in its sunset review of elemental sulphur from Canada, stated that the "magnitude of the margin likely to prevail for Husky is the first 'new shippers' rate determined by the Department," which was 5.56 percent. See Final Results of Expedited Sunset Review: Elemental Sulphur From Canada, 63 FR 67647, 67650 (December 8, 1998). Husky argues that if the Department believes that Husky is unlikely to sell at a margin greater than 5.56 percent (the new shipper rate) without an order, then the Department cannot claim that the 40.38 percent rate is reliable or relevant. Husky argues that the Department is not permitted to apply a discredited dumping margin, citing Ferro Union, 44 F. Supp. 2d at 1334 (citing D&L Supply Co., 113 F.3d at 1221). Husky further argues that the adverse facts available margin selected by the Department does not reflect the reality of the relevant market or industry. Husky stated that the Department, in its sunset review, distinguished Husky's earlier review periods from the more recent periods, and concluded that, if the order were revoked, Husky would not produce sulphur at certain facilities. Husky notes that these facilities were used to calculate Husky's high margin from the 1992-93 administrative review, thus implying that including the production from these facilities reflected a market condition that no longer exists. Also, Husky argues that the ITC, in its revocation determination, similarly concluded that revocation is not likely to lead to significant price effects. See Elemental Sulphur from Canada, Inv. No. AA1921-127 (Review), ITC Pub. 3152 at 24-5 (January 1999). Petitioner argues that, contrary to Husky's assertions, section 776(c) of the Act only requires the Department, in corroborating margins from prior reviews, to use information from independent sources to the extent they are reasonably available. Petitioner agrees with the Preliminary Results, in which the Department stated that the SAA provides that "corroborate" means that the Department will satisfy itself that the secondary information used has probative value (that is, that it is both reliable and relevant). Petitioner asserts that the margin selected in this case is indeed relevant, arguing that the statute authorizes the Department to use margins calculated in prior reviews as adverse facts available. Also, petitioner cites several court cases which it argues demonstrate that margins from prior reviews are probative of current market conditions. See, e.g., Rhone Poulenc v. United States, 879 F.2d 1185, 1190 (Fed. Cir. 1990). Petitioner also claims that the 40.38 percent margin is inherently reliable, noting that this margin was calculated using Husky's own sales and cost data from a prior review. While petitioner agrees with Husky that the Department cannot use a margin which has been discredited, petitioner argues that D&L Supply Co. stands only for the proposition that the Department may not continue to use a rate that has been vacated as erroneous. See D&L Supply Co., 113 F.3d at 1224. Petitioner notes that Husky has not stated that the calculation of the 40.38 percent rate was erroneous. Also, petitioner argues that Husky's reliance on Ferro Union is misplaced, because in that case, the court rejected the Department's use of a rate calculated for one respondent as adverse facts available for a second respondent, when the Department had several prior review rates available that had been calculated for the second respondent. In this case, petitioner notes that the 40.38 percent margin was calculated for Husky itself, not for another responding company. Petitioner also argues that the fact that the 40.38 percent rate was based on partial facts available does not render the rate unreliable for use as adverse facts available. In support, petitioner cites Elemental Sulphur from Canada: Final Results of Antidumping Duty Administrative Review, 62 FR 37958, 37968- 37969 (July 15, 1997) (where the Department used this 40.38 percent rate as an adverse BIA rate for Mobil Oil Canada Ltd.). Finally, petitioner argues that the Department's sunset review decision (where the Department stated that Husky would likely resume dumping at 5.56 percent in the absence of the order) does not validate Husky's claim that the 40.38 percent adverse facts available rate is not relevant or reliable. Petitioner argues that in the sunset review, the Department was required to determine Husky's likely margin of dumping in the absence of an order. In contrast, in this administrative review, petitioner maintains that it is the Department's statutory task to determine Husky's actual margin of dumping during the POR. Department's Position: We agree with petitioner. As stated in the Preliminary Results, "[s]ection 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate secondary information by reviewing independent sources reasonably at its disposal. The SAA provides that 'corroborate' means that the Department will satisfy itself that the secondary information to be used has probative value, that is, that it is both reliable and relevant. See SAA at 870. The 40.38 percent rate we selected meets these corroboration criteria." See Preliminary Results, 64 FR at 48588. As we also noted in the Preliminary Results, the 40.38 percent margin we have applied as total adverse facts available meets the criteria for corroboration established under section 776(c) of the Act. Specifically, we stated that "because there are no independent sources for calculated dumping margins, unlike other types of information, such as input costs or selling expenses, the only source for margins is administrative determinations. Thus, in an administrative review, if the Department chooses as total adverse facts available a calculated dumping margin from a prior segment of the proceeding, it is not necessary to question the reliability of the margin for that time period." Id. Concerning the relevance of the 40.38 percent rate for this review period, we find that a rate calculated for the same company in a prior review is particularly relevant, given that it reflects the company's own selling practices (rather than the behavior of some other company) in a recent period. We note that in D&L Supply Co., the court held that while the highest prior margin is not a "precise indicator of current dumping practices, it provides at least some guidance as to the probable dumping margin in the period for which the exporter is not providing information, and it is preferable in that respect to an arbitrarily selected figure that has no pretension to accuracy." See D&L Supply Co., 113 F.3d at 1223. Husky's reference to Ferro Union is inapposite. As petitioner points out, that case involved the application of a total facts available rate for one respondent based upon a rate from another respondent from a different time period. See Ferro Union, 44 F. Supp. 2d at 1333. In this case, as noted above, the 40.38 percent rate was Husky's own calculated rate for the 1992-93 review. Husky's reference to D&L Supply Co. is likewise misplaced. In D&L Supply Co., the court held that the Department cannot continue to use a BIA rate that has been vacated as erroneous. In contrast, the 40.38 percent rate was Husky's final rate from the 1992-93 review, and was not subsequently found to have been erroneous. Moreover, we agree with petitioner that our determination in the sunset review does not validate Husky's claim that the 40.38 percent rate is not relevant or reliable. The Department's task in the sunset review was to determine Husky's likely margin of dumping if the finding were revoked, that is, a prospective and counterfactual analysis based on events likely to occur on or after January 1, 2000. In contrast, in this administrative review, we are not required to determine Husky's likely margin of dumping during the POR. Rather, we are required to determine Husky's actual margin of dumping during the POR, or, being precluded from doing so by Husky's failure to cooperate, to ensure that Husky does not obtain a more favorable result by failing to cooperate, and to induce future cooperation (i.e., cooperation for the 1998/99 review), as noted in our response in Comment 1 above. Husky's argument that our use of the 1992/93 margin as the adverse facts available margin in this review does not reflect the reality of the relevant market or industry is not compelling. While we acknowledge that, in our sunset review, we distinguished Husky's earlier review periods from the more recent periods, this assessment was based on the assumption that, if the order were revoked, Husky would not produce at certain facilities (i.e., sour gas processing facilities). See Notice of Final Results of Expedited Review: Elemental Sulphur from Canada, 63 FR 67647, 67649-50 (December 8, 1998). We agree with Husky that the production at these sour gas processing facilities was used to calculate Husky's 1992/93 margin. However, because Husky decided it would withdraw from this administrative review, we are in no position to render conclusions about the composition of its facilities used to produce sulphur sold to the United States during the POR. Moreover, given Husky's withdrawal, the Department does not even know whether Husky's POR sales were of liquid or formed sulphur, the costs for which may differ significantly. Therefore, we find that it would be inappropriate under these circumstances to make a determination that the 40.38 percent rate is unrepresentative of the dumping that may have occurred in the POR. Also, we note that the ITC's determination that revocation would not be likely to lead to significant price effects is not relevant to this administrative review because the order was in effect, and not revoked, during the POR. Petrosul Comment 3: Facts Available Determination Petitioner argues that, under the statute, regulations, and established Department practice, the Department must determine whether Petrosul made U.S. sales of subject merchandise during the POR and ensure that the proper rate of duty is assessed on any sales by Petrosul where it had knowledge that these sales were ultimately destined for the United States. Petitioner cites section 751(a)(2)(A) of the Act to note that the Department determines normal value and export price (or constructed export price) for each entry of subject merchandise and, where applicable, the dumping margin for each entry. Citing section 772(a) of the Act, petitioner also notes that export price is the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffiliated purchaser for exportation to the United States. Petitioner argues that, consistent with the statute, the Department normally determines that the exporter is the first party that knew or should have known of the U.S. destination of the subject merchandise (citing Dynamic Random Access Memory Semiconductors of One Megabit or Above From the Republic of Korea: Final Results of Antidumping Duty Administrative Review, Partial Rescission of Administrative Review and Notice of Determination Not to Revoke Order, 63 FR 50867, 50876 (September 23, 1998); and Notice of Final Determination of Sales at Less Than Fair Value: Fresh Atlantic Salmon From Chile, 63 FR 31411, 31424 (June 9, 1998)). Petitioner notes that Petrosul, in a letter to the Department, stated that it did not ship any sulphur to the United States during the POR, but that it did purchase sulphur from Husky and later resold it to other parties in Canada, who in some instances exported the sulphur to the United States. Petitioner also notes that Petrosul stated, in this same letter, that it was not the exporter of record of subject merchandise during the POR for any of these transactions. Petitioner argues that the issue is not whether Petrosul shipped sulphur to the United States or was the exporter of record for sulphur shipped to the United States by other parties, but whether Petrosul knew or should have known whether any sulphur that it resold to other parties was destined for the United States, an issue that Petrosul did not specifically address in its letter to the Department. Also, petitioner argues that certain record information, some of which is proprietary, demonstrates that Petrosul knew that subject merchandise was destined for the United States when it sold the sulphur in Canada. Moreover, petitioner argues that additional proprietary information on the record is inconsistent with Petrosul's description of its sulphur reselling arrangements. See petitioner's October 6, 1999 case brief (proprietary version) at 3-4 for details. Petitioner notes that, in the preliminary results of this review, the Department, citing 19 C.F.R. § 351.213(d)(3), rescinded the review with respect to Petrosul. See Preliminary Results, 64 FR at 48587. Petitioner states that section 351.213(d)(3) of the Department's regulations provides the Department with the authority to rescind an administrative review with respect to a company if there were no entries, exports, or sales of the subject merchandise during a review period. Petitioner also argues that the Department has stated in several cases that it may rescind a review pursuant to this section only where a company made no sales or exports to the United States. In support, petitioner cites Certain Hot-Rolled Lead and Bismuth Carbon Steel Products from Germany: Recission of Antidumping Duty Administrative Review, 64 FR 52292 (September 28, 1999); Industrial Phosphoric Acid from Israel: Final Results and Partial Recission of Countervailing Duty Administrative Review, 64 FR 49460 (September 13, 1999); and Ferrovanadium and Nitrided Vanadium from the Russian Federation: Termination of Antidumping Duty Administrative Review, 63 FR 13031 (March 17, 1998). Petitioner argues that it is not sufficient for the Department to inquire only whether Petrosul is identified in U.S. Customs information as the shipper or supplier of any entries during the POR. Petitioner notes that Petrosul is currently subject to a "high" deposit rate of 40.38 percent which, according to petitioner, would discourage or prevent Petrosul from exporting in its own name. Also, according to petitioner, a leading research firm in the sulphur industry has indicated that Petrosul continues to supply sulphur to the United States. Petitioner argues that Petrosul's statement that it sold sulphur to other parties, some of which was exported by these other parties to the United States, supports its contention that Petrosul knew or should have known that these sales were of merchandise destined for the United States. Finally, petitioner argues that certain other proprietary information on the record indicates that Petrosul knowingly made sales destined for the United States during the POR. See petitioner's October 6, 1999 case brief (proprietary version) at 5-6 for details. Petitioner argues that the Department addressed a similar situation in the 1992-93 administrative review of this proceeding when Norcen Energy Resources ("Norcen") stated that a related company sold sulphur to a U.S. customer at the plant gate in Canada, but that the related company did not know whether the sulphur entered the United States. See Elemental Sulphur From Canada; Preliminary Results and Partial Rescission of Antidumping Duty Administrative Reviews, 61 FR 45937, 45938 (August 30, 1996). In that situation, petitioner notes, the Department required Norcen to answer the questionnaire and to provide additional information to determine whether the sales at issue should be considered U.S. sales. Petitioner notes that Norcen did not respond and that the Department therefore assigned Norcen a high dumping margin based on BIA, which, according to petitioner, did not change for the final results. See Elemental Sulphur From Canada; Final Results of Antidumping Duty Administrative Reviews, 62 FR 37970, 37990 (July 15, 1997). For the above reasons, petitioner argues that the Department should collect additional information from Petrosul to determine whether Petrosul made U.S. sales during the POR. Petitioner also requested that the Department allow parties an opportunity to comment on the above information before issuance of the final results and, if necessary, extend the final results. Petrosul did not comment on this issue. Department's Position: After careful consideration of the record and petitioner's comments, we sought additional information from Petrosul after the issuance of the Preliminary Results. On January 24, 2000, we issued Petrosul a supplemental questionnaire requesting additional information regarding its sales in Canada of merchandise ultimately destined for the U.S. market. Record information suggested that Petrosul may have sold sulphur to other Canadian exporters with knowledge that the merchandise was destined for the U.S. market. Petrosul, however, indicated that it would not respond to this questionnaire. Petrosul refused to provide the requested information. Therefore, in accordance with section 776(a) of the Act, the Department has found that the application of facts available is warranted. We further find that an adverse inference pursuant to section 776(b) is warranted because Petrosul failed to cooperate by not acting to the best of its ability in supplying the requested information. Petrosul stated categorically that it would not comply with the Department's information requests, stating only that it could not justify the time and money required to respond. As adverse facts available, we are assigning to Petrosul the same rate assigned to Husky, 40.38 percent. Section 776(c) of the Act provides that the Department shall, to the extent practicable, corroborate information by reviewing independent sources reasonably at its disposal. As noted above in Comment 2, we find that the 40.38 percent adverse facts available rate is both reliable and relevant. We further find that, because Petrosul indicated in its March 10, 1999 letter to the Department that it acquired the merchandise at issue from Husky, the 40.38 percent rate is as relevant for Petrosul as it is for Husky. Recommendation Based on our analysis of the comments received, we recommend adopting all of the above positions and adjusting all related margin calculations accordingly. If these recommendations are accepted, we will publish the final results of review and the final weighted-average dumping margins for all reviewed firms in the Federal Register. AGREE ____ DISAGREE ____ ______________________ Joseph A. Spetrini Acting Assistant Secretary for Import Administration ______________________ (Date)