(65 FR 11552, March 3, 2000) A-823-802 Sunset Review Public Document MEMORANDUM TO: Robert S. LaRussa Assistant Secretary for Import Administration FROM: Jeffrey A. May Director Office of Policy SUBJECT: Issues and Decision Memo for the Expedited Sunset Review of Uranium from Ukraine; Final Results Summary: We have analyzed the comments of interested parties in the expedited sunset review of the antidumping duty order covering uranium from Ukraine. 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 expedited sunset review for which we received comments by parties: 1. Domestic Industry Support 2. Likelihood of continuation or recurrence of dumping Weighted-average dumping margin Volume of imports Other factors 3. Magnitude of the margin likely to prevail Margins from the investigation Use of a more recent margin History of the Order: On December 5, 1991, the Department of Commerce (the "Department") published in the Federal Register a notice of initiation of the antidumping duty investigation on uranium from the Union of Soviet Socialist Republics ("USSR") (56 FR 63711). On December 23, 1991, the U.S. International Trade Commission ("Commission") issued an affirmative preliminary injury determination. On December 25, 1991, the USSR dissolved and the United States subsequently recognized the twelve newly independent states ("NIS") which emerged: Armenia, Azerbaijan, Byelarus, Georgia, Kazakhstan, Kyrgystan, Moldova, the Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan. The Department continued the investigations against each of these twelve countries. On June 3, 1992, the Department issued an affirmative preliminary determination that uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan was being sold at less-than-fair-value ("LTFV") by a weighted-average dumping margin of 115.82 percent, and a negative determination regarding the sale of uranium from Armenia, Azerbaijan, Byelarus, Georgia, Moldova, and Turkmenistan (57 FR 23380). On October 30, 1992, the Department suspended the antidumping duty investigations involving uranium from Kazakhstan, Kyrgyzstan, the Russian Federation, Tajikistan, Ukraine, and Uzbekistan on the bases of agreements by the countries' respective governments to restrict the volume of direct or indirect exports to the United States in order to prevent the suppression or undercutting of price levels of United States domestic uranium.(1) The Department also amended its preliminary determination to include highly enriched uranium ("HEU") in the scope of the investigations (57 FR 49220, 49235). On April 12, 1993, the Government of Ukraine ("GOU") terminated the suspension agreement on uranium from Ukraine (58 FR 21144, April 19, 1993), and the Department resumed the investigation. On July 8, 1993, the Department published a final determination of sales at LTFV and assigned all Ukrainian producers/exporters a margin of 129.29 percent.(2) On August 16, 1993, in accordance with section 735(d) of the Act, the Commission determined that imports of uranium, other than highly enriched uranium ("HEU"), from Ukraine threaten material injury to the U.S. industry. Subsequently, the Department issued an antidumping duty order on uranium imports, other than HEU, from Ukraine (58 FR 45483, August 30, 1993) There have been no administrative reviews since the imposition of the order. Background: On August 2, 1999, the Department initiated a sunset review of the antidumping duty order on uranium from Ukraine (64 FR 41915), pursuant to section 751(c) of the Act. The Department received Notices of Intent to Participate on behalf of domestic interested parties, the Ad Hoc Committee of Domestic Uranium Producers ("the Ad Hoc Committee"), including Rio Algom Mining Corporation ("Rio Algom") and Uranium Resources Inc. ("URI"),(3) USEC, Inc. and its subsidiary, the United States Enrichment Corporation (collectively, "USEC"), and Paper, Allied- Industrial, Chemical and Energy Workers International Union, AFL-CIO ("PACE"), within the applicable deadline (August 17, 1999) specified in section 351.218(d)(1)(i) of the Sunset Regulations. On August 27, 1999, we received a notice of intent to participate on behalf of the Ad Hoc Utilities Group ("AHUG").(4) The Ad Hoc Committee claimed interested-party status under section 771(9)(C) of the Act, as the only U.S. producers of a domestic like product; AHUG claimed interested-party status as industrial users of uranium;(5) PACE claimed interested-party status as a union representing workers of two domestic gaseous diffusion plants that produce uranium products. The Ad Hoc Committee claims that, along with the Oil, Chemical, and Atomic Workers International union, it was an original petitioner in the antidumping investigation that resulted in the antidumping duty order under review (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 1). AHUG did not submit a summary of its past participation in the proceeding. On September 1, 1999, we received complete substantive responses from the above domestic interested parties and industrial users, with the exception of USEC and PACE,(6) within the 30-day deadline specified in the Sunset Regulations under section 351.218(d)(3)(i). On September 2, 1999, we received a request for an extension to file rebuttal comments from AHUG.(7) Pursuant to 19 CFR 351.302(b)(1999), the Department extended the deadline for all participants eligible to file rebuttal comments until September 13, 1999.(8) Without a substantive response from respondent interested parties, the Department, pursuant to 19 CFR 351.218(e)(1)(ii)(C), determined to conduct an expedited, 120-day review of this order. In accordance with 751(c)(5)(C)(v) of the Act, the Department may treat a review as extraordinarily complicated if it is a review of a transition order (i.e., an order in effect on January 1, 1995). This review concerns a transition order within the meaning of 751(c)(6)(ii) of the Act. On December 3, 1999, the Department determined that the sunset review of the antidumping duty order on uranium from Ukraine is extraordinarily complicated, and, therefore, we extended the time limit for completion of the final results of this review until not later than February 28, 2000, in accordance with section 751(c)(5)(B) of the Act.(9) Discussion of the Issues In accordance with section 751(c)(1) of the Act, the Department conducted this review to determine whether revocation of the antidumping duty order would be likely to lead to continuation or recurrence of dumping. Section 752(c) of the Act provides that, in making this determination, the Department shall consider the weighted-average dumping margins determined in the investigation and subsequent reviews, and the volume of imports of the subject merchandise for the period before and the period after the issuance of the antidumping order. In addition, section 752(c)(3) of the Act provides that the Department shall provide to the Commission the magnitude of the margin of dumping likely to prevail if the order is revoked. Below we address the comments and rebuttals of the interested parties and industrial users. 1. Domestic Industry Support Interested Party Comments In its substantive response of September 1, 1999, AHUG asserts that the Department should consider other information in its analysis, including the extent to which the domestic industry supports the trade restrictions (see September 1, 1999, Substantive Response of AHUG at 14). AHUG notes that, of the thirteen original petitioners, the only domestic producers that support the continued imposition of the antidumping restrictions are URI and Rio Algom. In contrast, AHUG represents fourteen utility companies which own and operate 60 percent of the nuclear units in the United States, and have approximately 34,000 nuclear-related employees in the United States. Id. at 15. In addition, U.S. fuel fabricators, who employ approximately 3,300 nuclear-related employees in the United States also oppose the continuation of the antidumping duty order. Id. In its rebuttal of September 15, 1999, the Ad Hoc Committee assert that AHUG's request that the Department make a threshold determination of domestic industry support before proceeding with the sunset review is inconsistent with the statute and regulations governing the conduct of sunset reviews (see September15, 1999, Rebuttal of the Ad Hoc Committee at 13). As a domestic interested-party, the Ad Hoc Committee asserts that, according to the regulations, since it has submitted a complete, timely, and adequate substantive response, there is sufficient domestic interested party support in the proceeding. Id. Further, the Ad Hoc Committee asserts that, because consumers are not within the definition of interested parties, the lack of support by uranium consumers is irrelevant to the Department's decision to conduct the review. Id. Therefore, the Department, according to its regulations, should not assess the adequacy of domestic industry support. Id at 15. Department's Position We disagree with AHUG that the Department should consider, in the course of this sunset review, the extent to which the domestic consumers supports the continuation of the antidumping duty order. The Department's mandate in a sunset review is to determine whether revocation of the antidumping duty order is likely to result in the continuation or recurrence of dumping. Further, the Department made clear in its regulations that a complete substantive response from one domestic interested party would be considered adequate for purposes of continuing the review. Given that we received a response from at least one member of the domestic industry, in accordance with section 351.218(e)(1)(i) of the regulations, we determine that we have adequate domestic industry participation. The Department normally will not analyze and evaluate standing and industry support in the course of a sunset review beyond this threshold requirement. 2. Likelihood of Continuation or Recurrence of Dumping Interested Party Comments In its substantive response of September 1, 1999, the Ad Hoc Committee argues that revocation of the antidumping duty order would likely lead to resumed dumping of Ukrainian uranium in the United States at a margin equal to that established in the Department's final determination (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 6). The Ad Hoc Committee cites U.S. Census Bureau statistics which indicate that imports of Ukrainian uranium have significantly declined, and in some years completely ceased, since the imposition of the order in 1993. Id. at 6. Specifically, the Ad Hoc Committee notes that, according to these statistics, Ukrainian imports into the United States dropped from an apparent level of over 900,000 pounds in 1991, to a mere 58,000 pounds over the course of six years and, during this time, the antidumping duty margin of 129.29 percent has remained in effect. Id. at 9. In addition, the Ad Hoc Committee notes that there have been several years during the life of the order in which Ukranian uranium imports ceased. Id. at 10. For instance, the Ad Hoc Committee asserts that from 1993, the year of the order, to 1997, the U.S. Census Bureau recorded no imports of uranium from Ukraine into the United States. Id. In 1998, Ukraine exported 15,000 pounds of uranium; from January to June 1999, Ukraine exported 43,000 pounds of uranium. Id. Therefore, the Ad Hoc Committee asserts that, because imports of subject merchandise have continued below pre-order levels-or have ceased altogether- since the issuance of the order, the Department should find likelihood of continuation or recurrence of dumping if the order is revoked. AHUG argues, in its substantive response of September 1, 1999, that revocation of the antidumping duty order would not lead to the recurrence of dumping. Instead, removal of the antidumping restrictions would result in the ability of the NIS to command a higher price in the United States for its uranium imports because of the removal of the current restricted/unrestricted market distinction; the elimination of the former perception of supply risks; the diversity of suppliers; the post-Cold War political climate; and the increasingly globalized uranium market would result in increased prices for uranium (see September 1, 1999, Substantive Response of AHUG at 6). AHUG notes that purchases of foreign enrichment services began with changes to the enrichment contracting policy of the Department of Energy ("DOE"), which allowed the purchase of up to 30 percent of enrichment service requirements from non-DOE sources. Id. at 10. AHUG contends that purchasers of foreign enrichment services are motivated by the more attractive prices and terms offered by certain foreign enrichers. For instance, foreign purchases grew significantly in the mid-1990s, not because utilities attempted to evade the suspension agreements, but because long-term purchase obligations to DOE could be terminated without cost, and the utilities were free to purchase lower cost foreign enrichment services. Id. at 10-12. AHUG also argues that there is "good cause" for the Department to consider other factors such as relevant market or economic factors. Id. at 13. According to AHUG, the developments that have occurred which suggest that the NIS countries are behaving as market economies in the sales of uranium include: (1) setting price-based production costs; (2) partnerships with western companies; (3) adjusting uranium production in reaction to market conditions; and (4) the inclusion of a floor price for sales of the natural uranium component of HEU. Id. at 13-14. In its rebuttal, the Ad Hoc Committee asserts that AHUG's discussion of the two-tiered pricing of CIS-origin and western origin uranium is both incorrect and irrelevant to the sunset review of the antidumping duty order against uranium from Ukraine (see September 13, 1999, Rebuttal of the Ad Hoc Committee at 4). The Ad Hoc Committee asserts that AHUG's position that revocation of the Ukrainian order would lead to higher prices is misplaced. On the contrary, the Ad Hoc Committee argues, the pricing differential shown in the market place between the "restricted" and "unrestricted" product was the result of increases in the price of U.S. and western-produced uranium once the price suppressive effect of Ukrainian and other CIS uranium imports was limited by the suspension agreements, and subsequently, the Ukrainian order. Id. at 5. Further, there is no evidence that the institution of the antidumping relief caused Ukrainian and other CIS prices to drop; rather, prices for U.S. produced uranium rose, creating the differential. Id. Finally, the Ad Hoc Committee asserts that, even if AHUG's argument were correct that Ukraine prices would rise, there is no evidence that dumping would be eliminated. Id. With respect to AHUG's "good cause" arguments, the Ad Hoc Committee asserts that there is no basis for the Department to consider other information because, in this sunset review, the dumping margin from the final LTFV determination and the data regarding the import volumes are conclusive and are sufficient for the Department to use in its determination. Id. at 10. In addition, the Ad Hoc Committee notes that the fact that Ukraine's margin is based on best information available ("BIA") and Soviet-era data does not preclude its use by the Department, and AHUG's request that the Department collect new information from Ukraine to calculate a new margin is contrary to the Department's regulations. Id. Lastly, the Ad Hoc Committee notes that AHUG failed to submit information on the record to support its assertion that Ukraine is now a market economy country and, therefore, may not submit new factual information on these issues later in the sunset review. Id. at 11. Department's Position Drawing on the guidance provided in the legislative history accompanying the Uruguay Round Agreements Act ("URAA"), specifically the Statement of Administrative Action ("the SAA"), H.R. Doc. No. 103-316, vol. 1 (1994), the House Report, H.R. Rep. No. 103-826, pt.1 (1994), and the Senate Report, S. Rep. No. 103-412 (1994), the Department issued its Sunset Policy Bulletin providing guidance on methodological and analytical issues, including the bases for likelihood determinations. In its Sunset Policy Bulletin, the Department indicated that determinations of likelihood will be made on an order-wide basis (see section II.A.2). In addition, the Department indicated that, normally, it will determine that revocation of an antidumping order is likely to lead to continuation or recurrence of dumping where (a) dumping continued at any level above de minimis after the issuance of the order, (b) imports of the subject merchandise ceased after the issuance of the order, or (c) dumping was eliminated after the issuance of the order and import volumes for the subject merchandise declined significantly (see section II.A.3). In addition to consideration of the guidance on likelihood cited above, section 751(c)(4)(B) of the Act provides that the Department shall determine that revocation of an order is likely to lead to continuation or recurrence of dumping where a respondent interested party waives its participation in the sunset review. In the instant review, the Department did not receive a response from any respondent interested party. Pursuant to section 351.21 8(d)(2)(iii) of the Sunset Regulations, this constitutes a waiver of participation. As discussed in section II.A.3 of the Sunset Policy Bulletin, the SAA at 890, and the House Report at 63-64, if companies continue dumping with the discipline of an order in place, the Department may reasonably infer that dumping would continue if the discipline were removed. There have been no administrative reviews and dumping margins above de minimis levels continue to exist for all shipments of subject merchandise from uranium producers/ exporters from Ukraine. Consistent with section 752(c) of the Act, the Department also considered the volume of imports before and after issuance of the order. The import statistics provided by the Ad Hoc Committee on imports of subject merchandise from 1991 to 1997, and those examined by the Department (U.S. Census Bureau IM146 reports) demonstrate that imports of the subject merchandise from Ukraine ceased from 1993, the year of the order, through 1997. In 1998, Ukraine resumed exports of approximately 18,000 pounds of uranium compared with 4.5 million pounds in 1990, and 907,000 pounds in 1992. Based on this analysis, the Department finds that the existence of dumping margins after the issuance of the order is highly probative of the likelihood of continuation or recurrence of dumping. Deposit rates above a de minimis level continue in effect for exports of the subject merchandise by all known Ukrainian producers and exporters. Therefore, given that dumping continued after the issuance of the order, imports continued in 1998 at below pre-order levels, and that respondent interested parties have waived their right to participate in this review before the Department, we determine that dumping is likely to continue if the order were revoked. As noted in the Sunset Regulations, at section 351.218(e)(2)(ii), the Department will normally consider other factors only where it conducts a full review. Because we conducted an expedited review based on lack of respondent participation and we are not persuaded to abandon our normal practice, we have not considered AHUG's arguments related to factors other than previously calculated margins and import volumes. 3. Magnitude of the Margin Likely to Prevail: Interested Party Comments: In its substantive response, the Ad Hoc Committee argues that the Department cannot select a more recently calculated rate because there have been no administrative reviews of the subject order (see September 1, 1999, Substantive Response of the Ad Hoc Committee at 12). Thus, the margin of 129.29 percent from the final determination is the only margin that reflects the behavior of Ukrainian producers/exporters without the discipline of the order in place. Id. In its substantive response, AHUG argues that if the order were revoked, the prevailing dumping margin would be drastically lower than the margins calculated in the final determination for Ukraine because the transition from a non-market economy to a market economy should dramatically reduce the dumping margins to the extent that any margin exists (see September 1, 1999, Substantive Response of AHUG at 7). Furthermore, AHUG asserts that the margins originally calculated for the NIS were based on the best available information provided to the Department in the petition covering the Soviet Union, which was not based on data specific to each country and therefore, is not representative of any margins that would apply to the NIS today. Id. Additionally, AHUG asserts that, after the breakup of the Soviet Union, although the Department divided up the case into twelve separate investigations, the Department calculated the dumping margins based on the best information available, using the petition information from the Soviet Union, rather than data specific to each company. Id at 13. Therefore, AHUG argues that, as NIS countries are now behaving as market economies in the sales of uranium, the Department should solicit new information in the sunset review to calculated a dumping margin based on current market data for each company. Id. In its rebuttal, the Ad Hoc Committee disagrees with AHUG's argument that the prevailing dumping margin would be drastically lower than the margin calculated in the final determination. The Ad Hoc Committee asserts that selecting any other margin than the margin of 129.29 percent calculated in the final determination is contrary to Department regulations and practice, and there is no record evidence supporting the selection of another margin (see September 13, 1999, Rebuttal Comments of the Ad Hoc Committee at 5). The Ad Hoc Committee argues that AHUG did not show that the circumstances of this sunset review are "extraordinary," and justify using a margin other than that from the final determination. Id. at 7. Moreover, the dumping margin has not declined over the life of the order, and imports have not remained steady or increased. Thus, the Ad Hoc Committee asserts that the Department cannot conclude that Ukrainian producers/exporters are likely to continue dumping at a rate lower than that found in the final determination. Id. Department's Position In the Sunset Policy Bulletin, the Department stated that it will normally provide to the Commission the margin that was determined in the final determination in the original investigation. Further, for companies not specifically investigated or for companies that did not begin shipping until after the order was issued, the Department normally will provide a margin based on the "all others" rate from the investigation (see section II.B.1 of the Sunset Policy Bulletin). Exceptions to this policy include the use of a more recently calculated margin, where appropriate, and consideration of duty absorption determinations (see sections II.B.2 and 3 of the Sunset Policy Bulletin). The Department agrees with the Ad Hoc Committee that there have been no administrative reviews and no new published dumping margins. Therefore, the Department, consistent with the SAA at 890, and the House Report at 64, normally will select the margin from the investigation, because that is the only calculated rate that reflects the behavior of exporters without the discipline of the order in place. The Department disagrees with AHUG's argument that the Department should choose a new rate because the rate from the investigation was based on BIA and Soviet-era information. Ukraine, like all other CIS, had the opportunity to provide its own information during the investigation. Absent an administrative review, and consistent with the SAA at 891,and 19 CFR 351.218(e)(2)(i), the Department will provide to the Commission the original margin, even if it was a result of the application of BIA. Therefore, we find that the margins calculated in the original investigation are probative of the behavior of Ukrainian manufacturers/exporters of the subject merchandise were the order to be revoked. As such, the Department will report to the Commission the original rate from the final determination as the magnitude of the margin likely to prevail if the order were revoked, as contained in the Final Results of Review section of the accompanying Federal Register notice. Recommendation: Based on our analysis of the comments received, we recommend adopting all of the above positions. If these recommendations are accepted, we will publish the Final Results of Review in the Federal Register. AGREE____ DISAGREE____ ___________________________ Joseph A. Spetrini Acting Assistant Secretary for Import Administration _____________________ (Date) 1. See Antidumping; Uranium from Kazakhstan, Kyrgyzstan, Russia, Tajikistan, Ukraine, and Uzbekistan; Suspension of Investigations and Amendment of Preliminary Determinations, 57 FR 49220 (October 30, 1992). 2. See Final Determination of Sales at Less Than Fair Value: Uranium from Ukraine and Tajikistan, 58 FR 36640 (July 8, 1993). 3. The Ad Hoc Committee included Cotter Corporation in its Notice of Intent to Participate; however, Cotter Corporation was not included in the Ad Hoc Committee's substantive response of September 1, 1999. 4. AHUG consists of Ameren UE, Baltimore Gas and Electric Co., Carolina Power and Light Co., Commonwealth Edison Co., Consumers Energy, Duke Power Co., Entergy Services, Inc., FirstEnergy Nuclear Operating Co., Florida Power and Light Co., Northern States Power Co., PECO Energy Co., Southern Nuclear Operating Co., Texas Utilities Electric Co., and Virginia Power. 5. The Department notes that, although industrial users are allowed to participate in sunset reviews, they are not considered "interested parties" as defined in the statute and regulations. See sections 771(9) and 777(h) of the Act, and 19 CFR 351.312. 6. See September 9, 1999, Letter to the Secretary from Philip H. Potter withdrawing PACE from participation in the sunset reviews of uranium from Russia, Uzbekistan, and Ukraine. 7. See September 2, 1999, Request for an Extension to File Rebuttal Comments in the Sunset Reviews of Uranium from Russia, Uzbekistan, and Ukraine, from Nancy A. Fischer, Shaw Pittman, to Jeffrey A. May, Office of Policy. 8. See September 3, 1999, Letter from Jeffrey A. May, Director of the Office of Policy to Nancy A. Fischer, Shaw Pittman. 9. See Extension of Time Limit for Final Results of Five-Year Reviews, 64 FR 67847 (December 3, 1999).