66 FR 56272, November 7, 2001 A-423-808 AR: 11/04/1998 - 04/30/00 Public Document DAS III (7): AE MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Joseph A. Spetrini Deputy Assistant Secretary AD/CVD Enforcement Group III SUBJECT: Issues and Decision Memorandum for Final Results of Antidumping Duty Administrative Review of Stainless Steel Plate in Coils from Belgium Summary We have analyzed the comments and rebuttal comments of interested parties in the administrative review of the antidumping duty order covering Stainless Steel Plate in Coils (SSPC) from Belgium, covering the period of November 4, 1998 through April 30, 2000. As a result of our analysis, we have made changes in the margin calculations. We recommend that you approve the positions we have developed in the "Discussion of the Issues" section of this memorandum. The only issue in this administrative review for which we received comments and rebuttals by the parties concerns the selection of the appropriate adverse facts available margin. Applicable Statute and Regulations Unless otherwise indicated, all citations to the statute are references to the provisions effective January 1, 1995, the effective date of the amendments made to the Tariff Act of 1930 (the Act) by the Uruguay Round Agreements Act (URAA). In addition, unless otherwise indicated, all citations to the Department's regulations are to the regulations codified at 19 CFR Part 351 (2000). Background On February 26, 2001, the Department of Commerce (the Department) published the affirmative preliminary results of the antidumping duty administrative review on stainless steel plate in coils (SSPC) from Belgium (66 FR 11559) (Preliminary Results). In its Preliminary Results, the Department assigned ALZ, as adverse facts available (AFA), the highest calculated rate from the petition, 16 percent, and invited parties to submit additional information if they believed such information was more appropriate or relevant for use as AFA. On February 23, 2001, petitioners (1) submitted comments proposing that the Department calculate ALZ's dumping margin using ALZ's public summary of its proprietary data that was removed from the record upon ALZ's withdrawal from the administrative review. On March 5, 2001, ALZ submitted a response to petitioners' comments regarding the margin calculation. On March 28, 2001, petitioners filed their case brief. On April 2, 2001, ALZ filed a rebuttal brief. The Department has conducted this administrative review in accordance with section 751 of the Act. Discussion of Issues Selection of the Appropriate Adverse Facts Available Margin Petitioners argue that the Department should not use as AFA in this instance the highest calculated margin from the petition, which is 16 percent. This margin, according to petitioners, would improperly reward ALZ for its failure to cooperate in this review. Specifically, petitioners argue that substantial record evidence establishes that ALZ's true margin of dumping during the POR was greater than 16 percent. Instead of using the 16 percent margin, petitioners urge the Department to rely on the 38.9 percent margin calculated using ALZ's public information (the public version of its questionnaire responses). According to petitioners, this information is best for purposes of establishing an AFA rate because: 1) the information was prepared by and obtained from ALZ, and the sales used are of identically-matching products; 2) ALZ's public data should also be acceptable and indeed preferable to the Department, either as the basis for alleging a margin in the petition or as the basis for calculating an AFA margin; 3) using ALZ's public information is reliable and conservative because it relies on a price-to- price margin for identical merchandise, even though the Department initiated a below-cost investigation in this review; 4) this public information is reliable because it is primary, rather than secondary information; 5) ALZ's public information has been prepared in accordance with the Department's APO regulations; 6) use of such data for purposes of calculating an AFA rate is clearly within the contemplation of the statute and relevant precedents, which specifically permit reliance on information derived from a broad range of sources, i.e., the petition, the original investigation, any other review, and "any other information placed on the record" (see section 776(b) of the Act; N.A.R., S.p.A. v. United States, 14 CIT 409, 416, 741 F. Supp. 936, 942 (CIT 1990); and Usimas Siderurgicas de Minas Gerais, S.A. v. United States, Slip Op. 98-108, 1998 WL 442297, *18-19 (CIT 1998)); and 7) public information is not susceptible to challenge as being aberrational, uncharacteristic of ALZ's business practices, or unreliable as a measure of that respondent's dumping, as was the case in Fresh Cut Flowers from Mexico; Preliminary Results of Antidumping Duty Administrative Review, 60 FR 49,567 (Feb. 22, 1996). Petitioners emphasize that the data in ALZ's public versions are ALZ's own, and they are by definition characteristic of that respondent's business activities during the POR. Moreover, petitioners bring to the Department's attention the fact that petitioners own calculation of ALZ's margin, which was based on the company's proprietary information before it was removed from the record, was 29 percent. This demonstrates, according to the petitioners, that ALZ's margin should be more than 16 percent. Petitioners also assert that, even though ALZ argued that petitioners double counted the alloy surcharge when calculating the 29 percent margin, ALZ never submitted any details quantifying the effect of such double-counting. Therefore, petitioners assert, the lack of any detail supporting ALZ's claim permits a reasonable adverse assumption that, even if the rate is adjusted to correct any such error, the margin resulting from ALZ's withdrawn proprietary data would remain greater than 16 percent. Thus, petitioners assert that pertinent legislative, judicial, and administrative pronouncements support rejection of the petition's rate preliminarily assigned to ALZ because using that rate would improperly reward ALZ for its lack of cooperation. See Smith Corona v. United States, 796 F. Supp. 1532, 802 F. Supp. 467 (CIT 1992) (Smith Corona); Notice of Preliminary Determination of Sales at Less Than Fair Value; Structural Steel Beams from Japan, 65 FR 6992, 6994 (Feb. 11, 2000); and Certain Welded Stainless Steel Pipe From Taiwan; Final Results of Administrative Review, 62 FR 37,543, 37,554 (July 8, 1997). Petitioners emphasize that it is the Department's position that relevancy means that the prior margin should reflect the sales practices of the industry under examination. See Ferro Union, Inc. v. United States, 44 F. Supp. 2d 1310 (CIT 1999). In this case, petitioners explain that the final antidumping duty margins determined for the companies and countries under the original investigation ranged from 8.02 to 45.09 percent, which demonstrates that an AFA margin of 38.90 percent reflects past practices in this industry. See Antidumping Duty Orders; Certain Stainless Steel Plate in Coils From Belgium, Canada, Italy, the Republic of Korea, South Africa, and Taiwan, 64 FR 27,756 (May 21, 1999). Petitioners next state that, as recently discussed by the Court of Appeals for the Federal Circuit, Congress intended an AFA rate to reflect a respondent's actual level of dumping, "albeit with some built-in increase intended as a deterrent to non-compliance. Congress could not have intended for Commerce's discretion to include the ability to select unreasonably high rates with no relationship to the respondent's actual dumping margin." F.LLI De Cecco Di Filippo Fara S. Martino S.p.A. v. United States, 216 F. 3d 1027, 1033 (Fed. Cir. 2000) (De Cecco). Therefore, petitioners argue that ALZ's properly-prepared public version of proprietary information concerning its own POR-specific sales of subject merchandise is, without question, rationally related to that respondent's POR trading activities, because it is derived directly from ALZ's POR sales and cost data. Furthermore, petitioners assert that this is not a case in which the data from one respondent would be applied, improperly, to a differently- situated respondent. See, e.g., Borden, Inc. v. United States, 4 F. Supp. 2d 1221, 1247 (CIT 1998) (rejecting use of margin for "low-end" producer as BIA for "high-end" producer). In this review, ALZ's information is the most rationally-related information that can be applied to ALZ as AFA, and should be used to calculate its AFA rate. Petitioners also argue that an AFA rate based on ALZ's public information provides an appropriate level of incentive for this respondent to cooperate in future reviews. Petitioners state that "The Department's practice, when selecting an adverse rate from among the possible sources of information is to ensure that the margin is sufficiently adverse as to effectuate the purpose of the facts available rule to induce respondents to provide the Department with complete and accurate information in a timely manner." See Results of Redetermination Pursuant to Court Remand, Stainless Steel Sheet and Strip in Coils from Germany (Oct. 30, 2000), issued in Krupp Thyssen Nirosta GmbH v. United States, Court No. 99-08- 00550; and Static Random Access Memory Semiconductors from Taiwan; Final Determination of Sales at Less than Fair Value, 63 FR 8,909, 8,932 (Feb. 23, 1998). Moreover, petitioners assert that, by operation of law, ALZ must be presumed to have knowledge of relevant and applicable judicial precedent, and that its public information on the record of this review could be used as the basis for calculating its AFA margin. See Letter from Collier, Shannon, Rill & Scott, PLLC to Secretary of Commerce: Stainless Steel Plate in Coils from Belgium (March 28, 2001). Consequently, petitioners argue, ALZ's decision-making process that led to its withdrawal from this review must be presumed to have included consideration of the possibility that an AFA rate based on its public information would be applied, and an assessment by ALZ that the application of such a rate was an acceptable consequence. Petitioners further argue that, as in Smith Corona, 802 F. Supp. 467 (CIT 1992), the CIT ruled that Commerce could not reject a viable rate simply because it was larger than the rate calculated in the preliminary determination. Moreover, petitioners assert that the use of ALZ's public data as the basis for calculating an AFA rate is fully in accordance with judicial precedent and administrative practice. Petitioners argue that the instant case is the same as Smith Corona. In that case, the Department applied the rate of 150.60 percent, calculated using the respondent's public data. When, on appeal, the respondent challenged this rate, arguing that once proprietary information is withdrawn the public version cannot be used, the CIT upheld the Department's use of the margin derived from the public data as reasonable. Id. at 468. Petitioners also assert that, under the express terms of section 776(c) of the Act, use of ALZ's public information and data submitted in the course of this review is not subject to the corroboration requirement imposed by the Act because it is primary information. Petitioners add that the SAA, at 870, elaborates on "secondary information" and provides additional support for this conclusion. Furthermore, according to petitioners, the public data summaries can be used to calculate an AFA rate even though they are ranged within +/- 10 percent of the actual value; as such, they do not present inaccurate data that lead to inherently flawed results. Petitioners claim that, even if the use of ALZ's public information yields results that are not perfectly accurate, as a matter of law, its use is proper. Moreover, petitioners argue that the record reveals that there should be no pattern to ALZ's ranging methodology. Petitioners emphasize that the only information that would conclusively demonstrate whether ALZ's public information understates or overstates the actual margin is the very information that ALZ refuses to share with the Department. Thus, substantial record evidence supports use of ALZ's public information, unadjusted for any hypothetical ranging pattern. Finally, petitioners state that it is also possible for ALZ's public information to reflect distortions from the ranging process that significantly understate the values of ALZ's actual APO information. This, in turn, reflects ALZ's understandable desire to submit public information that presents its POR trading behavior in the least offensive light, i.e., minimizing its POR dumping. Petitioners claim that, in this scenario, adjusting ALZ's public information back to its hypothetical actual starting point yields an estimated cash deposit rate of 77.04 percent, and an importer-specific assessment rate of 159.59 percent. ALZ argues that the Department should reject petitioners' arguments concerning reliance on the non-APO version of ALZ's questionnaire response and should instead rely on the rate of 9.86 percent, which was calculated and verified for ALZ in the original investigation. ALZ further states that, contrary to petitioners' unsubstantiated claims, the non-APO version of ALZ's business proprietary response: 1) has no probative value; 2) fails to provide a reasonably accurate measure of ALZ's dumping margins during the POR; and 3) bears no relationship to the past practices of the industry in question. Therefore, ALZ argues, if the Department does not rely on the rate of 9.86 percent from the original investigation, it should follow its well-established practice of relying on the highest corroborated rate from the petition as AFA. According to ALZ, in this case, there are four options for the margin calculation: 1) ALZ's current margin for antidumping duty deposit purposes of 9.86 percent, which is the rate calculated and verified by the Department from the original investigation; 2) the highest margin alleged in the petition (16 percent) and corroborated by the Department; 3) the 29 percent margin alleged by petitioners in their submission of October 20, 2000, which is purportedly based on ALZ's business proprietary response that has been withdrawn from the record; and 4) the margin of 38.9 percent as alleged by petitioners, which is based on the non-APO version of ALZ's business proprietary response. ALZ argues that its dumping margin of 9.86 percent from the original investigation is based on the most probative data available to the Department as to ALZ's likely current level of dumping because the margin was calculated by the Department based on verified data. Moreover, ALZ argues that it would not have requested an administrative review, nor gone to the tremendous work and expense of responding to the Department's questionnaire, if it did not believe that its actual dumping margin would be reduced significantly from the LTFV investigation's 9.86 percent rate. ALZ states that it withdrew its data from the record because ALZ had concerns about its ability to demonstrate the accuracy of its response to the Department at verification. Based on past precedent in such situations, the Department could have rejected ALZ's data in its entirety and, instead, relied on total AFA. ALZ explains that it faced difficulties with the implementation of its new accounting system. According to ALZ, there was also concern that TrefilARBED, ALZ's U.S. affiliate, would not be able to demonstrate that all relevant U.S. sales had been reported, and that the Department might reject its methodology for reporting the date of sale. Moreover, ALZ argues that the highest corroborated rate from the petition (16 percent) provides the most accurate estimate of ALZ's current level of dumping with a built-in increase to serve as incentive to ALZ to participate in future reviews. ALZ asserts that, in situations calling for AFA, it is the Department's practice to rely on the higher of (1) the highest calculated rate for any respondent from any segment of the proceeding, or (2) the highest corroborated rate from the petition. See, e.g., Certain Cold-Rolled Flat-Rolled Carbon-Quality Steel Products from Brazil: Final Determination of Sales at Less than Fair Value, 65 FR 5554, 5567 (Feb. 4, 2000); Emulsion Styrene-Butadiene Rubber From the Republic of Korea: Final Determination of Sales at Less than Fair Value, 64 FR 14865, 14866 (Mar. 29, 1999); and Stainless Steel Sheet and Strip in Coils From the Republic of Korea: Final Determination of Sales at Less than Fair Value, 64 FR 30664, 30687(June 8, 1999). ALZ further argues that, in this case, there is only one previously calculated rate of 9.86 percent from the original investigation. Thus, ALZ argues, in accordance with its well- established practice, the Department should rely on the highest corroborated rate from the petition, 16 percent, which nearly doubles ALZ's current margin of dumping. Furthermore, ALZ argues that, if ALZ had originally decided not to participate in the review, the Department would apply, as AFA, the highest corroborated rate of 16 percent from the petition because there is no higher calculated rate from another segment of the proceeding. ALZ next asserts that it should not be penalized for withdrawing its information from the record, as permitted by section 351.213(d) of the Department's regulations. Moreover, ALZ asserts that the courts have repeatedly stated that the purpose of the AFA rule is to provide respondents with an incentive to cooperate, not to impose punitive, aberrationally high or uncorroborated margins. See Borden, Inc., Gooch Foods, Hershey Foods Corp. v. United States, No. 96-08-01970 (CIT 1998), at 4; and De Cecco, at 1032. Regarding the 29 percent margin based on ALZ's business proprietary response that has been withdrawn from the record, ALZ contends that, in calculating the net home market price, petitioners' computer program added the alloy surcharge to the reported gross unit price, even though ALZ's Section B Questionnaire Response made it abundantly clear that the reported home market gross unit prices were already inclusive of the alloy surcharge. ALZ further argues that petitioners' double-counting of the alloy surcharge grossly inflated ALZ's home market prices and, in turn, inflated petitioners' estimate of ALZ's dumping margin. Furthermore, ALZ argues that it was under no obligation to determine the impact of petitioners' error on the alleged 29 percent dumping margin, as argued by petitioners, and asserts that doing so would have required reliance on ALZ's business proprietary data, which had already been withdrawn from the record and destroyed by the Department. Moreover, ALZ argues that, irrespective of the errors inherent in petitioners' calculations of the alleged 29 percent margin based on ALZ's proprietary data, the Department cannot now rely on that 29 percent margin because ALZ's proprietary data, on which that 29 percent margin is purportedly based, is no longer on the record. Regarding the 38.9 percent margin calculated by petitioners based on ALZ's public summary data, ALZ argues that, contrary to petitioners' claims, ALZ did not acknowledge that its actual dumping margin during the POR would be greater than 16 percent, and that its business proprietary data has no probative value and does not reflect the past practices of the stainless steel plate-in-coil industry. Moreover, ALZ argues that ranged data by definition is inaccurate because it is ranged upward or downward by 10 percent. Furthermore, the numbers in the non-APO version of a response are not necessarily ranged by the same percentage or in the same direction. Thus, a price could be ranged downward by 10 percent, while the adjustments are ranged upward by 5 percent or 10 percent, or downward by 2 percent. ALZ also gave an example where, through the ranging of data up or down within 10 percent of the actual number, a 54 percent dumping margin could be created, when there is no dumping margin based on the non-ranged numbers. ALZ asserts that this example illustrates how the Department's reliance on ALZ's ranged data could result in a grossly inflated dumping margin, which bears no relationship to ALZ's actual dumping margin during the POR. Furthermore, ALZ argues that the only information that can be considered primary information is ALZ's business proprietary data, which has been withdrawn from the record. ALZ argues that a non-APO version of that primary information, which contains figures that are randomly ranged upward and downward by 10 percent, cannot itself be deemed primary information. Therefore, ALZ argues, the Department will never be able to corroborate those data because they simply do not exist. Moreover, citing De Cecco, at 1034, ALZ asserts that the Department cannot possibly determine that petitioners' alleged 38.9 percent dumping margin based on these ranged numbers has probative value. ALZ also argues that petitioners confuse valid data that is in the public domain with proprietary data that has been ranged, the purpose of which is to provide a sample of data that may be released publicly. Furthermore, ALZ argues that these two types of public data cannot possibly have the same probative value, despite petitioners' assertions to the contrary. ALZ adds that petitioners earlier alleged that ALZ's dumping margin should be approximately 29 percent, based on ALZ's proprietary information now withdrawn from the record; thus, the petitioners' new claim that the margin should be 38.9 percent, based on the public summary, is merely an attempt to choose the highest conceivable dumping margin. Furthermore, ALZ argues that the dumping rate of 38.9 percent does not reasonably reflect the past practices of the SSPC industry. ALZ explains that the cash deposit rates, from the Department's original LTFV investigations (on SSPC imports from Belgium, Canada, Italy, South Africa, South Korea and Taiwan), which range from 9.86 percent to 45.09 percent, actually prove that a 38.9 percent rate is not at all reflective of the past practices of the SSPC industry. First of all, ALZ argues, a simple average of the cash deposit rates for the respondents involved in those investigations is only 20.9 percent, which is significantly lower than the 38.9 percent rate petitioners would like the Department to accept. In addition, ALZ asserts that, with the exception of the respondents involved in the investigations against Belgium (i.e., ALZ), South Korea and South Africa, the cash deposit rates listed are based on total AFA because the foreign producers chose not to participate in the investigations; however, for ALZ and the respondents involved in the investigations on South Korea and South Africa, the final cash deposit rates are based on partial AFA. See Stainless Steel Plate in Coils From Canada: Final Determination of Sales at Less than Fair Value, 64 FR 15457 (March 31, 1999); Stainless Steel Plate in Coils From Italy: Final Determination of Sales at Less than Fair Value, 64 FR 15458 (March 31, 1999); Stainless Steel Plate in Coils from Taiwan: Final Determination of Sales at Less than Fair Value, 64 FR 15493 (March 31, 1999); See Stainless Steel Plate in Coils From Belgium: Final Determination of Sales at Less than Fair Value, 64 FR 15476 (March 31, 1999); Stainless Steel Plate in Coils From the Republic of South Korea: Final Determination of Sales at Less than Fair Value, 64 FR 15444 (March 31, 1999); and Stainless Steel Plate in Coils From South Africa: Final Determination of Sales at Less than Fair Value, 64 FR 15459 (March 31, 1999). Thus, ALZ concludes, taken individually, these cash deposit rates demonstrate the petitioners' most adverse assumptions about foreign SSPC producers' practices. Taken together, the 20.9 percent average of these cash deposit rates confirms that a 38.9 percent rate bears no relationship to the past practices of the SSPC industry. ALZ also argues that, in Smith Corona, the highest dumping rate alleged in the petition was lower than the preliminary rate calculated based on the respondent's business proprietary data. ALZ further asserts that, in the case now before the Department, the highest corroborated dumping rate alleged in the petition is nearly double the rate calculated and verified by the Department for ALZ in the original less-than-fair value (LTFV) investigation. In addition, the public data ultimately used by the Department in calculating the 150.6 percent best information available rate finally applied to the respondent in Smith Corona was one small piece of data used to make a difference-in-merchandise adjustment to compare two otherwise dissimilar models. Therefore, ALZ argues, the Department did not, as petitioners argue in this case, rely entirely on the non-APO version of a respondent's questionnaire response to calculate a dumping margin. Thus, ALZ concludes that the Smith Corona case bears no relevance to the factual situation presented in the SSPC review now before the Department. ALZ concludes that, for these final results, the Department should follow its legal precedents and continue to use the highest corroborated margin alleged in the petition as AFA in the final results of this administrative review. ALZ argues that reviews are enormously costly both in terms of internal man-hours spent by the respondent company involved and legal fees, and that these costs must be weighed against the commercial costs of any antidumping duties to be paid by U.S. importers. Furthermore, ALZ recognizes that, as a result of its non-participation, the Department may decide not to rely on the 9.86 percent dumping margin calculated and verified in the original investigation, which ALZ considers to be the most accurate facts available rate; rather, the Department may decide to rely on another adverse, higher rate. However, ALZ argues that, according to the law, regulations, and legal precedents, any such AFA rate must bear some relationship to reality and the AFA must be both corroborated and probative. Department's Position: We disagree with both the petitioners and ALZ. For the reasons described below, we have determined to apply, as AFA, the highest margin from the petition, the elements of which were re-examined and recalculated with the more recent information from ALZ's publicly available financial statements. For purposes of our Preliminary Results, in accordance with section 776 of the Act, we applied total AFA with respect to ALZ. We explained that ALZ's withdrawal from the review and its request to return or destroy the company's initial questionnaire responses constituted a refusal to cooperate to the best of the company's ability, within the meaning of section 776(b) of the Act, and that an adverse inference was therefore warranted in selecting facts otherwise available. As AFA, we applied to ALZ the highest margin from the petition, 16 percent, as corroborated by the Department. We also invited parties to submit additional information if they believed that such information was more appropriate or relevant for use as AFA. For a detailed discussion of our decision, see Preliminary Results, 66 FR at 11561. Since our Preliminary Results, we have re-examined the information on which the preliminary margin was based. We have analyzed options available to the Department as sources of AFA, namely, the petitioners' proposal to use the public summaries of ALZ's data, the information contained in the petition, the rate from the original LTFV investigation, and ALZ's publicly available financial statements. For these final results, to the extent that POR information was reasonably available to us, and that overall the constructed value was higher during the POR, we have determined ALZ's AFA rate by recalculating the highest margin contained in the petition, which was based on a price-to-constructed value comparison. Specifically, we recalculated the factory overhead, selling and general expenses, and profit ratios using ALZ's 1998, 1999 and 2000 publicly available financial statements. We applied the weighted-average of these ratios to the original base cost (listed in the foreign market research reports) to obtain the total constructed value. Using this revised constructed value in our recalculation resulted in a margin of 24.43 percent. For a detailed discussion of our calculations, see Memorandum to Barbara E. Tillman through Sally Gannon from Abdelali Elouaradia: Total Adverse Facts Available Calculation Memorandum, October 24, 2001. We agree with petitioners that, in certain circumstances, the Department may rely on public summaries of proprietary information in its calculations. Notice of Final Determination of Sales At Less Thank Fair Value: Melamine Institutional Dinnerware Products From the People's Republic of China, 62 FR 1708, 1712 (January 13, 1997)(using public summary of the questionnaire response to calculate a respondent's surrogate profit). However, in this instance, we find that analyzing the highest margin in the petition and recalculating the constructed value in the petition using ALZ's public financial statements for the POR is more appropriate because the information derived from ALZ's financial statements comes from the company's actual financial records. As such, it is not as uncertain as the publicly ranged data obtained from ALZ's public summary of proprietary questionnaire responses. Moreover, we note that there exists a rational relationship between recalculating the petition's rate using ALZ's financial statements (i.e., the "facts chosen" by the Department) and the calculated margin (i.e., the "matter to which it was applied"). See Branco Peres Citrus, S.A. v. United States, Slip Op. 01-121 at 21, Court No. 99-09-00560 (CIT, Oct. 3, 2001) (upholding the Department's use of AFA based on costs taken from the petition and the respondent's own sales data because a rational relationship existed between these "facts chosen" and the calculation of the respondent's sales- specific dumping margins) (Branco Peres); and Ta Chen Stainless Steel Pipe, Inc. v. United States, Slip Op.00-107, at 8 (CIT Aug. 25, 2000). We disagree with ALZ that we should apply, as AFA, either the margin of 9.86 percent from the LTFV investigation, or the highest margin from the petition (16 percent). As ALZ notes in its rebuttal brief, the CIT in DeCecco specifically instructed the Department that an AFA rate must be "a reasonably accurate estimate of the respondent's actual rate, albeit with some built-in increase intended as a deterrent for non-compliance." 216 F.3d at 1032. ALZ's actual LTFV margin may be an approximation of ALZ's dumping behavior during the period of investigation; however, to apply this margin as AFA would reward ALZ for its lack of cooperation, rather than provide a proper level of incentive to ensure the company's future participation in reviews. See SAA at 870; Branco Peres, Slip Op. 01-121 at 21-22; DeCecco 216 F.3d at 1032; and Mannesmannrohren-Werke v. United States, 77 F. Supp. 2d 1302, 1319 n.7. Although section 776(b) of the Act permits the Department to use information derived from the petition, that is but one source of AFA, as the statute explicitly grants to the Department discretion to choose from several enumerated sources. In this particular instance, given the fact that the respondent withdrew its data during the first administrative review, and at the time of the withdrawal confronted the possibility of receiving either of the two margins (i.e., 16 and 9.86 percent), and that evidence available indicates that the petition margin of 16 percent may in fact benefit the respondent, we find that the 24.43 percent rate reasonably ensures that ALZ does not benefit from its failure to cooperate and encourages its future participation in a review. In addition, this margin reasonably represents ALZ's trading practices, given that it incorporates information from ALZ's actual and most recent financial statements. As such, this rate does not belong to the category of "unreasonably high rates with no relationship to the respondent's actual dumping margin." See DeCecco, 216 F.3d at 1033. As adverse FA for purposes of the final results, we have not considered the margin of 29 percent, which was calculated by the petitioners using ALZ's proprietary questionnaire responses before ALZ's withdrawal from the review. As we explained in the Preliminary Results, these responses were removed from the record, pursuant to ALZ's request, and thus cannot be considered as the source of adverse FA. The Department's determination in this regard is in accordance with its long-standing practice to return proprietary information withdrawn from the record, and to base adverse FA on the information remaining on the record. See, e.g., Memorandum from Constance Handley to Holly A. Kuga Regarding Request for the Return of Questionnaire Responses, dated May 11, 2000, in Circular Seamless Stainless Steel Hollow Products from Japan (the Department returned respondent's confidential questionnaire responses consistent with Commerce's general practice of returning such data to respondents upon request); Notice of Final Determination of Sales at Less Than Fair Value: Silicomanganese From Brazil, 59 Fed. Reg. 55432, 55433 (Nov. 9, 1994) (respondent's request to remove all of its proprietary information has the consequence of expunging from the administrative record the basis for showing that respondent is cooperative); Final Determination of Sales At Less Than Fair Value; Certain Cold-Rolled Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Italy, 58 Fed. Reg. 37152, 37152-153 (July 9, 1993) (in light of ILVA's request to withdraw from the record its proprietary responses to the antidumping questionnaire, "the Department no longer has any choice but to continue to treat ILVA as an uncooperative respondent"); Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From France, 58 Fed. Reg. 6203, 6204-6205 (January 27, 1993) (respondent asked for destruction of all of its proprietary responses, which resulted in the application of best information available). In Allegheny Ludlum Corp., et al. v. United States, Court No. 01-00003 (Jan. 29, 2001) (Alleghany), the Court took issue with several aspects of the Department's determination instructing petitioners to return or destroy ALZ's information in this review. First, the Court questioned the Department's statutory and regulatory authority to return a party's information upon its withdrawal. It held that neither the statute nor the pertinent regulations require the Department to return materials submitted by parties. Alleghany at 9. We respectfully disagree. The Department's practice of returning withdrawn information stems from section 777(b)(1)(A) (2) of the Act, which allows access to business proprietary information under the express condition that the proprietary information "shall not be disclosed to any person without the consent of the person submitting the information." (emphasis added) Given that this disclosure is accomplished on a voluntary and consensual basis, where parties decide to withdraw from a proceeding prior to its conclusion and explicitly request that their proprietary information be removed from the record, according to the Department's interpretation of section 777(b)(1)(A) of the Act, in this context the parties' "consent" is similarly withdrawn, and the information is returned to the respondent, as requested. See The AD Hoc Committee of AZ-NM-TY-FL Producers of Gray Portland Cement, 13 F.3d 398, 400 (Fed Cir. 1994) (discussing the Department's inherent authority to fill in the gaps in the statute). As we have explained to the Court, in those cases where parties refuse to participate in the proceedings, Commerce's only recourse is to apply adverse FA when calculating a dumping margin or rate of subsidization, pursuant to section 776(b) of the Act. The FA rule thus encourages future participation and ensures that the parties are not rewarded for failure to cooperate. See, e.g., World Finer Foods, Inc. et al. v. United States, Consol. Court No. 99-03-00138, Slip Op. 2000-72 (June 26, 2000); Allied Signal Aerospace Co. v. United States, 996 F.2d 1185, 1192 (Fed. Cir. 1993). Second, we agree with the Court that section 777(b)(1)(A) of the Act does not place the "right of ownership" of proprietary information with the Department. Allegheny at 9. It is specifically for this reason that the Department has determined to grant ALZ's request to remove its proprietary information from the record, given that it is the company who is the rightful holder of the proprietary information, and who retains the interest in and control of its data at all times. The Department's role is only to safeguard the use and dissemination of that information. See Antidumping and Countervailing Duty Proceedings: Administrative Protective Order Procedures; Procedures for Imposing Sanctions for Violation of a Protective Order 63 FR 24391 (May 4, 1998) ("APO Regulations"). (3) Consequently, where the holders withdraw and seek release and removal of their proprietary information, the Department permits such removal in accordance with its practice, stated above. Third, the Court appears to misapprehend the Department's basis for distinguishing the approach taken in Notice of Final Determination of Sales at Less Than Fair Value: Live Cattle From Canada, 64 FR 56739 (Oct. 21, 1999) ("Live Cattle") from the approach taken with respect to ALZ's proprietary information in the instant case. See Allegheny at 15. As explained in the Department's December 19, 1999 Memorandum regarding the destruction or withdrawal of ALZ's information from the record, in Live Cattle, the Department ostensibly departed from its practice of allowing the respondents to remove confidential business information, and retained, over the respondent's objection, proprietary information submitted to the Department in the course of the investigation. The Department reasoned that it was appropriate to do so, given that the facts surrounding the respondent's withdrawal in Live Cattle were unusual and had significant ramifications for the agency's administration of the law. In that case, Schaus, one of the six exporters of live cattle from Canada, decided to withdraw from the investigation after the preliminary determination, and requested that its business proprietary information be removed from the record. Given an overwhelming number of Canadian producers and exporters of the subject merchandise, the removal of Schaus's questionnaire responses from the record would have significantly distorted the "all others" rate for potentially hundreds of companies. The Allegheny Court appears to mistake the Department's concern relating to the impact on the "all others" rate with the collection of antidumping duties. See Allegheny at 15 n.4. Rather, the Department was concerned about the potential consequences that the removal of Schaus's information would have on the calculation of the "all others" rate for the remaining respondents in that investigation, given that not using that information would have significantly distorted the calculations. Thus, the Department was not guided by the monetary concerns, as implied by the Allegheny Court, but by concerns that the margin would be manipulated or distorted due to the removal of the respondent's information. In the instant case, which involves a review rather than an investigation, the removal of ALZ's information from the record has no impact upon any other potential respondents. In reviews, we do not recalculate the "all others" rate. Thus, the removal would not lend itself to manipulation or distortion of the "all others" margin. In light of the Department's determination to apply, as adverse FA, the recalculated highest margin alleged in the petition, there is no need to utilize ALZ's proprietary questionnaire responses retained under seal by way of Court order. Recommendation Based on our analysis of the comments received, we recommend adopting the above position. If this recommendation is accepted, we will publish the final weighted-average dumping margin and the final results of this administrative review in the Federal Register. Agree Disagree Richard W. Moreland Acting Assistant Secretary for Import Administration Date _________________________________________________________________________ footnotes: 1. Allegheny Ludlum, AK Steel Corporation, J&L Specialty Steel Inc., North American Stainless, Butler-Armco Independent Union, Zanesville Armco Independent Union, and the United Steelworkers of America, AFL-CIO/CLC. 2. The Trade Secrets Act, 18 U.S.C. § 1905, generally prevents a federal agency from disclosing business proprietary information unless specific exemption is provided by the statute. In case of antidumping and countervailing duty laws, section 777 of the Act provides such exemption from the Trade Secrets Act for the Department, and permits limited disclosure of business proprietary information for purposes of proper administration of antidumping and countervailing duty laws. Specifically, section 777 of the Act delegates to Commerce the authority to administer the dissemination of the business proprietary information, and it also acts as a mechanism to permit the use of such information in a highly circumscribed setting. See Antidumping and Countervailing Duty Proceedings: Administrative Protective Order Procedures; Procedures for Imposing Sanctions for Violation of a Protective Order, 61 Fed. Reg. 4826 (Feb. 8, 1996) 3. The Department has taken a very cautious approach to access and use of business proprietary information. See e.g., the Preamble to the APO Regulations, 63 FR at 24398-399 (the Department noted that section 777 of the Act prescribes three instances where the Department may utilize business proprietary information from different segments of proceedings, or from different proceedings; the Department also noted the absence of support for allowing parties to use information across proceedings). The Department's approach with respect to a party's use and access to business proprietary information constitutes "a reasonable compromise between the long held desires of petitioners to be able to address perceived inconsistencies between segments, and respondents' concerns that their business proprietary information not be distributed among representatives and across segments for indeterminate periods." Id. at 24399.