[Federal Register Volume 70, Number 221 (Thursday, November 17, 2005)]
[Notices]
[Pages 69735-69738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-6370]


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DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-852]


Initiation of Antidumping Duty Investigation: Liquid Sulfur 
Dioxide from Canada

AGENCY: Import Administration, International Trade Administration, 
Department of Commerce.

EFFECTIVE DATE:  November 17, 2005.

FOR FURTHER INFORMATION CONTACT: Kate Johnson or Rebecca Trainor, AD/
CVD Operations, Office 2, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
4929 and (202) 482-4007, respectively.

SUPPLEMENTARY INFORMATION:

INITIATION OF INVESTIGATION

The Petition

    On September 30, 2005, the Department of Commerce (Department) 
received a petition on imports of liquid sulfur dioxide from Canada 
filed in proper form by Calabrian Corporation (the petitioner) on 
behalf of the domestic industry producing liquid sulfur dioxide\1\ 
(Liquid Sulfur Dioxide from Canada: Antidumping Duty Petition dated 
September 30, 2005 (Petition)). The period of investigation (POI) is 
July 1, 2004, through June 30, 2005.
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    \1\ See Memorandum from the Team to Barbara Tillman, Acting 
Deputy Assistant Secretary: Decision Memorandum Concerning Filing 
Date of Petition, October 6, 2005, (explaining that the proper 
filing date is September 30, 2005, as the petition was filed at the 
ITC after the noon deadline on September 29).
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    In accordance with section 732(b) of the Tariff Act of 1930, as 
amended (the Act), the petitioner alleged that imports of liquid sulfur 
dioxide from Canada are being, or are likely to be, sold in the United 
States at less than fair value within the meaning of section 731 of the 
Act, and that such imports are materially injuring or threaten to 
injure an industry in the United States.

Scope of Investigation

    The product covered by this investigation is technical or 
commercial

[[Page 69736]]

grade and refrigeration grade liquid sulfur dioxide of a minimum 99.98 
percent assay. Sulfur dioxide is identified by the chemical formula 
SO2. The Chemical Abstract Service (CAS) No. for sulfur 
dioxide is 7446-09-5. Liquid sulfur dioxide is pure sulfur dioxide gas 
compressed through refrigeration and stored under pressure. Sulfur 
dioxide in its gaseous state is excluded from the petition.
    Liquid sulfur dioxide subject to this investigation is currently 
classifiable under subheading 2811.23.00 of the Harmonized Tariff 
Schedule of the United States (HTSUS). While the HTSUS subheading is 
provided for convenience and customs purposes, the written description 
of the scope of this investigation is dispositive.

Comments on Scope of Investigation

    During our review of the petition, we discussed the scope with the 
petitioner to ensure that it accurately reflects the product for which 
the domestic industry is seeking relief. Moreover, as discussed in the 
preamble to the Department's regulations, we are setting aside a period 
for interested parties to raise issues regarding product coverage. See 
Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 
27323 (May 19, 1997). The Department encourages all interested parties 
to submit such comments within 20 calendar days of publication of this 
initiation notice. Comments should be addressed to Import 
Administration's Central Records Unit, Room 1870, U.S. Department of 
Commerce, 14th Street and Constitution Avenue, NW, Washington, DC 20230 
- Attn: Irene Darzenta Tzafolias. The period of scope consultations is 
intended to provide the Department with ample opportunity to consider 
all comments and consult with interested parties prior to the issuance 
of the preliminary determination.

Determination of Industry Support for the Petition

    Section 732(b)(1) of the Act requires that a petition be filed by 
or on behalf of the domestic industry. In order to determine whether a 
petition has been filed by or on behalf of the industry, the 
Department, pursuant to section 732(c)(4)(A) of the Act, determines 
whether a minimum percentage of the relevant industry supports the 
petition. A petition meets this requirement if the domestic producers 
or workers who support the petition account for: (i) at least 25 
percent of the total production of the domestic like product; and (ii) 
more than 50 percent of the production of the domestic like product 
produced by that portion of the industry expressing support for, or 
opposition to, the petition. Moreover, section 732(c)(4)(D) of the Act 
provides that, if the petition does not establish support of domestic 
producers or workers accounting for more than 50 percent of the total 
production of the domestic like product, the Department shall: (i) poll 
the industry or rely on other information in order to determine if 
there is support for the petition, as required by subparagraph (A), or 
(ii) determine industry support using any statistically valid sampling 
method.
    Section 771(4)(A) of the Act defines the ``industry'' as the 
producers of a domestic like product. Thus, to determine whether a 
petition has the requisite industry support, the statute directs the 
Department to look to producers and workers who produce the domestic 
like product. The International Trade Commission (ITC), which is 
responsible for determining whether ``the domestic industry'' has been 
injured, must also determine what constitutes a domestic like product 
in order to define the industry. While both the Department and the ITC 
must apply the same statutory definition regarding the domestic like 
product (section 771(10) of the Act), they do so for different purposes 
and pursuant to a separate and distinct authority. In addition, the 
Department's determination is subject to limitations of time and 
information. Although this may result in different definitions of the 
like product, such differences do not render the decision of either 
agency contrary to law. See Algoma Steel Corp. Ltd. v. United States, 
688 F. Supp. 639, 642-44 (CIT 1988); see also High Information Content 
Flat Panel Displays and Display Glass Therefor from Japan: Final 
Determination; Rescission of Investigation and Partial Dismissal of 
Petition, 56 FR 32376, 32380-81 (July 16, 1991).
    Section 771(10) of the Act defines the domestic like product as ``a 
product which is like, or in the absence of like, most similar in 
characteristics and uses with, the article subject to an investigation 
under this title.'' Thus, the reference point from which the domestic 
like product analysis begins is ``the article subject to an 
investigation,'' i.e., the class or kind of merchandise to be 
investigated, which normally will be the scope as defined in the 
petition.
    With regard to the domestic like product, the petitioner does not 
offer a definition of domestic like product distinct from the scope of 
the investigation. Based on our analysis of the information submitted 
in the petition, we have determined there is a single domestic like 
product, liquid sulfur dioxide, which is defined further in the ``Scope 
of the Investigation'' section above, and we have analyzed industry 
support in terms of that domestic like product. See Initiation 
Checklist at Attachment 1.
    Based on information provided in the petition, the share of total 
estimated U.S. production of the domestic like product in calendar year 
2004 represented by the petitioner did not account for more than 50 
percent of the total production of the domestic like product. 
Therefore, in accordance with 732(c)(4)(D) of the Act, we polled the 
industry. See Notice of Extension of the Deadline for Determining the 
Adequacy of the Petition: Liquid Sulfur Dioxide from Canada, 70 FR 
61937 (October 27, 2005).
    On October 7, 2005, we issued polling questionnaires to all known 
domestic producers of liquid sulfur dioxide identified in the petition. 
On October 12, 2005, we sent a letter to the domestic producers 
transmitting revised scope language provided by the petitioner on 
October 11, 2005, as well as a clarification regarding the reporting of 
liquid sulfur dioxide that was produced and consumed internally. The 
questionnaires are on file in the Central Records Unit (CRU) in room B-
099 of the main Department of Commerce building. We requested that each 
company complete the polling questionnaire and certify their responses 
by faxing their responses to the Department by the due date. For a 
detailed discussion of the responses received, please see the 
Initiation Checklist at Attachment I.
    On October 25, 2005, we sent additional questions to Rhodia Inc. 
(Rhodia) and Chemtrade Logistics (U.S.) Inc. (Chemtrade U.S.), domestic 
producers expressing opposition to the petition, and received responses 
on October 31, 2005. Based on the responses received, we determined 
that Rhodia's opposition should be disregarded in our industry support 
calculation.
    Section 732(c)(4)(B)(i) of the Act states that the Department 
``shall disregard the position of domestic producers who oppose the 
petition if such producers are related to foreign producers, as defined 
in section 771(4)(B)(ii), unless such domestic producers demonstrate 
that their interests as domestic producers would be adversely affected 
by the imposition of an antidumping duty order.'' In addition, section 
351.203(e)(4)(i) of the Department's regulations states that the 
position of a domestic producer that opposes the petition may be 
disregarded if such producer is related to a foreign

[[Page 69737]]

producer or to a foreign exporter under section 771(4)(B)(ii) of the 
Act, unless such domestic producer demonstrates to the Secretary's 
satisfaction that its interests as a domestic producer would be 
adversely affected by the imposition of an antidumping order. Moreover, 
section 771(4)(B)(ii)(II) contemplates that the Department will 
consider whether an exporter controls a producer, when determining 
whether a domestic producer is related to a foreign company for 
purposes of section 732(c)(4)(B)(i).
    In its October 31, 2005, response, Rhodia confirmed that it has a 
significant relationship with a Canadian exporter of subject 
merchandise. Specifically, Rhodia, which ceased production of the 
subject merchandise on December 31, 2004, entered into an asset 
purchase and sale agreement with Chemtrade Logistics Inc. (Chemtrade 
Canada) at the end of 2003, whereby it sold all of its domestic 
manufacturing and sales business to Chemtrade Canada and was obligated 
not to compete in the liquid sulfur dioxide industry for a period of 5 
years. In addition, Rhodia is currently marketing and distributing 
liquid sulfur dioxide supplied by Chemtrade Canada, and is entitled to 
a commission on these sales.
    In this case, we find that Rhodia and Chemtrade Canada are related, 
as defined in section 771(4)(B)(ii)(II) of the Act. Section 
771(4)(B)(ii)(II) states that a producer and an exporter or importer 
shall be considered to be related parties if ``the exporter or importer 
directly or indirectly controls the producer.'' This subparagraph also 
states that ``a party shall be considered to directly or indirectly 
control another party if the party is legally or operationally in a 
position to exercise restraint or direction over the other party.'' 
Because of the nature of the relationship between Rhodia and Chemtrade 
Canada, Chemtrade Canada is legally and operationally in a position to 
restrain or direct Rhodia. For further discussion, see Initiation 
Checklist.
    Section 732(c)(4)(B)(i) of the Act also states that the Department 
will disregard the opposition of related producers ``unless such 
domestic producers demonstrate that their interests as domestic 
producers would be adversely affected by the imposition of an 
antidumping duty order.'' Rhodia has not demonstrated that its 
interests as a domestic producer would be adversely affected by the 
imposition of an antidumping order. Furthermore, it is unclear what 
``interests as a domestic producer'' Rhodia has because it no longer 
produces the domestic like product pursuant to its business arrangement 
with Chemtrade Canada. Therefore, we determine that it is appropriate 
to disregard Rhodia's opposition to the petition under section 
732(c)(4)(B)(i) of the Act and section 351.203(e)(4)(i) of the 
Department's regulations based on the fact that it is related to 
Chemtrade Canada and failed to demonstrate that its interests as a 
domestic producer would be adversely affected by the imposition of an 
antidumping duty order on liquid sulfur dioxide.
    Our analysis of the data indicates that the domestic producers of 
liquid sulfur dioxide who support the petition account for at least 25 
percent of the total production of the domestic like product and, once 
Rhodia's opposition is disregarded, more than 50 percent of the 
production of the domestic like product produced by that portion of the 
industry expressing support for, or opposition to, the petition. See 
Initiation Checklist at Attachment I. Accordingly, the Department 
determines that the industry support requirements of section 
732(c)(4)(A) of the Act have been met. The petitioner has suggested 
that we disregard another party who opposed the petition, Chemtrade 
U.S., because it is related to Chemtrade Canada and is a significant 
importer of liquid sulfur dioxide from Canada; however, because the 
petitioner has met the 50 percent threshold, after disregarding 
Rhodia's opposition, we have determined that we need not address the 
opposition of Chemtrade U.S.
    Therefore, the Department determines that petitioner filed this 
petition on behalf of the domestic industry because it is an interested 
party as defined in section 771(9)(F) of the Act and it has 
demonstrated sufficient industry support with respect to the 
antidumping investigation that it is requesting the Department 
initiate. See Initiation Checklist at Attachment I (Industry Support).

U.S. Price and Normal Value

    The following is a description of the allegation of sales at less 
than fair value upon which the Department based its decision to 
initiate this investigation. The sources of data for the deductions 
relating to the U.S. and home market prices are also discussed in the 
Initiation Checklist. Should the need arise to use any of this 
information as facts available under section 776 of the Act in our 
preliminary or final determination, we may reexamine the information 
and revise the margin calculations, if appropriate.

Export Price

    Pursuant to section 772(a) of the Act, the petitioner based export 
price on two price quotations from a Canadian producer of liquid sulfur 
dioxide to U.S. customers. See petition at 18-20 and Attachment 15 and 
amended petition at 9. The Department deducted from these prices 
freight expenses and merchandise processing fees of 0.21 percent of 
dutiable value (net of freight). The freight rates are based on the 
published 2005 freight tariffs of Canadian Pacific Railway. See 
proprietary Initiation Checklist.

Normal Value

    To calculate NV, pursuant to section 773(a) of the Act, the 
petitioner provided a 2003 published price for liquid sulfur dioxide 
and June 2005 Canadian prices obtained through foreign market research. 
See petition at 15-18 and Attachments 10-13 and amended petition at 6-
9. For purposes of this initiation, we have relied on the market 
research by the petitioner of Canadian liquid sulfur dioxide prices 
because these prices are more contemporaneous. In addition, we 
disregarded two of these prices and recalculated another price based on 
source documentation in the petition. See proprietary Initiation 
Checklist. The petitioner deducted estimated freight expenses to derive 
ex-factory prices. The freight rates are based on the published 2005 
freight tariffs of Canadian Pacific Railway. See proprietary Initiation 
Checklist.

Fair Value Comparisons

    Based on the data provided by the petitioner, there is reason to 
believe that imports of liquid sulfur dioxide from Canada are being, or 
are likely to be, sold in the United States at less than fair value. 
Based upon comparisons of export price to the NV, calculated in 
accordance with section 773(a) of the Act, the estimated dumping 
margins for liquid sulfur dioxide from Canada, revised as a result of 
the Department's recalculations, range from 141.14 percent to 219.99 
percent.

Allegations and Evidence of Material Injury and Causation

    The petitioner alleges that the U.S. industry producing the 
domestic like product is being materially injured, or is threatened 
with material injury, by reason of the individual and cumulated imports 
of the subject merchandise sold at less than NV. The petitioner 
contends that the industry's injured condition is illustrated by the 
decline in customer base, market share, domestic shipments, prices and 
profit. We have assessed the

[[Page 69738]]

allegations and supporting evidence regarding material injury and 
causation, and we have determined that these allegations are properly 
supported by adequate evidence and meet the statutory requirements for 
initiation. See Initiation Checklists.

Initiation of Antidumping Investigation

    Based upon our examination of the petition on liquid sulfur dioxide 
from Canada, we find that this petition meets the requirements of 
section 732 of the Act. Therefore, we are initiating an antidumping 
duty investigation to determine whether imports of liquid sulfur 
dioxide from Canada are being, or are likely to be, sold in the United 
States at less than fair value. Unless postponed, we will make our 
preliminary determination no later than 140 days after the date of this 
initiation.

Distribution of Copies of the Petition

    In accordance with section 732(b)(3)(A) of the Act, a copy of the 
public version of the petition has been provided to the Government of 
Canada.

International Trade Commission Notification

    We have notified the International Trade Commission (ITC) of our 
initiation, as required by section 732(d) of the Act.

Preliminary Determination by the ITC

    The ITC will preliminarily determine, within 25 days after the date 
on which it receives notice of this initiation, whether there is a 
reasonable indication that imports of liquid sulfur dioxide from Canada 
are causing material injury, or threatening to cause material injury, 
to a U.S. industry. See section 733(a)(2) of the Act. A negative ITC 
determination will result in the investigation being terminated; 
otherwise, this investigation will proceed according to statutory and 
regulatory time limits.
    This notice is issued and published pursuant to section 777(i) of 
the Act.

    Dated: November 9, 2005.
Stephen J. Claeys,
Acting Assistant Secretaryfor Import Administration.
[FR Doc. E5-6370 Filed 11-16-05; 8:45 am]
BILLING CODE 3510-DS-S