01-19345. Amendment to the Notice of Initiation of Countervailing Duty Investigation: Certain Softwood Lumber Products From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of amendment to initiation of countervailing duty investigation.

SUMMARY:

The Department of Commerce (the Department) is amending its notice of initiation of a countervailing duty investigation of certain softwood lumber products from Canada to exempt the Provinces of New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland (the Maritime Provinces) from the investigation. This exemption does not apply to certain softwood lumber products produced in the Maritime Provinces from Crown timber harvested in any other Province.

EFFECTIVE DATE:

August 2, 2001.

FOR FURTHER INFORMATION CONTACT:

Eric B. Greynolds at [phone] or Maria MacKay at [phone], Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, Room 1870, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230.

Background

The 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 references to the provisions codified at 19 CFR Part 351 (2001).

ACTIONS SINCE INITIATION:

On April 30, 2001, the Department published in the Federal Register the “Notice of Initiation of Countervailing Duty Investigation: Certain Softwood Lumber Products from Canada” (66 FR 21332) (Notice of Initiation). In the Notice of Initiation, the Department did not exempt the Maritime Provinces from this investigation. However, the Department noted the possibility of addressing the unique circumstances associated with the Maritime Provinces through an exclusion process. The Department invited comments from interested parties concerning exclusions and how to address the unique circumstances of the Maritime Provinces. Initial comments were due by May 15, 2001, and several rounds of rebuttal comments were submitted in subsequent weeks.

In the comments submitted to the Department, parties argued that, consistent with the petition, the Department should have exempted certain lumber produced in the Maritime Provinces from the scope of the investigation. Specifically, petitioners asserted that the Department should have exempted the Maritime Provinces from the investigation. In a subsequent submission, petitioners requested that the Department amend the Notice of Initiation to exempt the Maritime Provinces from the investigation. The Maritime Provinces, the Maritime Lumber Bureau of Canada, and at least one company located in the Maritime Provinces also requested that the Department reconsider its decision to include the Maritime Provinces in the investigation. Additionally, the Government of Canada, in pre-initiation consultations with the Department, supported exempting the Maritime Provinces from the investigation.

ANALYSIS:

We have reconsidered the status of the Maritime Provinces in this investigation. Based on all of the comments submitted, we agree with the views expressed by the interested parties that, given the unique circumstances associated with the investigation of softwood lumber from Canada, as described below, the Department should exempt certain lumber produced in the Maritime Provinces from the scope of the investigation. In reaching this decision, we were guided by the long history of trade cases and trade agreements regarding softwood lumber.

The courts have long recognized that, generally, the statute accords the Department broad discretion in the enforcement of the antidumping and countervailing duty laws. Daewoo Elecs. Co. v. International Union, 6 F.3d 1511, 1516 (Fed. Cir. 1993), cert denied, 512 U.S. 1204 (1994). More specifically, the courts have acknowledged that the Department has the inherent authority to define the parameters of an investigation. Duferco Steel, Inc. v. U.S., 2110 CIT LEXIS 64 (May 29, 2001); Mitsubishi Heavy Industries, Ltd. v. U.S., 986 F. Supp. 1428, 1432 (CIT 1997). Nevertheless, the purpose of the antidumping and countervailing duty laws is to provide the relief sought in the petition, if the allegations in the petition are borne out through investigation. Thus, while the Department has broad discretion to define an investigation, that discretion must be exercised reasonably and with ample deference to the intent of the petition.

Upon reconsideration, we have concluded that, even though the exact circumstances surrounding the exemption of the Maritimes from the 1991 investigation are not present in this case, there are still unique circumstances, discussed in the amendment below, that warrant exempting the Maritime Provinces from this investigation. In fact, the circumstances behind the original exemption of the Maritimes from the 1986 Memorandum of Understanding (1986 MOU) have not changed for the last 15 years. Even though the exemption of the Maritimes from the 1991 countervailing duty investigation was based on a separate legal requirement (see, Self-Initiation of Countervailing Duty Investigation: Certain Softwood Lumber Products from Canada, 56 FR 56055, 56058 (October 31, 1991) and Amendment to the Notice of Self-Initiation of Countervailing Duty Investigation: Certain Softwood Lumber Products from Canada, 56 FR 56058 (October 31, 1991)), the circumstances associated with the Maritime Provinces are substantially the same as they were at the time of the 1986 MOU. Those circumstances remained the same at the time of the 1991 countervailing duty investigation, the 1996 Softwood Lumber Agreement, and at present with respect to the current investigation. Accordingly, the Department is amending the Notice of Initiation to exempt the Maritime Provinces.

Amendment

The Notice of Initiation is amended to add the following paragraph entitled “Exemption of Maritime Provinces”:

Exemption of Maritime Provinces

The lumber dispute between Canada and the United States has a long history. Throughout much of the history of this dispute, the Maritime Provinces have been exempt from the various actions taken, including the 1986 Memorandum of Understanding on Softwood Lumber, the interim measures taken pursuant to Section 301 of the Trade Act of 1974, the 1991 countervailing duty investigation, and the recently expired Softwood Lumber Agreement. All parties have generally recognized that there are unique circumstances associated with the Maritime Provinces and have supported those exemptions. That is equally true in the case now before us. In the petition, petitioners requested that softwood lumber production in the Maritime Provinces be exempt as it was in the 1991 countervailing duty investigation. Further, petitioners did not allege that any subsidies are received by producers in the Maritime Provinces. While the absence of allegations regarding specific regions of a country would not be sufficient by itself to warrant the exemption of those regions from an investigation, this factor, when combined with all the other unique circumstances of the Maritimes, does contribute to our determination to exempt the Maritimes. The Government of Canada also supported exemption of the Maritime Provinces from the investigation given the absence of subsidy allegations.

In light of all of the unique circumstances in this case, we have determined that it is appropriate to exempt exports of certain softwood lumber products produced in the Maritime Provinces from this investigation. As in the earlier proceedings and agreements concerning softwood lumber, this exemption does not apply to certain softwood lumber products produced in the Maritime Provinces from Crown timber harvested in any other Province.

Dated: July 27, 2001.

Faryar Shirzad,

Assistant Secretary, Import Administration.