02-28217. Final Results and Partial Recission of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products From Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of final results of countervailing duty expedited reviews.

SUMMARY:

On August 14, 2002, the Department of Commerce (the Department) published in the Federal Register its preliminary results of 18 expedited reviews of the countervailing duty order on certain softwood lumber products from Canada for the period April 1, 2000 through March 31, 2001. See Preliminary Results of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada, 67 FR 52945 (August 14, 2002) (Preliminary Results). Based on our analysis of additional information, we have made changes to the estimated net subsidy rates. Therefore, these final results differ from the preliminary results. For information on estimated net subsidies, please see the “Final Results of Reviews” section of this notice. In accordance with these final results of reviews, we will instruct the U.S. Customs Service (Customs) to amend the cash deposit for each reviewed company as detailed in the “Final Results of Reviews” section of this notice. In addition, the Department has rescinded expedited reviews with regard to Western Commercial Millwork Inc.

EFFECTIVE DATE:

November 5, 2002.

FOR FURTHER INFORMATION CONTACT:

Maria MacKay or Gayle Longest, Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, NW., Washington, DC 20230; telephone: [phone] or [phone].

SUPPLEMENTARY INFORMATION:

Applicable Statute

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 C.F.R. Part 351 (2002).

Background

On May 22, 2002, the Department published in the Federal Register its amended final affirmative countervailing duty determination and countervailing duty order on certain softwood lumber products (subject merchandise) from Canada (67 FR 36068), as corrected (67 FR 37775, May 30, 2002). On July 17, 2002, the Department published a Notice of Initiation of Expedited Reviews which covered 73 companies that filed complete and timely applications. (See Notice of Initiation of Expedited Reviews of the Countervailing duty Order: Certain Softwood Lumber Products from Canada, (67 FR 46955) (July 17, 2002) (Notice of Initiation).)

As explained in the Notice of Initiation, we segregated the 73 applicants into two groups. Group 1 consists of 45 companies that obtain the majority of their wood (over 50 percent of their inputs) from the United States, the Maritime Provinces, Canadian private lands, and Canadian companies excluded from the order, as well as companies that source less than a majority of their wood from these sources and do not have tenure. Group 2 includes 28 companies that source less than a majority of their wood from these sources and have acquired Crown timber through their own tenure contracts.

In our review of the applications in Group 1, we noted that, in order to conduct our analysis, we required only minimal supplemental data for 24 of the 45 companies. The other Group 1 companies required additional information and more extensive analysis. Rather than delaying the process to provide all Group 1 companies the opportunity to submit the necessary information, we issued a short questionnaire to the 24 companies requiring only minimal information and set a short deadline for the response. Of the 24 companies, 18 were able to supply the information by the deadline. We completed our preliminary analysis of those 18 companies, using the Group 1 methodology (see “Methodology” section below). See Preliminary Results. Two of these companies subsequently requested a pass-through analysis: Les Bois d'Oeuvre Beaudoin & Gauthier Inc. and Meunier Lumber Company Ltd. Three other companies were verified subsequent to the preliminary results of expedited reviews: Interbois Inc., Les Moulures Jacomau 2000, Inc., and Richard Lutes Cedar, Inc. We are providing those three companies and petitioners with an opportunity to comment on the verification reports, as explained in the “Verification” section of this notice. Therefore, this notice includes the final results for 13 of the 18 companies that were included in the Preliminary Results. We are continuing to process the other applications in Groups 1 and 2, and will be issuing additional questionnaires shortly. We received comments and rebuttal comments on the Preliminary Results, on September 6, 2002 and September 18, 2002, respectively, from petitioners and several respondents.

Partial Recission

On July 25, 2002, Olav Haavaldsrud Timber Company Limited (Olav Haavaldsrud) and Western Commercial Millwork withdrew their requests for review. On August 26, 2002, Olav Haavaldsrud requested that the Department reinstate its June 21, 2002, request for expedited review. On August 28, 2002, petitioners filed comments objecting to the reinstatement. The Department considered the arguments presented by Olav Haavaldsrud and petitioners, and decided that reinstatement of Olav Haavaldsrud in this expedited review proceeding is inappropriate. See Letter to Elliot J. Feldman from Melissa G. Skinner, Director, Office of CVD/AD Enforcement VI, Re: Expedited Review of Countervailing Duty Order on Certain Softwood Lumber Products from Canada—Olav Haavaldsrud Timber Company dated September 18, 2002.

On October 11, 2002, the GOC filed a submission urging the Department to reconsider the request for reinstatement filed by Olav Haavaldsrud. In the GOC's view, acceptance of Olav Haavaldsrud's request is required as a matter of procedural fairness. The GOC states that, as Olav Haavaldsrud detrimentally relied on the Department's statements, the Department should apply equitable tolling principles and accept Olav Haavaldsrud's request for reinstatement.

In response to the GOC, we note that the Department never, at any point in the expedited reviews, foreclosed consideration of arm's length issues, including in the cover letter to the questionnaire dated July 22, 2002 (cited by the GOC). Nevertheless, we understand that Olav Haavaldsrud may have misinterpreted that cover letter. Consequently, we are granting this company's request for reinstatement. However, we are granting the recission request of Western Commercial Millwork.

This notice includes the final results of review for the following 13 companies:

Bois Daaquam Inc.

Bois Omega Ltée

City Lumber Sales & Services Limited

Herridge Sawmills Ltd.

J. A. Fontaine et fils Inc.

Jointfor (3207021 Canada Inc.)

Les Produits Forestiers Dube Inc

Lonestar Lumber Inc.

Maibec Industries, Inc.

Materiaux Blanchet Inc.

MF Bernard Inc.

Scierie Nord-Sud Inc.

Scierie West-Brome Inc.

Scope of the Reviews

The products covered by this order are softwood lumber, flooring and siding (softwood lumber products). Softwood lumber products include all products classified under headings 4407.1000, 4409.1010, 4409.1090, and 4409.1020, respectively, of the Harmonized Tariff Schedule of the United States (HTSUS), and any softwood lumber, flooring and siding described below. These softwood lumber products include:

(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled, whether or not planed, sanded or finger-jointed, of a thickness exceeding six millimeters;

(2) Coniferous wood siding (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed;

(3) Other coniferous wood (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces (other than wood moldings and wood dowel rods) whether or not planed, sanded or finger-jointed; and

(4) Coniferous wood flooring (including strips and friezes for parquet flooring, not assembled) continuously shaped (tongued, grooved, rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) along any of its edges or faces, whether or not planed, sanded or finger-jointed.

Although the HTSUS subheadings are provided for convenience and Customs purposes, the written description of the merchandise subject to this order is dispositive.

As specifically stated in the Issues and Decision Memorandum accompanying the Notice of Final Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada, 67 FR 15539 (April 2, 2002) (see comment 53, item D, page 116, and comment 57, item B-7, page 126), available at http://www.ia.ita.doc.gov, drilled and notched lumber and angle cut lumber are covered by the scope of this order.

The following softwood lumber products are excluded from the scope of this order provided they meet the specified requirements detailed below:

(1) Stringers (pallet components used for runners): if they have at least two notches on the side, positioned at equal distance from the center, to properly accommodate forklift blades, properly classified under HTSUS 4421.90.98.40.

(2) Box-spring frame kits: if they contain the following wooden pieces—two side rails, two end (or top) rails and varying numbers of slats. The side rails and the end rails should be radius-cut at both ends. The kits should be individually packaged, they should contain the exact number of wooden components needed to make a particular box spring frame, with no further processing required. None of the components exceeds 1″ in actual thickness or 83″ in length.

(3) Radius-cut box-spring-frame components, not exceeding 1″ in actual thickness or 83″ in length, ready for assembly without further processing. The radius cuts must be present on both ends of the boards and must be substantial cuts so as to completely round one corner.

(4) Fence pickets requiring no further processing and properly classified under HTSUS heading 4421.90.70, 1″ or less in actual thickness, up to 8″ wide, 6′ or less in length, and have finials or decorative cuttings that clearly identify them as fence pickets. In the case of dog-eared fence pickets, the corners of the boards should be cut off so as to remove pieces of wood in the shape of isosceles right angle triangles with sides measuring 3/4 inch or more.

(5) U.S. origin lumber shipped to Canada for minor processing and imported into the United States, is excluded from the scope of this order if the following conditions are met: (1) The processing occurring in Canada is limited to kiln-drying, planing to create smooth-to-size board, and sanding, and (2) if the importer establishes to Customs' satisfaction that the lumber is of U.S. origin.

(6) Softwood lumber products contained in single family home packages or kits, ^[1] regardless of tariff classification, are excluded from the scope of this order if the importer certifies to items 6 A, B, C, D, and requirement 6 E is met:

A. The imported home package or kit constitutes a full package of the number of wooden pieces specified in the plan, design or blueprint necessary to produce a home of at least 700 square feet produced to a specified plan, design or blueprint.

B. The package or kit must contain all necessary internal and external doors and windows, nails, screws, glue, sub floor, sheathing, beams, posts, connectors, and if included in the purchase contract, decking, trim, drywall and roof shingles specified in the plan, design or blueprint.

C. Prior to importation, the package or kit must be sold to a retailer of complete home packages or kits pursuant to a valid purchase contract referencing the particular home design plan or blueprint, and signed by a customer not affiliated with the importer.

D. Softwood lumber products entered as part of a single family home package or kit, whether in a single entry or multiple entries on multiple days, will be used solely for the construction of the single family home specified by the home design matching the entry.

E. For each entry, the following documentation must be retained by the importer and made available to the U.S. Customs Service upon request:

i. A copy of the appropriate home design, plan, or blueprint matching the entry;

ii. A purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer;

iii. A listing of inventory of all parts of the package or kit being entered that conforms to the home design package being entered;

iv. In the case of multiple shipments on the same contract, all items listed in E(iii) which are included in the present shipment shall be identified as well.

Lumber products that the Customs Service may classify as stringers, radius cut box-spring-frame components, and fence pickets, not conforming to the above requirements, as well as truss components, pallet components, and door and window frame parts, are covered under the scope of this order and may be classified under HTSUS subheadings 4418.90.45.90 , 4421.90.70.40, and 4421.90.97.40.

Finally, as clarified throughout the course of the investigation, the following products, previously identified as Group A, remain outside the scope of this order. They are:

1. Trusses and truss kits, properly classified under HTSUS 4418.90;

2. I-joist beams;

3. Assembled box spring frames;

4. Pallets and pallet kits, properly classified under HTSUS 4415.20;

5. Garage doors;

6. Edge-glued wood, properly classified under HTSUS item 4421.90.98.40;

7. Properly classified complete door frames;

8. Properly classified complete window frames;

9. Properly classified furniture.

Verification

The Department verified three companies from September 30, 2002, through October 3, 2002. The companies verified during this time period were Interbois, Inc., Les Moulures Jacomau 2000, Inc., and Richard Lutes Cedar. Because we want to provide those companies and petitioners with an opportunity to comment on the verification reports, and we want to maintain the schedule for conducting these expedited review proceedings, we are not at this time issuing the final results for these three companies. Instead, their final results will be included in the next notice of final results of expedited reviews. In addition, we note that, in the underlying investigation, the Department verified Bois Daaquam Inc., Bois Omega Ltée, J. A. Fontaine et fils Inc., Les Produits Forestiers Dube Inc., Maibec Industries, Inc., Materiaux Blanchet Inc., Scierie Nord-Sud Inc., and Scierie West-Brome Inc.

Methodology

These final results include: (a) Companies that obtain the majority of their wood (over 50 percent of their inputs) from the United States, the Maritime Provinces, Canadian private lands, and/or Canadian companies excluded from the order, and (b) companies that source less than a majority of their wood from these sources and do not have tenure. We calculated company-specific rates based on the methodology described in the notice of preliminary results. To obtain the company-specific stumpage benefit, we multiplied the quantity of Crown logs and the quantity of lumber inputs (except for those specified below) by the province-specific stumpage benefit calculated in the underlying investigation, i.e., the average per-unit differential between the calculated adjusted stumpage fee for the relevant province and the appropriate benchmark for that province. For those provinces, such as British Columbia and Ontario, for which we calculated more than one per-unit benefit in the investigation, we calculated one province-wide per-unit benefit by weight-averaging the previously calculated values by the corresponding volumes of harvested softwood. As indicated in the Notice of Initiation, we have not attributed a benefit to (1) logs or lumber acquired from the Maritime Provinces, if accompanied by the appropriate certification, (2) logs or lumber of U.S. origin, (3) lumber produced by mills excluded in the investigation, or (4) logs from Canadian private land. We divided the stumpage benefit by the appropriate value of the company's sales to determine the company's estimated subsidy rate from stumpage and then added any benefit from other programs to obtain the cash deposit rate for the company.

Analysis of Comments Received

The issues raised in the case briefs by parties to these expedited reviews are addressed in the “Issues and Decision Memorandum” (Decision Memorandum), dated concurrently with this notice, which is hereby adopted by this notice. As noted in the Decision Memorandum, we are addressing in these final results those issues that are of a general nature or that specifically affect these 13 reviews. Other issues, related for instance to pass-through analysis or Group 2 methodology, will be addressed in the context of subsequent reviews. A list of the issues which parties have raised, and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix I. The Decision Memorandum is on file in the Central Records Unit in room B-099 of the Main Commerce Building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov, under the heading “Federal Register Notices.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Results

We amended data for MF Bernard based on submissions of factual information dated September 3, 2002.

Final Results of Review

We have calculated an individual subsidy rate for each producer/exporter subject to these expedited reviews. For the period April 1, 2000 to March 31, 2001, we determine the net subsidy to be as follows:

Net subsidies—producer/exporter	Net subsidy rate (in percent)
Bois Daaquam Inc	2.99
Bois Omega Ltée	3.10
City Lumber Sales & Services Limited	6.60
Herridge Sawmills Ltd	4.91
J. A. Fontaine et fils Inc	3.28
Jointfor (3207021 Canada Inc	1.96
Les Produits Forestiers Dube Inc	1.39
Lonestar Lumber Inc	13.42
Maibec Industries, Inc	1.98
Materiaux Blanchet Inc	10.32
MF Bernard Inc	3.69
Scierie Nord-Sud Inc	2.22
Scierie West-Brome Inc	1.16

We will instruct Customs to collect cash deposits of estimated countervailing duties in the amounts indicated above of the f.o.b. invoice price on all shipments of the subject merchandise produced by the reviewed companies, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of these reviews.

This notice covers only those 13 companies that we have specifically identified herein. We will instruct Customs to continue collecting cash deposits for all non-reviewed companies at the cash deposit rates established in the amended final determination on softwood lumber from Canada, 67 FR 36070 (May 22, 2002).

These expedited reviews and notice are issued and published in accordance with section 751(a)(1) and 777(I)(1) of the Act (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677(f)(I)).

Dated: October 31, 2002.

Faryar Shirzad,

Assistant Secretary for Import Administration.

Appendix 1

General Issues

Comment 1 Whether the Department should exclude companies from the CVD order as a result of expedited reviews

Comment 2 Whether the Department should verify all companies subject to expedited reviews

Comment 3 Whether the Department should allow companies purchasing inputs in arm's length transactions to request expedited reviews

Comment 4 Whether companies should be afforded the opportunity to self select the methodology to apply in the expedited review

Procedural Issues

Comment 1 Whether the timeline adopted by the Department for requesting rescission of an expedited review is in accordance with law

Comment 2 Whether the final results of expedited reviews should be issued sequentially or concurrently for all companies in Round 1

Comment 3 Whether non-compliant submissions should be removed from the record and companies that did not supply all documentation requested by the Department should be ejected from the process

Methodological Issues

Comment 1 Expedited reviews may result in a diminishment of subsidy offset notwithstanding the intent of the Department to adjust the country-wide rate

Comment 2 Whether the Department should collect full information on cross-owned and affiliated entities

Comment 3 Whether non-subject softwood lumber products should be included in the company-specific subsidy calculations

Comment 4 Whether the same stumpage benefit should apply to logs and lumber

Comment 5 Whether the Department may lawfully recalculate the country-wide cash deposit rate by deducting the alleged benefit to and sales by the companies receiving individual rates from the country-wide calculation

Comment 6 Whether logs purchased from excluded companies and lumber produced from private forest timber should be excluded from the volume of subsidized inputs

Comment 7 Whether the Department should adopt a standardized conversion factor to convert board feet into cubic meters for lumber input

Comment 8 Whether the Department should calculate mill-specific rates

Company Specific Issues

Comment 1 Bois Daquaam Inc.

Comment 2 City Lumber Sales and Services Limited

Comment 3 Herridge Sawmills Ltd.

Comment 4 Jointfor

Comment 5 Lonestar Lumber

Comment 6 Maibec Industries Inc.

Footnotes

1.  To ensure administrability, we clarified the language of exclusion number 6 to require an importer certification and to permit single or multiple entries on multiple days as well as instructing importers to retain and make available for inspection specific documentation in support of each entry.