67 FR 36070, May 22, 2002

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-839]
 
Notice of Amended Final Affirmative Countervailing Duty Determination 
and Notice of Countervailing Duty Order: Certain Softwood Lumber 
Products From Canada

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

ACTION: Notice of Amended Final Determination and Notice of 
Countervailing Duty Order: Certain Softwood Lumber Products from 
Canada.

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EFFECTIVE DATE: May 22, 2002.

FOR FURTHER INFORMATION CONTACT: Eric B. Greynolds at 202-482-6071, 
Office of AD/CVD Enforcement VI, Group II, Import Administration, 
International Trade Administration, U.S. Department of Commerce, Room 
4012, 14th Street and Constitution Avenue, NW., Washington, DC 20230.

The Applicable Statute and Regulations

    Unless otherwise indicated, all citations to the statute are 
references to the provisions of the Tariff Act of 1930, as amended by 
the Uruguay Round Agreements Act effective January 1, 1995 (the Act). 
In addition, unless otherwise indicated, all citations to the 
Department's regulations are to the current regulations codified at 19 
CFR Part 351 (2000).

Scope of Order

    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 
U.S. 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 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

[[Page 36071]]

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:
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    \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.
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    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, 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.

Exclusion of Maritime Products

    On July 27, 2001, we amended our Initiation Notice, to exempt 
certain softwood lumber products from the Provinces of New Brunswick, 
Nova Scotia, Prince Edward Island, and Newfoundland (the Maritime 
Provinces) from this investigation. This exemption does not apply to 
softwood lumber products produced in the Maritime Provinces from Crown 
timber harvested in any other Province. See Amendment to the Notice of 
Initiation of Countervailing Duty Investigation: Certain Softwood 
Lumber Products from Canada, 66 FR 40228 (August 2, 2001).

Company Exclusions

    In the Notice of Final Affirmative Countervailing Duty 
Determination and Final Negative Critical Circumstances Determination: 
Certain Softwood Lumber Products from Canada, 67 FR 15545, 15547 (April 
2, 2002) (Final Determination), we granted exclusions to the following 
companies: Armand Duhamel et fils Inc., Bardeaux et Cedres, Beaubois 
Coaticook Inc., Busque & Laflamme Inc., Carrier & Begin Inc., Clermond 
Hamel, J.D. Irving, Ltd., Les Produits. Forestiers. D.G., Ltee, Marcel 
Lauzon Inc., Mobilier Rustique, Paul Vallee Inc., Rene Bernard, Inc., 
Roland Boulanger & Cite., Ltee, Scierie Alexandre Lemay, Scierie La 
Patrie, Inc., Scierie Tech, Inc., Wilfrid Paquet et fils, Ltee, B. 
Luken Logging Ltd., Frontier Lumber, and Sault Forest Products Ltd. For 
further discussion of this issue, see the ``Company Exclusions'' 
section of the Issues and Decision Memorandum.

Amended Final Determination

    On March 21, 2002, in accordance with section 705(a) of the Act, 
the Department made a final determination that countervailable 
subsidies were being provided with respect to certain softwood lumber 
products from Canada. See Final Determination.
    On April 8, 2002, the Coalition for Fair Lumber Imports Executive 
Committee (petitioners) and the Governments of Canada, Alberta, British 
Columbia, Manitoba, Ontario, Saskatchewan, and Quebec (collectively, 
respondents) alleged ministerial errors in the calculations of the 
Final Determination. On April 15, 2002, petitioners and respondents 
submitted rebuttal comments regarding the allegations.
    On April 25, 2002, we issued a memorandum concerning these 
allegations in which we amended the ad valorem rate calculated in the 
Final Determination. These ministerial error allegations and the 
Department's responses to the allegations are summarized below. For a 
more detailed discussion of these ministerial error allegations, see 
the April 25, 2002, Memorandum to Faryar Shirzad, Assistant Secretary 
for Import Administration, through Bernard T. Carreau, Deputy Assistant 
Secretary for Import Administration (Ministerial Error Memorandum), a 
public document on file in room B-099 of the main Commerce Building.

I. General Allegations

A. Treatment of Company-Specific Sales Data in the Country-Wide Rate 
Calculations
    Respondents explain that the initial version of the Department's 
final

[[Page 36072]]

calculations failed to bracket business proprietary data pertaining to 
the Province of Ontario. They state that to correct this inadvertent 
disclosure of business proprietary data, the Department erased the data 
in question from the final calculations. Respondents argue that rather 
than remove the business proprietary data from the calculations, the 
Department should include the information in question with the 
necessary brackets and recalculate the country-wide rate consistent 
with the Department's Final Determination.
    Department's Position: We disagree with respondents. The data in 
question pertained only to a single cell in our spreadsheet 
calculations. However, redacting that single cell would not have 
adequately prevented the general public from deriving the proprietary 
figure. Therefore, to appropriately protect the proprietary data in 
question and to provide the general public with a meaningful summary of 
the country-wide rate section of the final calculations, we determined 
to remove the proprietary data at issue. We find our decision is the 
best solution as the removal of the proprietary figure from the 
calculations did not alter the final, country-wide rate nor did it 
change the portion of the country-wide rate attributable to Ontario.
B. Inclusion of Sales Values of Excluded Companies From the Yukon 
Territory in the Country-Wide Rate Calculation
    Respondents allege that the Department inadvertently neglected to 
add the sales of excluded companies from the Yukon Territory in the 
country-wide rate section of the final calculations. They argue that if 
the Department did not intend to use the excluded sales from the Yukon 
Territory, then the Department should add all excluded company 
shipments in the calculation.
    Department's Position: We disagree with respondents that the 
Department should have included excluded sales of the Yukon Territory 
and total shipment values for the Yukon and Northwest Territories in 
the country-wide section of the final calculations. In the March 21, 
2002 Issues and Decision Memorandum that accompanied the Final 
Determination, we explained that although petitioners alleged that 
stumpage programs from the Yukon and the Northwest Territories 
conferred countervailable subsidies upon producers of subject 
merchandise, we were not examining those programs in the Final 
Determination ``because the amount of exports to the United States from 
the two Territories is insignificant.'' See the ``Provincial Stumpage 
Programs Determined to Confer Subsidies'' section of the March 21, 
2002, Issues and Decision Memorandum to Faryar Shirzad, Assistant 
Secretary, for Import Administration, from Bernard T. Carreau, Deputy 
Assistant Secretary, for Import Administration (Issues and Decision 
Memorandum), a public document on file in room B-099 of the main 
Commerce Building. Consistent with the approach explained in the Issues 
and Decision Memorandum, we did not calculate separate benefits for the 
two Territories.
C. Inclusion of Sales Values From the Yukon and Northwest Territories 
in the Country-Wide Rate Calculation
    Respondents allege that the Department inadvertently neglected to 
add the total shipment values of lumber from the Yukon and Northwest 
Territories in the country-wide rate calculations. Respondents argue 
that though the Yukon and the Northwest Territories did not provide 
data from total shipment values of softwood lumber, the Government of 
Ontario (GOO) did report export shipments for those territories. 
Respondents assert that the export shipments for the Yukon and the 
Northwest Territories should be inserted into the total lumber shipment 
values column (the third column of the table on page 3 of the final 
calculation memorandum) of the country-wide rate calculations.
    Department's Position: As explained above, we determined not to 
calculate provincial benefits (i.e., numerators) and, thus, provincial 
rates for the Yukon and Northwest Territories. Consequently, including 
sales of lumber shipments from the these two territories, which could 
only be used in the denominator of a provincial rate calculation for 
each province, cannot mathematically affect the country-wide rate.
D. Inflation Adjustment of Figures Used To Derive the POI Value of 
Remanufactured Products
    In the Final Determination, the Department used 1997 figures from 
Exhibit 15 of the February 15, 2002 Statistics Canada Verification 
Report to derive the value of remanufactured products during the POI. 
See the ``Inclusion of Remanufactured Products in the Denominator of 
the Subsidy Calculation'' section of the Issues and Decision 
Memorandum. Respondents claim that the Department's final calculations 
indicate that the data were inflation adjusted. They further claim that 
the final calculations do not adjust for inflation. To correct this 
error, they argue that the Department should adjust the 1997 values 
included in Verification Exhibit 15. They further argue that if the 
Department does not make this correction, then it should strike the 
words ``Inflation Adjusted'' from the table on page 5 of its final 
calculations.\2\
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    \2\ On this matter, respondents appear to alter their argument 
in their rebuttal comments. Respondents claim that the Issues and 
Decision Memorandum makes clear that the Department did not intend 
to adjust for inflation as petitioners suggest. They further argue 
that nothing in the final calculations indicates that the Department 
adjusted for inflation. Thus, they contend that the Department did 
not intend to adjust for inflation.
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    Petitioners also argue that the Department should adjust the values 
on page 5 of the final calculations. They claim that it is clear that 
the Department intended to use an inflation-adjusted figure when 
deriving the value of remanufactured products during the POI.
    Department's Position: We disagree that the value of remanufactured 
products during the POI should be adjusted for inflation. Our intention 
in the Final Determination was not to adjust the values in Verification 
Exhibit 15 for inflation. This is evident in our description of how we 
used the values from Verification Exhibit 15: ``we determined the 
percentage relationship between the total value of remanufactured 
products and the total value of first-mill shipments for the 1997 ASM 
and applied this percentage to the reported total value of softwood 
lumber shipments.'' See the ``Inclusion of Remanufactured Products in 
the Denominator of the Subsidy Calculation'' section of the Issues and 
Decision Memorandum.
    Regarding the calculation of the value of remanufactured products 
during the POI, we ackowledge that our calculations contain a clerical 
error. In the Final Determination, we intended to use a ``percentage 
relationship'' (i.e., the ratio of in-scope merchandise outside of SIC 
2512 but inside Group 25 to products inside Group 25) to derive the 
value of remanufactured lumber products. However, in the final 
calculations, instead of using the data from Verification Exhibit 15 to 
derive a percentage relationship, we inadvertently used actual values 
to derive a remanufactured figure. For an explanation of the formula we 
used to correct this error, see Ministerial Error Memorandum at 5.
E. Value of In-Scope Remanufactured Products as Reported by the Pacific 
Forestry Center (PFC)
    In the Final Determination, the Department chose not to use the 
values

[[Page 36073]]

from the PFC study to estimate the value of remanufactured lumber 
shipments produced by Canadian firms during the POI because it found 
the study flawed in several important respects. See the ``Use of the 
Pacific Forestry Center's Study of Remanufactured Products from British 
Columbia'' section in the Issues and Decision Memorandum. Respondents 
allege that the grounds on which the Department dismissed the study are 
not supported by the facts on the record and, thus, the Department 
should amend its Final Determination to reflect that the PFC study 
provides an appropriate estimate of the value of remanufactured 
products produced in Canada during the POI.
    Department's Position: Respondents' allegation does not meet the 
standard for a ministerial error as defined by section Sec. 351.224(f) 
of the Department's regulations; rather, the allegation challenges a 
methodological choice. Therefore, the Department is not addressing 
respondents' allegations on this matter.
F. Ad Valorem Rate Calculations for Federal and Other Non-Stumpage 
Programs
    In the ad valorem rate calculations for the federal and other non-
stumpage programs, the Department included in the denominator ``total 
lumber shipments, inclusive of remanufactured products.'' Respondents 
contend that the values in the calculation inadvertently exclude the 
value of ``by-products'' that is in the ad valorem rate calculations of 
the stumpage programs. Respondents argue that the Department should 
recalculate the ad valorem rates for the federal programs and other 
non-stumpage programs using a divisor that consists of total lumber 
shipments, inclusive of remanufactured products, and by-products.
    Department's Position: We disagree with respondents that the 
Department inadvertently excluded the value of by-products in the 
calculation of the federal and other non-stumpage programs. Each of the 
programs for which we were able to quantify a benefit was designed to 
benefit lumber producers or sawmill operators. Accordingly, we 
calculated the provincial rates for these non-stumpage programs by 
dividing the benefit amounts ``by the f.o.b. value of total sales of 
softwood lumber for the POI * * *'' See e.g., the ``Forest Renewal 
B.C.'' section in the Issues and Decision Memorandum. Therefore, the 
Department's decision to calculate the ad valorem rates for these non-
stumpage programs using a denominator that did not include by-products 
was intentional and, thus, does not constitute a ministerial error 
within the meaning of section Sec. 351.224(f) of the Department's 
regulations.

II. Province-specific Allegations

A. Alberta
1. Billed Volume and Holding and Protection Charge
    Petitioners argue that two ministerial errors were made when the 
Department calculated the benefit conferred by the stumpage program in 
Alberta. First, petitioners maintain that on page A-7 of the 
Calculation Memorandum, the second row of charts incorrectly used the 
SPF billed volume for each tenure type to calculate the per-unit 
reforestation levy for all species, while the third row of charts 
incorrectly used the all-species billed volume for each tenure type to 
weight the SPF administered stumpage rate calculation.
    Second, petitioners argue that on page A-7 of the Calculation 
Memorandum, the calculation of the per-unit holding and protection 
charge was derived by dividing the total cash payments as provided by 
the Government of Alberta (GOA) by the harvested volume in each tenure 
type when the payments should have been divided by billed volume. 
Petitioners maintain that when the Department divided the total holding 
and protection charges by a volume figure to convert the lump sum 
payment to a per-unit charge, it should have used the same volume that 
it used when converting the per-unit benefit to a total provincial 
benefit (i.e., billed volume).
    Department's Position: Regarding the first point, we agree with 
petitioners. We have corrected this error.
    Regarding petitioners' second point, we disagree. Holding and 
protection charges are assessed by the GOA on harvested, not billed, 
volume (see page AB-IV-9 of the GOA's June 28, 2001 questionnaire 
response), and, therefore, we are correct in dividing by the harvested 
volume to arrive at the per-unit holding and protection charge.
2. In-kind Costs Relating to DTLs and DTPs
    Respondents argue that, with respect to Alberta, the Department 
made a ministerial error in calculating the total stumpage payments 
made for coniferous timber harvested under deciduous timber licenses 
(DTLs) and deciduous timber permits (DTPs). Respondents maintain that 
the Department inadvertently failed to include the in-kind costs 
associated with harvesting this wood in its calculations.
    Department's Position: We disagree with respondents that we 
inadvertently failed to include the in-kind costs associated with 
harvesting coniferous timber under DTLs and DTPs. Although respondents 
are correct in stating that the GOA supplied the costs applied to DTLs 
and DTPs, we note that it failed to break out these costs into costs 
associated with harvesting coniferous timber on deciduous stands and 
costs associated with harvesting deciduous timber on the same stands. 
Because these are deciduous timber tenures and most of the timber 
harvested from them is deciduous timber (i.e., non-subject 
merchandise), and because respondents did not provide a breakdown of 
costs, we have chosen not to include the costs associated with 
harvesting coniferous timber under DTLs and DTPs in our stumpage 
calculations.
B. British Columbia
1. Calculation of Softwood Logs Used for Sawmilling
    Petitioners assert that the Department made a ministerial error in 
calculating an estimate of the Crown softwood timber harvest used for 
sawmilling. Petitioners state that the Government of British Columbia 
(GBC) did not disclose the volume of ``sawlogs'' used by sawmills and 
the Department, therefore, attempted to derive the total POI sawlog 
harvest from the total volume of logs harvested and sent to sawmills in 
2000. Petitioners allege the Department ``mistakenly'' multiplied the 
harvest for sawlogs by the percentage of total logs harvested, 
including pulp and veneer, to determine the benefit.
    Respondents claim that the Department specifically rejected 
petitioners' argument in the Issues and Decision Memorandum, thus, the 
Department made no inadvertent mistake in its calculations. See the 
``Calculation of the Subsidy'' section for the Province of British 
Columbia in the Issues and Decision Memorandum.
    Department's Position: For the Final Determination, the Department 
multiplied the sawlog harvests for the Coast and Interior by the 
respective percentages of total logs going to sawmills, and multiplied 
the resulting figures by the calculated price differentials (inclusive 
of adjustments) to arrive at the benefits, separately for the Coast and 
Interior. The Department did not mistakenly use the percentage of total 
logs to determine the sawlog harvest that goes to sawmills. Moreover, 
the Department clearly stated its approach on this issue in the Issues 
and Decision Memorandum. Id.

[[Page 36074]]

2. The Department Inadvertently Failed To Include Allocated G&A 
Expenses in the Adjustment for Coastal Logging Camp Expenses
    Respondents assert that the Department inadvertently failed to 
include an allocation of G&A expenses for logging camps, as evidenced 
by the fact that there is no line entitled ``Allocation of G&A'' under 
the Logging Camp Expenses category in the Calculation Memorandum. 
Respondents claim that this inadvertent error resulted in the 
Department understating the logging camp adjustment used in the final 
calculations.
    Petitioners state that the Department declined to make an 
adjustment for differences in total operating costs between Coastal 
B.C. and Western Washington, and only made adjustments for particular 
costs where differences existed (and were quantified to the 
Department's satisfaction). Further, petitioners argue that the 
adjustment, attributable to ``Camp Operations and Overhead,'' already 
includes G&A costs.
    Department's Position: It was the Department's intent to allocate 
G&A expenses only to those cost categories that clearly did not 
incorporate administrative expenses within the reported costs 
associated with the activity. For costs associated with logging camps, 
petitioners correctly note that ``overhead'' is included within the 
reported costs, and has therefore been accounted for in the 
Department's calculations. Thus, respondents' allegation does not 
constitute a ministerial error.
3. The Department Inadvertently Used the Wrong Denominator When 
Calculating the Margin for the Forest Renewal Program
    Respondents allege that the Department inadvertently excluded sales 
of by-products from the denominator when it calculated the benefit for 
the GBC's Forest Renewal program. They claim that the Department's 
decision not to include by-products in the denominator is inconsistent 
with its decision to include by-products in the subsidy calculations of 
B.C.'s stumpage programs.
    Department's Position: We disagree with respondents' contention 
that the Department inadvertently excluded by-products from the 
denominator of the subsidy calculations for the Forest Renewal program. 
The Department found in the Final Determination that under the Forest 
Renewal program the GBC provides benefits directly to softwood lumber 
producers. See the ``Forest Renewal B.C.'' section of the Issues and 
Decisions Memorandum. Accordingly, to calculate the benefit under this 
program, we divided the amount of benefits lumber producers received by 
B.C.'s f.o.b. value of total sales of softwood lumber for the POI. Id. 
Thus, our decision to use this denominator was intentional and does not 
constitute a ministerial error.
4. The Department Inadvertently Failed To Include the Prices and Volume 
for ``Other Merchantable'' Timber in the Eastern Washington United 
States Forestry Service (USFS) Data
    Respondents allege that the Department, in creating species-
specific prices for use as a benchmark, inadvertently failed to include 
prices and volumes for timber in the ``Other Merchantable'' category 
reported in the Stumpage Price Report for USFS sales in Eastern 
Washington. They claim this failure to include these prices resulted in 
a benchmark price that was overstated.
    Petitioners disagree. They contend that there is no way to tell the 
proportion of species and prices associated with ``Other Merchantable'' 
timber and, thus, no way for the Department to use such data to make 
direct species or species group comparisons.
    Department's Position: Respondents' allegation does not constitute 
a ministerial error. The Department deliberately excluded ``Other 
Merchantable'' timber in the Stumpage Price Report from consideration 
for our benchmark data because the record simply does not indicate with 
any degree of certainty which species are included in this category and 
because there is no evidence of the prices and volumes associated with 
particular species.
C. Ontario
1. Conversion of Michigan Volumes From Cords to MBF
    Petitioners explain that the Department correctly converted from 
cords to MBF the pulplog volumes for purposes of calculating the 
benchmark prices. These volumes were taken from Michigan data sources. 
However, they argue that the Department improperly did not convert the 
corresponding prices for those data. They argue that the Department 
should convert the corresponding pulplog prices by dividing them by the 
same conversion factor that was used to convert the volumes.
    Department's Position: We agree with petitioners. Therefore, we 
converted the pulplog prices that were used in the calculation of the 
benchmark prices from USD/cord to USD/MBF by dividing them by the same 
conversion factor that we used to convert the volumes.
2. Silviculture Overhead Calculation
    Respondents argue that the Department erred in the calculation of 
the Ontario silviculture overhead reimbursement. In the Final 
Determination, we multiplied the total Forest Renewal Trust Fund 
disbursements during the POI--C$69,707,124.5--by ten percent, 
calculating that tenure holders were reimbursed 10 percent for 
silviculture overhead. Respondents argue that we should have calculated 
the overhead reimbursement according to the following formula: X = 
Total Silviculture Reimbursement-(Total Silviculture Reimbursement/
1.1). Using this formula would result in an overall reimbursement 
amount of C$6,337,011.32 and an adjustment of C$0.45/m3.
    Department's Position: We agree with respondents that a different 
formula should be used to calculate silviculture overhead 
reimbursement. Because Ontario tenure holders are reimbursed for 100 
percent of eligible silvilculture costs plus an additional 10 percent 
for silviculture overhead, they are, in effect, reimbursed for 110 
percent of their eligible silviculture costs. As such, to derive the 10 
percent figure for silviculture overhead reimbursement, we have used 
the formula above, and derived a new figure for per unit silviculture 
overhead reimbursement of C$0.45/m3.
3. Total Silviculture Costs Calculation
    Respondents argue that the Department should have adjusted for 
those total silviculture costs incurred by Ontario harvesters, but not 
reimbursed by the Crown. Respondents claim that in the ``Silviculture'' 
section for the Province of Ontario in the Issues and Decision 
Memorandum, we stated that we would make adjustments for silviculture 
costs actually incurred by Ontario harvesters. Respondents claim that 
Ontario tenure holders incurred an additional C$0.05 per m3 cost as a 
result of fulfilling Crown mandates that was not reimbursed by the 
Crown. Respondents argue that the Department should make this 
adjustment.
    Department's Position: We disagree with respondents. We addressed 
this issue in the ``Silviculture'' section for the Province of Ontario 
in the Issues and Decision Memorandum. The Department's decision to 
reject this

[[Page 36075]]

adjustment was intentional and, thus, does not constitute a ministerial 
error within the meaning of section 351.224(f) of the Department's 
regulations.
4. Forest Management Planning Cost Adjustment
    Respondents claim that in the Issues and Decision Memorandum, the 
Department stated its intention to make an adjustment for forest 
management planning costs actually incurred by harvesters, which they 
claim are C$0.32 per m3. In the final calculations, however, we made an 
adjustment of only C$0.16 per m3 for forest management planning costs. 
Respondents claim that this C$0.16 figure was mistakenly based on an 
estimate of in-kind revenue to the Crown for such expenses, rather than 
actual costs incurred by Ontario harvesters.
    Department's Position: Respondents' allegation does not meet the 
standard for a ministerial error as defined by section Sec. 351.224(f) 
of the Department's regulations; rather, the allegation challenges a 
methodological choice. As explained in the ``Forest Management and 
Planning'' section for the Province of Ontario in the Issues and 
Decision Memorandum, the Department made an upward adjustment of half 
of the reported forest management planning costs. Therefore, the 
Department is not addressing respondents' allegations on this matter.
5. Road Cost Adjustment
    Respondents claim that we mistakenly adjusted for only half of 
secondary road construction costs, made no adjustments for tertiary 
road construction costs, and adjusted for only a portion of the road 
maintenance costs incurred by Ontario tenure holders. Respondents argue 
that the road cost data they placed on the record from Michigan and 
Minnesota was not used by the Department. They claim that the 
Department should have adjusted the actual road costs faced by Ontario 
harvesters net of the actual road costs incurred in Michigan and 
Minnesota.
    Department's Position: We disagree with respondents. By adjusting 
for primary and secondary road construction costs, but not for tertiary 
costs we are adjusting for those road costs borne by Ontario tenure 
holders as a result of government obligations that purchasers of public 
stumpage in the benchmark states do not face. The decision to allow 50 
percent of secondary road construction and maintenance was based on 
information contained in Ontario's questionnaire responses and based on 
information we discussed with GOO personnel at verification. See the 
``Road Construction and Maintenance'' section for the Province of 
Ontario in the Issues and Decision Memorandum. The Department's 
decision to calculate the road cost adjustment in this manner was 
intentional and, thus, does not constitute a ministerial error within 
the meaning of section 351.224(f) of the Department's regulations.
D. Alberta, Manitoba, Ontario, and Saskatchewan
1. Use of General Conversion Factor, Rather Than Conversion Factor 
Derived From Information on Minnesota 2000 Corrected Public Stumpage 
Price Review and Price Index
    Respondents argue that we should have used a conversion factor of 
6.25 m3/MBF for the Minnesota stumpage price data based on information 
contained in the Minnesota 2000 Corrected Public Stumpage Price Review 
and Price Index (Minnesota Price Index and Review). Specifically, they 
argue that the report contains a conversion factor of 400 board feet 
per cord for softwoods on the cover. They further argue that because 
there are 2.5 m3 in a cord, a conversion factor of 400 board feet per 
cord will yield a m3/MBF conversion factor of 6.25 for softwood 
sawtimber and 2.5 m3/cord for pulpwood sawtimber.
    Respondents acknowledge that the figure of 2.5 m3 in a cord has 
been challenged by petitioners, but note that petitioners have proposed 
using a figure of 2.41 m3/cord. See Dewey Ballantine, Legal Memorandum 
Concerning the Countervailability of the Provincial Stumpage Programs 
and Subsidy Methodology at 64 (February 14, 2002). Respondents argue 
that the choice between these two positions could be viewed as a policy 
decision, but failure to use one or the other, ``as the Department has 
done,'' is a ministerial error. See Weil, Gotshal, and Manges, 
Ministerial Error Comments, at 8 (April 8, 2002). They add that this 
information is published information prepared in the ordinary course of 
business by public agencies and, as such, should be used by the 
Department.
    Petitioners argue that the choice of a conversion factor was 
heavily debated during the course of the investigation and that the 
Department's selection of a conversion factor was a methodological 
choice and, thus, cannot constitute a minesterial error. They further 
argue that the conversion factor advocated by respondents, (e.g., the 
factor from the Minnesota Price Index and Review) is not appropriate 
because it was not used in actual transactions and because it is a 
conversion factor used with sawlogs and sawtimber.
    Department's Position: We clearly stated the reasons for our 
selection of a conversion factor in the Final Determination. See the 
``Conversion Factor'' section of the Issues and Decision Memorandum. 
Thus, respondents' allegations are methodological and do not identify a 
ministerial error.
E. Alberta and Saskatchewan
1. Composition of Species Groups in the Benchmark
    In the Final Determination, Minnesota was used as a benchmark for 
Alberta, Saskatchewan and Manitoba. The species found in Minnesota were 
categorized to make direct comparisons to the species groups found in 
the respective Provinces. Eastern white pine, found in Minnesota, was 
included in the SPF category for Alberta and Saskatchewan, but excluded 
from the SP category in Manitoba.
    Respondents argue that the Department made a ministerial error by 
including Eastern white pine in Minnesota's SPF category to compare 
with the SPF found in Saskatchewan and Alberta. They state that Eastern 
white pine is not found in either Province, referring to information 
previously submitted on the record.
    Petitioners state that the Department consistently made comparisons 
between species that were not identical. They further argue that these 
comparisons constitute deliberate methodological decisions, which are 
not ministerial errors. Also, petitioners mention that Alberta did not 
provide the data necessary to make species specific calculations.
    Department's Position: We agree with respondents. The methodology 
we employed, when possible, was to use species-specific comparisons, 
see, e.g., the ``Comparability of U.S. Timber Stands'' section of the 
Issues and Decision Memorandum. This resulted in different ``species 
comparison baskets'' in each Province because of a different mix of 
species in each Province and U.S. benchmark state (see Calculation 
Memorandum.) For Alberta and Saskatchewan, we stated that we had 
constructed an SPF basket. However, white pine is not in the basket of 
species for which we were attempting to construct a benchmark using 
Minnesota data. Therefore, the inclusion of white pine in the SPF 
species mix for the Minnesota benchmark that was used for Alberta and 
Saskatchewan was inadvertent, and a ministerial error.

[[Page 36076]]

Accordingly, we have removed the white pine species from Minnesota's 
SPF mix for the benchmark used for Alberta and Saskatchewan.
F. Quebec
1. Weighting of Sawlog Prices
    In the final calculations, the Department weighted stumpage prices 
for sawlogs per county in Maine using county-specific, sawlog volume 
data from the Maine Forest Service (MFS). Respondents allege that 
weighting stumpage prices for sawlogs in this manner seriously 
overstates the price of sawlogs in Maine because the volume data from 
the MFS includes other log types (i.e., veneer, boltwood, studwood, and 
palletwood). Respondents argue that because the volume data from the 
MFS includes studwood, palletwood, and other wood categories under the 
heading ``sawlog,'' the Department must correct its weighting so that 
the price variable matches the weighting criteria. They assert that the 
Department can correct this error by incorporating prices for other log 
types into the country-specific sawlog prices.
    Petitioners assert that respondents' allegations do not identify a 
ministerial error but rather address a methodological decision adopted 
by the Department in the Final Determination.
    Department's Position: In the preliminary calculations, we stated 
that we used weighted-average stumpage prices to derive the benchmark 
price for each species in Maine. See Notice of Preliminary Affirmative 
Countervailing Duty Determination, Preliminary Affirmative Critical 
Circumstances Determination, and Alignment of Final Countervailing Duty 
Determination with Final Antidumping Duty Determination: Certain 
Softwood Lumber Products from Canada, 66 FR 43186, 43200 (August 17, 
2001)(Preliminary Determination). However, though stumpage prices in 
the MFS Stumpage Price Report are weighted by county, the county-wide 
prices included in the report are not weighted across all counties. 
Rather, those county-wide prices are simple averages of the prices in 
each county. As explained in the ``Choice of Maine as Source of 
Benchmark'' section for the Province of Quebec in the Issues and 
Decision Memorandum, we opted to move away from basing the benchmark 
stumpage prices on a simple average and, instead, chose to weight the 
prices using volume data, as reported by the MFS. Respondents contest 
the manner in which we used the volume data from the MFS. But, as we 
have explained, our decision to use the volume data from the MFS 
represented a methodological choice and not an inadvertent error. 
Therefore, we find that respondents' allegation on this point does not 
meet the standard of a ministerial error.

Countervailing Duty Order

    As a result of our corrections, the estimated net countervailable 
subsidy rate attributable to certain softwood lumber products from 
Canada is as follows:

----------------------------------------------------------------------------------------------------------------
                Producer/exporter                     Original net subsidy rate       Amended net subsidy rate
----------------------------------------------------------------------------------------------------------------
All Producers/Exporters \3\......................  19.34 Percent                   18.79 Percent
                                                   Ad Valorem.                     Ad Valorem.
----------------------------------------------------------------------------------------------------------------
\3\ Other than exempted or excluded products and/or companies.

    On May 16, 2002, pursuant to section 705(d) of the Act, the 
International Trade Commission (ITC) notified the Department of its 
final determination that under section 705(b)(1)(A)(ii) of the Act the 
industry in the United States producing softwood lumber products is 
threatened with material injury by reason of imports of the subject 
merchandise from Canada.
    In accordance with section 706(a)(1) of the Act, the Department 
will direct the Customs Service to assess, upon further advice by the 
Department, countervailing duties equal to the amount of the net 
countervailable subsidy determined to exist for all entries of softwood 
lumber products from Canada not explicitly exempted or excluded by the 
Department. In accordance with section 706(b)(2) of the Act, duties 
shall be assessed on subject merchandise entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
ITC's notice of final determination if that determination is based on 
the threat of material injury and is not accompanied by a finding that 
injury would have resulted but for the imposition of suspension of 
liquidation of entries since the Department's Preliminary 
Determination. In addition, section 706(b)(2) of the Act requires the 
refund of any cash deposits and release of any bonds of estimated 
countervailing duties posted since the Department's Preliminary 
Determination if the ITC's final determination is based on threat of 
material injury.
    Because the ITC's final determination in this case is based on the 
threat of material injury and is not accompanied by a finding that 
injury would have resulted but for the imposition of suspension of 
liquidation of entries since the Department's Preliminary 
Determination, section 706(b)(2) of the Act is applicable to this 
order. Therefore, the Department will direct the Customs Service to 
assess, upon further advice, countervailing duties on all unliquidated 
entries of softwood lumber products from Canada entered, or withdrawn 
from warehouse, for consumption on or after the date of publication of 
the ITC's notice of final determination of threat of material injury in 
the Federal Register and terminate the suspension of liquidation for 
entries of softwood lumber products from Canada entered or withdrawn 
from warehouse, for consumption prior to that date. The Department will 
also instruct the Customs Service to refund any cash deposit made and 
release any bonds posted, between the publication date of the 
Department's Preliminary Determination and the publication of the ITC's 
final determination.
    On or after the date of publication of the ITC's notice of final 
determination in the Federal Register, the Customs Service will 
require, at the same time as importers would normally deposit estimated 
duties, cash deposits for the subject merchandise equal to the amended 
net subsidy rate mentioned above. However, as indicated above, the 
Department exempted certain softwood lumber products from the Maritime 
Provinces from this investigation. This exemption, however, does not 
apply to softwood lumber products produced in the Maritime Provinces 
from Crown timber harvested in any other province. Additionally, as 
explained above, the following companies are excluded from this order:
     Armand Duhamel et fils Inc.
     Bardeaux et Cedres.
     Beaubois Coaticook Inc.
     Busque & Laflamme Inc.
     Carrier & Begin Inc.
     Clermond Hamel.
     J.D. Irving, Ltd.
     Les Produits. Forestiers. D.G., Ltee.
     Marcel Lauzon Inc.
     Mobilier Rustique.
     Paul Vallee Inc.

[[Page 36077]]

     Rene Bernard, Inc.
     Roland Boulanger & Cite. Ltee.
     Scierie Alexandre Lemay.
     Scierie La Patrie, Inc.
     Scierie Tech, Inc.
     Wilfrid Paquet et fils, Ltee.
     B. Luken Logging Ltd.
     Frontier Lumber.
     Sault Forest Products Ltd.
    Therefore, we will direct the U.S. Customs Service to exempt from 
the application of the order only entries of softwood lumber products 
from Canada which are accompanied by an original Certificate of Origin 
issued by the Maritime Lumber Bureau (MLB), and those of the excluded 
companies listed above. The MLB certificate will specifically state 
that the corresponding entries cover softwood lumber products produced 
in the Maritime Provinces from logs originating in Nova Scotia, New 
Brunswick, Prince Edward Island, Newfoundland, and the state of Maine.
    Pursuant to sections 705(a) and 706(a) of the Act, this notice 
constitutes the amended Final Determination and countervailing duty 
order with respect to certain softwood lumber products from Canada.

Notice of Review

    Pursuant to section 751(a) of the Tariff Act of 1930, as amended, 
Canadian exporters of subject merchandise to the United States, subject 
to this order, may submit requests for expedited reviews for the 
purpose of establishing individual cash deposit rates within 30 days 
from the date of publication of this order. Each request must be 
accompanied by a completed application, which will be posted on IA's 
web site on the internet (WWW.IA.ITA.DOC.GOV). The eligibility criteria 
to request an expedited review of this order are included in the 
application form.
    This order is published pursuant to section 706(a) of the Act and 
19 CFR 351.211.

    Dated: May 17, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-12989 Filed 5-21-02; 8:45 am]
BILLING CODE 3510-DS-P