[Federal Register Volume 67, Number 157 (Wednesday, August 14, 2002)]
[Notices]
[Pages 52945-52950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20645]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-839]


Preliminary Results of Countervailing Duty Expedited Reviews: 
Certain Softwood Lumber Products from Canada

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

ACTION: Notice of preliminary results of countervailing duty expedited 
reviews.

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SUMMARY: The Department of Commerce (the Department) is conducting 
expedited reviews of the countervailing duty order on certain softwood 
lumber products from Canada for the period April 1, 2000 through March 
31, 2001. This notice includes the preliminary results for 18 of the 
companies that are being reviewed under the expedited methodology. See 
``Notice of Initiation of Expedited Reviews'' (67 FR 46955, July 17, 
2002) (Notice of Initiation). For information on estimated net 
subsidies, please see the ``Preliminary Results of Reviews'' section of 
this notice. If the final results remain the same as these preliminary 
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 
``Preliminary Results of Reviews'' section of this notice. Interested 
parties are invited to comment on these preliminary results.

EFFECTIVE DATE: August 14, 2002.

FOR FURTHER INFORMATION CONTACT: Maria MacKay or Gayle Longest, Office 
of AD/CVD Enforcement VI, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230; telephone: (202) 482-
1775 or (202) 482-3338.

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 CFR 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 the Notice of 
Initiation of Expedited Reviews. As indicated in that notice, the 
Department had received 100 timely requests for expedited review. Since 
the publication of that notice, we have accepted as timely nine other 
applications for expedited review (see, Memorandum to the File from 
Gayle Longest, Case Analyst, through Melissa Skinner, Director, Office 
VI, dated August 2, 2002, concerning Reconsideration of Timeliness of 
Certain Applications--Expedited Reviews of the Countervailing Duty 
Order on Softwood Lumber from Canada, filed in the Central Record Unit, 
Room B-099, Main Commerce Building (CRU)).
    In the Notice of Initiation, we initiated expedited reviews on the 
73 companies that we found to have filed complete and timely 
applications. We have provided the remaining 36 companies, which we 
found to have filed incomplete applications, the opportunity to perfect 
their filings.
    As explained in the Notice of Initiation, we reached the conclusion 
that the most efficient way to conduct such a large number of reviews 
in an expedited manner, and at the same time respond to the concerns 
expressed by the interested parties, is to adopt a bifurcated and 
streamlined methodology. The comments we received support this view. 
Our methodology involves segregating the applicants into two groups. 
Group 1 consists of 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 
companies that source less than a majority of their wood from these 
sources and have acquired Crown timber through their own tenure 
contracts. We reviewed the applications we received and assigned each 
of the 73 companies to one of the two groups. We found that 45 
companies satisfied the requirements of Group 1 and 28 companies 
satisfied the requirements of Group 2. Within Group 1, 17 companies 
primarily used inputs from the United States, Canadian private forests, 
or the Maritime Provinces, and 25 primarily used Crown inputs but did 
not have tenure (for three companies, we need additional information to 
determine whether they will be in Group 1(a) or (b)).
    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 require 
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 have therefore been able to 
complete our preliminary analysis of those 18 companies, using the 
Group 1 methodology (see ``Methodology'' section below). We are 
continuing to process the other applications in Groups 1 and 2, and 
will be issuing additional questionnaires shortly.
    Four of the companies to whom we sent questionnaires asked for 
extensions of time to submit their responses; we granted the 
extensions. In addition, two companies, Olav Haavalsrud Timber Company 
Limited and Western Commercial Millwork withdrew their requests for 
review. This notice includes the preliminary results of review for the 
following 18 companies:

Bois Daaquam Inc.
Bois Omega Lt[eacute]e
City Lumber Sales & Services Limited
Herridge Sawmills Ltd.
Interbois, Inc.
J. A. Fontaine et fils Inc.
Jointfor (3207021 Canada Inc.)
Les Bois d'Oeuvre Beaudoin & Gauthier Inc.
Les Moulures Jacomau 2000, Inc.
Les Produits Forestiers Dube Inc
Lonestar Lumber Inc.
Maibec Industries, Inc.

[[Page 52946]]

Materiaux Blanchet Inc.
Meunier Lumber Company Ltd.
MF Bernard Inc.
Richard Lutes Cedar, 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 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:
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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, 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;

[[Page 52947]]

    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.

Methodology

    In the Notice of Initiation we invited comments on our approach and 
indicated that we would consider alternative methodologies. We received 
comments from petitioners, Fred Tebb and Sons (Fred Tebb) (a U.S. 
remanufacturer), and from 27 respondents. We also received rebuttal 
comments from six respondents. We are addressing in this notice those 
comments that are pertinent to (1) our methodology in general and (2) 
company-specific issues for the 18 companies covered by this notice.
    Comment 1: Petitioners state that, even if the Department had 
authority to undertake expedited reviews in this case, it would have to 
observe limitations that apply to analogous situations. Specifically, 
the Department would have to follow the timeline applicable to the most 
expedited type of review addressed in section 751(a) of the Act, the 
new shipper review. Under those procedures, expedited reviews could not 
be initiated before November 2002, a preliminary determination would 
have to be issued 180 days later, and a final determination would be 
issued 90 days after the preliminary determination.
    Department's position: Although the Department has the statutory 
authority to conduct expedited reviews of countervailing duty orders 
issued as a result of an investigation based on aggregate data, there 
is no statutory or regulatory guidance on the procedures for conducting 
such reviews. Nevertheless, as the Department explained in the Notice 
of Initiation, in establishing the approach to the conduct of this 
segment of the proceeding, we took into account, although we are not 
bound by, existing regulations for similar types of reviews. 
Unfortunately, none of our existing regulations was intended to provide 
workable timelines for expedited reviews of more than 100 companies. We 
concluded that, in order to reach our goal of completing these reviews 
in an expedited manner, it was incumbent upon the Department to divide 
the companies into two groups and to adopt a special bifurcated time 
schedule. This approach allows us to process the largest number of 
companies in the shortest period of time.
    Comment 2: Petitioners claim that the methodology proposed by the 
Department sacrifices accuracy for the sake of expediency. 
Specifically, petitioners state that using the Province-wide average 
benefit for everyone underestimates the amount of the benefits for 
entities that are highly subsidized. Furthermore, petitioners object to 
the Department's treatment of private land timber as unsubsidized, 
since the Department did not investigate whether export restraints on 
Canadian logs give rise to subsidies, as alleged by the Coalition. In 
petitioners' view, the Department cannot now base decisions to grant 
expedited reviews on the claim that private logs are never subsidized.
    Department's position: Petitioners expressed similar views during 
the investigation, in their comments on the methodology adopted by the 
Department in the exclusion process (see ``Company Exclusions'' section 
of the Issues and Decision Memorandum to Faryar Shirzad, Assistant 
Secretary for Import Administration from Bernard Carreau, Deputy 
Assistant Secretary for AD/CVD Enforcement II, concerning Final Results 
of the Countervailing Duty Investigation of Certain Softwood Lumber 
Products from Canada, dated March 21, 2002, on file in the CRU (Issues 
Memorandum)). At that time, we responded that the use of the Province-
wide average benefit to measure whether a requestor received a de 
minimis benefit is appropriate and consistent with past practice.
    Consideration of more in-depth methodologies, such as those 
presumably envisioned by petitioners, would require extensive 
information collection and analysis, and we are simply unable to do 
this consistent with our dual goals of providing company-specific 
analyses and conducting these reviews in an expeditious manner. 
Furthermore, we note that petitioners have not proposed an alternative 
methodology that addresses these dual goals, as we requested in the 
Notice of Initiation. As we stated during the investigation, we believe 
that the methodology we have adopted is appropriate in this case and in 
accordance with past practice. Furthermore, in seeking to strike a 
balance between accuracy and expeditiousness, we took into account the 
fact that these reviews are intended to provide an estimated cash 
deposit rate, rather than an assessment rate. Assessment rates will be 
determined in a full administrative review (if one is requested), in 
which the Department will have an opportunity to revisit methodological 
issues.
    With regard to the issue of whether private land timber can be 
considered unsubsidized, this issue was also raised by petitioners 
during the investigation. In the investigation, we stated that we did 
not address the allegation that the log export ban provides a subsidy 
to softwood lumber producers ``because any conceivable benefit provided 
through a log ban would already be included in the calculation of the 
stumpage benefit based upon our selected market-based benchmark prices 
for stumpage.'' 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 43191, August 17, 2001. In the memorandum 
detailing the methodology that the Department adopted in the exclusion 
process, we stated that ``[c]ompanies that produce lumber from logs 
harvested in the Maritime Provinces, the United States, or on private 
lands in Canada, are unlikely to benefit to any significant extent from 
federal or provincial stumpage programs* * *'' See Memorandum to Faryar 
Shirzad, Assistant Secretary for Import Administration from Bernard T. 
Carreau, Deputy Assistant Secretary, Group II regarding Countervailing 
Duty (CVD) Investigation on Softwood Products from Canada, dated 
February 20, 2002, on file in the CRU (Exclusion Memorandum). 
Consequently, private land timber was treated as unsubsidized in the 
exclusion process. In the Notice of Initiation, we indicated that we 
would not revisit issues addressed in the investigation. Therefore, for 
purposes of these expedited reviews, we continue to treat private land 
timber as unsubsidized.
    Comment 3: Petitioners note that the methodology described by the 
Department does not address verification and enforcement. In 
petitioners' view, all producers should have to certify the accuracy of 
their claims, specifically authorize on-going verification by the 
United States, commit to periodic reports, and specifically concede 
that if the basis of their claim should prove inaccurate or should 
change materially, their request can be denied.
    Fred Tebb also expresses reservations concerning the accuracy of 
the information requested and obtained by the Department. Fred Tebb 
claims that, if a review is conducted, it should be conducted in an 
organized and verifiable fashion that results in

[[Page 52948]]

accurate findings. If, due to its limited resources, the Department 
must rely upon the applicants to provide accurate information, Tebb 
recommends that the Department require that the applications and any 
supplemental information be audited by independent U.S. auditors at 
applicant's expense.
    Department's position: Concerning verification, we intend to verify 
all the companies that receive a zero or de minimis rate in the 
preliminary results. The decision of whether or not to verify other 
companies will be made on a case-by-case basis.
    Concerning enforcement, companies covered by these reviews are 
subject to the legal requirements intended to address enforcement, such 
as certification and verification, as are companies in any other 
proceeding. With regard to those companies that may be excluded as a 
result of this process and therefore would not be subject to 
administrative reviews, they are receiving the same treatment as all 
companies that are excluded during an antidumping or countervailing 
duty investigation.
    Concerning the accuracy of the information provided to the 
Department, we would point out that our regulations require all 
submissions to be accompanied by a statement by an official of the 
company attesting to the accuracy of the information provided to the 
Department. On this basis, it is the Department's standard practice to 
rely on questionnaire responses and, whenever we deem it necessary or 
are legally required to do so, to conduct verifications to ensure 
accuracy and completeness. Because of the highly technical and 
specialized nature of the analysis, review by an independent auditor is 
both unwarranted and unnecessary.
    Comment 4: The Maine Forest Council expresses support for the 
request by Maibec and Materiaux Blanchet that the Department calculate 
mill-specific, not company-specific, rates. The Maine Forest Council 
claims that Maibec's and Materiaux Blanchet's mills are in the unique 
situation of sourcing a majority of their logs from the United States, 
as the Department verified during the investigation. Materiaux Blanchet 
also claims that the Department already conducted a mill-specific 
analysis of its St. Pamphile mill in the underlying investigation, 
calculated a mill-specific rate for that mill, and indeed relied on 
that rate in determining that the rate was just over the threshold for 
exclusion from the countervailing duty order. Thus, no change in 
methodology would be required in this review. Materiaux Blanchet 
further claims that the Department excluded a number of individual 
mills in Quebec that were affiliated with Maritime producers. A mill 
exclusion would also be consistent with 19 CFR section 351.214(k), 
which allows expedited reviews for non-investigated exporters. 
Furthermore, providing mill-specific rates is well within the 
Department's broad discretion in administering the countervailing duty 
law, as the Department acknowledged in the underlying investigation 
when it excluded the Maritime provinces completely. Maibec produces 
subject merchandise only at one of its mills. Since softwood stumpage 
for subject merchandise is used by that mill, and only that mill, which 
produces subject merchandise, an expedited review rate based only on 
Maibec's St. Pamphile mill alone is both feasible and not subject to 
potential circumvention.
    Department's position: We disagree with respondents' contention 
that the Department should calculate subsidy rates for individual 
mills, rather than for the company as a whole. The Department's 
practice and regulations with respect to the calculation of ad valorem 
subsidy rates and attribution of domestic subsidies are clear. Under 
these rules, in the case of a domestic subsidy that is not tied to a 
specific product, the subsidy is attributed to all of the firm's sales. 
See section 351.525 of Countervailing Duties; Final Rule, 63 FR 65416, 
November 25, 1998 (CVD Regulations). Neither the statute nor the 
regulations provide for the attribution of a domestic subsidy to a 
specific entity within a firm. Rather, the attribution regulations 
distinguish among products or markets, not production facilities.
    While these parties are correct that the Department indicated in 
the final determination that it calculated rates on a company- or mill-
specific basis, no company or mill was excluded from the order on the 
basis of a mill-specific rate. The purpose of the exclusion process 
during the underlying investigation was to determine whether, based on 
the existence of a de minimis subsidy rate, a company should be 
excluded from the order. With respect to the mill related to a Maritime 
province company, we note that had the production of the remainder of 
the company, production that could not have benefitted from the 
subsidies under investigation, been included in our calculations, the 
calculated subsidy rate would only have decreased. Further, with 
respect to Materiaux Blanchet's mill-specific request, we note that the 
information we verified during the investigation, related to both of 
its mills, indicates that the subsidy rate would not have been de 
minimis regardless of whether the calculation was conducted on a mill- 
or company-specific basis.
    Comment 5: Several respondents raise the issue of whether an arm's-
length sale of logs or lumber allows for a pass-through of the stumpage 
benefit on timber and suggest alternative methodologies to measure 
whether or not the subsidy passes through. Dunkley Lumber suggests that 
the Department take into account the purchase price of the logs and 
compare it to one of the market benchmarks provided on the record. If 
the price is at or above the benchmark, the company is receiving no 
benefits from those logs.
    Treeline Wood Products Ltd. contends that remanufacturers 
purchasing lumber on the open market are not receiving subsidies. 
Treeline claims to be an arm's length purchaser. Therefore, its lumber 
should be treated as non-subsidized. Alternatively, the Department 
should determine whether the subsidy passes through by establishing a 
benchmark on the basis of the manufacturing costs of comparable U.S. 
companies. The Department would determine the raw material inventory 
costs of comparable U.S. companies and determine the percentage of 
total sales that these costs represent (this could be derived from 
trade publications). If Treeline's ratio of material costs to sales is 
within the range established for these U.S. companies (approximately 50 
percent), the Department should conclude that there are no subsidies.
    Goodfellow Inc. (Goodfellow) recommends that the Department resolve 
early on in these reviews the threshold question of pass-through: 
whether any portion of the alleged subsidies should be attributed to a 
remanufacturer who purchases sawn lumber at arm's length from an 
unaffiliated primary mill. In Goodfellow's view, if the Department's 
position is that subsidies do not pass through, as allegedly stated in 
Final Affirmative Countervailing Duty Determination: Certain Softwood 
Lumber Products from Canada, 57 FR 22,574 (May 28, 1992) (Lumber III), 
at least 27 of the 73 companies (one third of the total) would be found 
not to be subsidized and this would save time and effort both for the 
companies and for the Department. If, instead, the Department has 
changed its position since Lumber III and determines that subsidies 
pass through, then Goodfellow and other remanufacturers may decide that 
further participation in this proceeding is not economically viable, 
because their records do not normally indicate the timber origin for 
each

[[Page 52949]]

lumber purchase and the search for such information would be expensive 
and not practicable.
    Furthermore, Goodfellow contends that, if the Department does not 
resolve the pass-through issue early in these reviews, all respondents 
who intend to rely on the Department's alleged decision in Lumber III 
will continue to participate fully in the hope that the issue will be 
decided favorably. If the Department does not take a position or 
decides to abandon its prior position taken in Lumber III, as 
interpreted by Goodfellow, such efforts will have served no useful 
purpose. Even if the Department decides the issue favorably at the end 
of the review, respondents' and the Department's resources will have 
been wasted on an analysis that relies on elements such as the 
geographical source of the lumber, which has become a superfluous 
detail. Under any scenario, wasted effort is a natural result if the 
Department fails to make an early decision on the pass-through issue.
    Department's position: Under the Department's proposed methodology, 
all Crown inputs into subject merchandise (logs and lumber) are 
included in the subsidy calculations. Because of the expedited nature 
of these reviews, we proposed not considering whether subsidies pass 
through in the context of alleged arm's-length transactions. As 
articulated in the Exclusion Memorandum from the investigation, such an 
analysis would require additional time to collect and examine 
information on the purchaser, the suppliers (whether or not they are 
affiliated), and the nature of the transaction itself. The 
determination of affiliation, for example, is an extremely complicated 
matter, as indicated by (1) the statutory definition contained in 
section 771(33) of the Act, (2) the discussion in the Statement of 
Administrative Action accompanying the URAA (H. R. Doc. 103-316 at 838 
(1994)), and (3) section 351.102 of the regulations. Affiliation covers 
not just control through stock ownership, but also operational control, 
and the statute directs the Department to examine such factors as 
corporate or family groupings, franchises or joint venture agreements, 
debt financing, and close supplier relationships. See Ferro Union, Inc. 
et al. v. United States, 74 F.Supp.2d 1289 (Ct. Int'l Trade 1999); 
Mitsubishi Heavy Industries, Ltd., v. United States, 54 F.Supp.2d 1183 
(Ct. Int'l Trade 1999), aff'd, 275 F.3d 1056 (Fed. Cir. 2001).
    Contrary to Goodfellow's contention, the Department did not in 
Lumber III reach any conclusions with respect to the pass-through of 
subsidies resulting from an arm's-length transaction. No 
remanufacturers were excluded on that basis in Lumber III. Furthermore, 
the question of whether, or to what extent, the stumpage benefit passes 
through in an arm's-length transaction was not directly addressed in 
the underlying investigation because we conducted the case on an 
aggregate basis. As such, the investigation provides no methodology, no 
benchmarks applicable to the log market, and no readily available 
information sources with which to approach this issue.
    The methodologies proposed in the comments do not lend themselves 
to a rational and expedient analysis of this issue. Specifically, 
Dunkley Lumber proposes a methodology that relies on the comparison of 
log prices to a benchmark already on the record. However, in the 
underlying investigation, we compared stumpage costs, not log prices; 
the benchmarks already on the record would therefore not be helpful. 
The other proposal, by Treeline Wood Products, is also not relevant to 
this issue, because it is based on a comparative analysis of 
manufacturing costs between Canadian and U.S. companies. Such a 
comparison is irrelevant under the countervailing duty law. The third 
comment, by Goodfellow, does not put forward a new methodology but 
relies on Goodfellow's own interpretation of the Department's position 
in Lumber III. In that investigation, however, as pointed out above, 
the Department did not specifically address how to conduct a pass-
through analysis of this type of transaction and took no position on 
the effect of an arm's-length transaction. In short, none of the 
comments offers the Department an approach that would enhance our 
ability to perform these complex reviews accurately and expeditiously.
    After consideration of the above comments, we determined that the 
most expeditious approach would be to proceed with the issuance of the 
preliminary results for the first 18 companies of Group 1. None of 
those companies raised the issue of an arm's-length analysis. The 
Department is prepared, however, to conduct such analyses for companies 
that request them, to the extent practicable. Because of the complexity 
of the fact patterns and the extensive analysis involved, we will need 
to extend the time period to complete the reviews for companies that 
request an arm's-length analysis beyond the time frame we announced for 
Group 2 in the Notice of Initiation. Furthermore, given the time frame 
of these expedited reviews, and the number of companies involved, it is 
unlikely that we could conduct such analyses for more than a limited 
number of companies. Therefore, we invite those companies that wish the 
Department to conduct a pass-through analysis to advise the Department 
in writing. Such requests must be received by the Department within 14 
days from the date of publication of this notice. We will determine, 
based on the number of the requests received, how many companies it is 
practicable to consider for such an analysis, as well as the amount of 
time that will be necessary for this aspect of the reviews.
    We note that certain respondents (Bois Daquaam Inc., Bois Omega, 
Limitee, J.A. Fontaine et fils Inc., Maibec Industries Inc., Materiaux 
Blanchet Inc., and Scierie West Brome Inc.) have acquiesced to the 
Department's application of the exclusion methodology, but have 
reserved the right to raise methodological issues in the course of a 
regular administrative review. We would note that the Department's 
application of streamlined methodologies in these expedited reviews 
does not preclude any respondent from raising methodological issues in 
the context of full administrative reviews.
    Comment 6: Woodtone Industries (Woodtone) recommends that the 
conversion factor from MFB (thousand board feet) to cubic meters for 
lumber inputs be standardized. Woodtone also expresses the view that 
benefits from other programs should not be included in the company-
specific calculations on a pro-rata, averaging, or company-specific 
basis unless producers in fact benefitted from the programs.
    Department's position: We examined extensively in the investigation 
the conversion factor from MFB to cubic meters for logs. Woodtone, 
however, raises the issue with regard to lumber. As explained below, 
for the subsidy calculations in these reviews, the Department does not 
need to adopt a standardized conversion factor for lumber inputs.
    In Canada, lumber and logs are uniformly measured in cubic meters. 
The only instance in which we might need to convert MBF to cubic meters 
for lumber inputs would be in the case of lumber purchased from the 
United States. We are not, however, including the quantity of U.S. 
lumber in our calculations, because we are not attributing a subsidy to 
U.S. origin lumber.
    With regard to the measurement of benefits other than stumpage, as 
we did in the exclusion process in the investigation, we intend to 
measure

[[Page 52950]]

those subsidies in these reviews on a company-by-company basis, in 
accordance with all relevant regulatory and statutory procedures.

Preliminary Results of Reviews

    After consideration of all the above comments, we have applied the 
following methodology. We calculated company-specific rates based on 
the exclusion methodology used in the investigation. 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 in these reviews 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.
    In accordance with 19 CFR Sec. 351.221(b)(4)(i), we calculated an 
individual subsidy rate for each producer/exporter subject to these 
expedited reviews. For the period April 1, 2002 to March 31, 2001, we 
preliminarily determine the net subsidy to be as follows:

------------------------------------------------------------------------
                                                                   Net
              Net subsidies--  producer/exporter                 subsidy
                                                                 rate %
------------------------------------------------------------------------
Bois Daaquam Inc..............................................      2.99
Bois Omega Lt[eacute]e........................................      3.10
City Lumber Sales & Services Limited..........................      6.60
Herridge Sawmills Ltd.........................................      4.91
Interbois, Inc................................................      0.88
J. A. Fontaine et fils Inc....................................      3.28
Jointfor (3207021 Canada Inc..................................      1.96
Les Bois d'Oeuvre Beaudoin & Gauthier Inc.....................      9.98
Les Moulures Jacomau 2000, Inc................................      0.58
Les Produits Forestiers Dube Inc..............................      1.39
Lonestar Lumber Inc...........................................     13.42
Maibec Industries, Inc........................................      1.98
Materiaux Blanchet Inc........................................     10.32
Meunier Lumber Company Ltd....................................     35.35
MF Bernard Inc................................................      4.96
Richard Lutes Cedar, Inc......................................      0.25
Scierie Nord-Sud Inc..........................................      2.22
Scierie West-Brome Inc........................................      1.16
------------------------------------------------------------------------

    If the final results of these reviews remain the same as these 
preliminary results, the Department intends to 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.
    Those exporters whose final estimated net subsidy rate, based on 
verified information, is zero or de minimis will be excluded from the 
order. Because, in the Department's view, there is no relevant 
difference for purposes of the de minimis rule between expedited 
reviews of orders resulting from investigations conducted on an 
aggregate basis and expedited reviews of orders resulting from 
investigations conducted on a company-specific basis, we believe it is 
appropriate in these reviews to treat de minimis rates in accordance 
with section 19 CFR section 351.214(k)(3)(iv). Therefore, after the 
issuance of its final results, the Department intends to instruct 
Customs to liquidate, without regard to countervailing duties, all 
outstanding shipments of the subject merchandise produced by those 
exporters, for whom the Department has calculated an estimated cash 
deposit rate of zero or de minimis, i.e. less than one percent ad 
valorem.
    These expedited reviews cover only those companies that we have 
specifically identified as qualifying for expedited reviews. The cash 
deposit rate for all other companies will be adjusted in the final 
results of these reviews to account for the benefit and the sales 
values of the companies that have received company-specific rates. We 
will instruct Customs to collect cash deposits for all non-reviewed 
companies at the new cash deposit rates established in the final 
results of these reviews.

Public Comment

    Pursuant to 19 CFR section 351.224(b), the Department will disclose 
to parties to the proceeding any calculations performed in connection 
with these preliminary results within five days after the date of 
publication of this notice. Pursuant to 19 CFR section 351.309, 
interested parties may submit written comments in response to these 
preliminary results. Case briefs must be received by the Department 
within 21 days after the date of publication of this notice, and 
rebuttal briefs, limited to arguments raised in case briefs, must be 
received no later than five days after the time limit for filing case 
briefs. Parties who submit argument in this proceeding are requested to 
submit with the argument: (1) A statement of the issue, and (2) a brief 
summary of the argument. Case and rebuttal briefs must be served on 
interested parties in accordance with 19 CFR section 351.303(f).
    Representatives of parties to the proceeding may request disclosure 
of proprietary information under administrative protective order no 
later than 10 days after the representative's client or employer 
becomes a party to the proceeding, but in no event later than the date 
the case briefs, under 19 CFR section 351.309(c)(ii), are due. The 
Department will include the results of its analysis of issues raised in 
any case or rebuttal briefs in the final results of these expedited 
reviews. The Department will continue to issue preliminary results in 
the most expeditious manner practicable, and will follow the same 
approach in issuing final results of review.
    In the interests of giving each respondent an informed opportunity 
to request rescission of their expedited review, we are amending the 
timeline announced in the application form. Requests for rescission 
must be received by the Department no later than 30 days after the date 
of publication of the preliminary results of the relevant expedited 
review.
    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: August 8, 2002.
Faryar Shirzad,
Assistant Secretary for Import Administration.
[FR Doc. 02-20645 Filed 8-13-02; 8:45 am]
BILLING CODE 3510-DS-P