[Federal Register Volume 68, Number 226 (Monday, November 24, 2003)]
[Notices]
[Pages 65879-65886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29308]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-839]


Preliminary Results and Partial Rescission 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 16 
companies. For all 16 companies we applied the Group 2 methodology. See 
the ``Methodology'' section below for details. For information on 
estimated net subsidies, 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 and 
Border Protection (CBP) to amend the cash deposit rate 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.
    The Department is also rescinding expedited reviews of five 
companies. See the ``Partial Rescission'' section below for details.

EFFECTIVE DATE: November 24, 2003.

FOR FURTHER INFORMATION CONTACT: Stephanie Moore or Cindy Lai Robinson, 
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-
3692 or (202) 482-3797.

SUPPLEMENTARY INFORMATION:

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 36070), as corrected, 67 FR 37775 (May 
30, 2002) (Amended Final Determination). On July 17, 2002, the 
Department published the Notice of Initiation of Expedited Reviews of 
the Countervailing Duty Order: Certain Softwood Lumber Products From 
Canada, 67 FR 46955 (July 17, 2002) (Notice of Initiation/Round 1), 
which covered 73 companies that filed complete and timely review 
applications. On September 20, 2002, the Department published the 
Notice of Initiation of Expedited Reviews of the Countervailing Duty 
Order: Certain Softwood Lumber Products from Canada, 67 FR 59252 
(September 20, 2002) (Notice of Initiation/Round 2), which covered 31 
additional companies. This notice included 23 companies that had 
corrected their applications as well as eight companies whose requests 
were received after the initial application deadline for reasons 
outside the requesters' control.
    As explained in the Notice of Initiation/Round 1, we segregated the 
73 Round 1 applicants into two groups. Group 1 consists of 45 companies 
which 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, and 
companies that source less than a majority of their wood from these 
sources and do not have tenure. Group 2 includes 28 companies that have 
tenure contracts and source less than a majority of their wood from 
these sources. Of the 31 companies in Round 2, we similarly segregated 
23 companies into Group 1 and eight companies into Group 2.
    With respect to the Group 1 companies, on August 14, 2002, the 
Department issued a notice of preliminary results covering 18 
companies. See Preliminary Results of Countervailing Duty Expedited 
Reviews: Certain Softwood Lumber Products from Canada, 67 FR 52945 
(August 14, 2002) (August Preliminary Results). On November 5, 2002, 
the Department issued a notice of final results for 13 of the 18 
companies covered in the August Preliminary results. Of the five 
remaining companies, two companies requested an analysis of whether 
they benefitted from subsidies bestowed on their inputs and we deferred 
a notice of final results for the other three companies to allow 
interested parties to comment on the verification reports. See

[[Page 65880]]

Final Results and Partial Rescission of Countervailing duty Expedited 
Reviews: Certain Softwood Lumber Products from Canada, 67 FR 67388 
(November 5, 2002) (November Final Results). A notice of final results 
for these three companies was issued on May 7, 2003. See Final Results 
of Countervailing duty Expedited Reviews: Certain Softwood Lumber 
Products from Canada, 68 FR 24436 (May 7, 2003) (May Final Results).
    In addition, on May 8, 2003, the Department published another 
notice of preliminary results for 28 Group 1 companies (14 in Round 1 
and 14 in Round 2). See Preliminary Results and Partial Rescission of 
Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products 
from Canada, 68 FR 24717 (May 8, 2003) (May Preliminary Results). 
Companies that requested an analysis of whether they benefitted from 
subsidies bestowed on their inputs, acquired in arm's length 
transactions, were not included in the preliminary results notice. The 
Department also addressed outstanding methodological issues related to 
Group 1 companies. See May Preliminary results.
    This notice includes the preliminary results for 16 Group 2 
companies (13 in Round 1 and three in Round 2). We are not including in 
this notice any of the following 15 Group 2 companies that requested an 
analysis of whether they benefitted from subsidies bestowed on their 
inputs. They are: Apollo Forest Products Ltd., Aspen Planers Ltd., 
Downie Timber Ltd., Dunkley Lumber Ltd., Gorman Bros. Lumber Ltd., 
Liskeard Lumber Ltd., Mill & Timber Products Ltd., North Enderby Timber 
Ltd., Riverside Forest Products Ltd., Selkirk Specialty Wood Ltd., 
Slocan Forest Products Ltd., Tembec Inc., Tolko Industries Ltd., and 
Uphill Wood Supply Inc. (the above companies are in Round 1), and 
Bridgeside Hilga Forest Industries Ltd. (which is in Round 2).
    Furthermore, this preliminary results do not include the following 
three Group 2 companies: Jackpine Engineered Wood Products Inc. and 
Jackpine Forest Products Ltd. (in Round 1), and 9027-7971 Quebec Inc. 
(in Round 2), because the reviews of these three companies have been 
rescinded in an earlier notice (See May Preliminary results).
    We received various comments from interested parties subsequent to 
the Department's Initiation/Round 1, August Preliminary Results, 
Initiation/Round 2, and the November Final Result. All general 
methodological issues related to both Group 1 and Group 2, and company-
specific issues pertaining to Group 1 companies have been addressed in 
the notices of Group 1's preliminary results and final results. See 
August Preliminary Results, November Final Result, ``Issues and 
Decision Memorandum'' dated concurrently with the November Final 
Results notice, May Preliminary Results, May Final Results, and the 
``Issues and Decision Memorandum'' dated concurrently with the May 
Final Results notice. In this preliminary results notice, we are 
addressing only petitioners' and respondents' comments concerning the 
Group 2 companies covered in these results.

Partial Rescission

    We did not receive any responses from South East Forest Products 
Ltd. (South East Forest), a respondent in Round 2. We contacted a South 
East Forest company official who confirmed that the company will no 
longer participate in these expedited reviews. See Department's March 
31, 2003, memorandum to the file regarding Expedited Reviews in the 
Countervailing Duty Order on Softwood Lumber from Canada (C-122-839), 
which is on file in room B-099 of the Central Records Unit of the Main 
Commerce Building (CRU). Because South East Forest did not provide the 
necessary information, we are not able to proceed with an expedited 
review of this company. Therefore, we are rescinding the expedited 
review for South East Forest.
    On April 14, 2003, Teal Cedar Products Ltd., another respondent in 
Round 2, withdrew its request for review. West Fraser Mills Ltd., a 
respondent in Round 1, also withdrew its request for an expedited 
review on June 12, 2003. Therefore, we are rescinding the expedited 
review for Teal Cedar Products Ltd. and West Fraser Mills Ltd.
    In addition, Lukwa Mills Ltd. (Lukwa), another Round 2 company, did 
not respond to our supplemental questionnaire. We contacted the general 
manager of the company who told us that Lukwa is shutting down and 
there is no staff to work on the response. Because Lukwa did not 
provide the necessary information, we are also unable to proceed with 
an expedited review of this company. Therefore, we are rescinding the 
expedited review for Lukwa. See Department's May 6, 2003, memorandum to 
the file regarding Expedited Reviews in the Countervailing Duty Order 
on Softwood Lumber from Canada (C-122-839), which is on file in CRU.
    Finally, the Department is also rescinding a Group 1 company, 
Kootenay Innovate Wood Inc. (Kootenay), which initially indicated a 
possible cross-ownership with a Group 2 company, Kalesnikoff Lumber Co. 
Ltd. (Kalesnikoff). The Department did not include Kootenay in the May 
Preliminary Results. Rather, it postponed the analysis of Kootenay 
until these preliminary results for Group 2 companies so a consolidated 
subsidy rate for Kootenay and Kalesnikoff could be calculated. See May 
Preliminary Results.
    However, during the Group 2 expedited review, Kalesnikoff stated 
that it is not cross-owned with Kootenay. After further analysis we 
have determined that cross-ownership between Kootenay and Kalesnikoff 
does not exist. Additionally, Kootenay stated in its application and 
later confirmed in a supplemental questionnaire response that it did 
not have any sales of subject merchandise to the United States during 
the POR. In accordance with the Department's practice, companies that 
did not ship subject merchandise during the period covered by the 
investigation or administrative review are not eligible to participate 
in that segment of the proceeding. See, e.g., Final Results and Partial 
Rescission of Countervailing Duty Administrative Review: Stainless 
Steel Sheet and Strip from the Republic of Korea (68 FR 13267; March 
19, 2002). Moreover, the application to request an expedited review 
specifically listed exports of subject merchandise to the United States 
during the POR as one of the eligibility requirements. Because there is 
no information on the record indicating that Kootenay exported subject 
merchandise to the United States during the POR, we are rescinding the 
expedited review with respect to Kootenay.

Companies Reporting Cross-Ownership

    The following companies reported that they are cross-owned with 
other companies that produce and/or manufacture subject merchandise: 
Canadian Forest Products Ltd. (Canfor) reported that it is cross-owned 
with Lakeland Mills Ltd. (Lakeland), and the Pas Lumber Company Ltd. 
(The Pas); Greenwood Forest Products Ltd. (Greenwood) reported that it 
is cross-owned with GFP Enterprise Ltd. (GFP); Commonwealth Plywood Co. 
Ltd. (Commonwealth) reported that it is cross-owned with three 
companies that produce and/or manufacture subject merchandise: Les 
Entreprises Atlas (1985) Inc., Bois Clo-Val Inc., and the W.C. Edwards 
Company Ltd.; Shawood Lumber Inc. (Shawood) and Lukwa reported that the 
two companies jointly cross-own a logging company; R. Fryer Forest 
Products Ltd. (Fryer) reported

[[Page 65881]]

that it is cross-owned with a holding company; C. Cambie Cedar Products 
(Cambie) reported that it is cross-owned with an inactive shell 
company; Kootenay reported that it was cross-owned with Kalesnikoff; 
and Selkirk Specialty Wood Ltd. (Selkirk) reported that it is cross-
owned with one of its suppliers.
    Regarding Canfor's reporting of cross-ownership with Lakeland and 
The Pas. Canfor \1\ states that in the preliminary and final 
determinations for the antidumping investigation of softwood lumber, 
the Department collapsed Lakeland, and The Pas with Canfor. Further, in 
two subsequent supplemental responses \2\ Canfor reported that its 
investment level, board of directors representation, and management 
involvement with respect to Lakeland and The Pas is absolutely equal to 
that of the two additional investors who are also equal shareholders, 
with Canfor, of Lakeland and The Pas. Thus, Canfor owns and controls 
one-third of the voting shares in Lakeland and The Pas.
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    \1\ See Canfor's March 31, 2003 expedited review questionnaire 
response at page 4.
    \2\ See Canfor's May 27, 2003 expedited review supplemental 
response (May supplemental) at page 1 and Canfor's June 16, 2003 
expedited review supplemental response (June supplemental) at pages 
1 through 4.
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    Specifically, under 19 CFR 351.525(b)(6)(vi), cross-ownership 
exists between two or more corporations where one corporation can use 
or direct the individual assets of the other corporation(s) in 
essentially the same ways it can use its own assets. Normally, this 
standard will be met where there is a majority voting ownership 
interest between two corporations or through common ownership of two 
(or more) corporations (see 19 CFR 351.525(b)(6)(vi)). In the instant 
case, Canfor is not able to use Lakeland and The Pas as it would its 
own assets, nor does Canfor control a majority voting ownership 
interest in either company. Broad corporate business decisions 
regarding Lakeland and The Pas are made by three equal ``corporate'' 
investment entities of which Canfor is one. Finally, as Canfor has 
reported in its May and June supplementals, neither Canfor nor any of 
the one-third investment partners are involved in the day-to-day 
operations of Lakeland and The Pas. Therefore, we preliminarily 
determine that the level of Canfor's investment and management control 
of Lakeland and The Pas is not sufficient to consider the three 
companies cross-owned under 19 CFR 351.525(b)(6)(vi). Thus, with 
respect to Canfor, Lakeland and The Pas, because we determine that 
cross-ownership does not exist, we have applied the Group 2 methodology 
to these companies separately. See company-specific analysis memorandum 
for further details.
    Greenwood reported that it was affiliated and cross-owned with GFP 
in its March 28, 2003 questionnaire response. It stated that the two 
companies shared a senior management position, but that each company 
had its own asset base, which is not shared. In its April 29, 2003 and 
May 16, 2003 supplemental questionnaire responses, Greenwood confirmed 
that there was no controlling interest between the two companies. 
Therefore, we preliminarily determine that Greenwood and GFP are not 
crossed-owned under 19 CFR 351.525(b)(6)(vi).
    Kootenay reported that it was affiliated and shared cross-ownership 
with Kalesnikoff in its February 18, 2003 questionnaire response. 
Kalesnikoff, however, reported that it was not crossed-owned with any 
other company during the POR in its March 20, 2003 questionnaire 
response. We sent supplemental questionnaires to both companies with 
regard to the cross-ownership between the two companies. Both Kootenay 
and Kalesnikoff responded that, while the owners of the two companies 
are affiliated, neither company held any shares of the other company, 
nor did they share members of a board of directors or management 
staff.\3\ Accordingly, we preliminarily determine that Kalesnikoff and 
Kootenay are not crossed-owned under 19 CFR 351.525(b)(6)(vi). 
Therefore, in these preliminary results we are rescinding the expedited 
review with respect to Kootenay (see ``Partial Rescission'' section 
above for further discussion). Further, we have applied the Group 2 
calculation methodology to Kalesnikoff for determining its level of 
subsidy benefit.
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    \3\ See Kalesnikoff's May 12, 2003 supplemental questionnaire 
response at pages 1 through 2, Kootenay's May 16, 2003 supplemental 
questionnaire response at pages 1 through 2, and Kootenay's May 22, 
2003 supplemental questionnaire response at page 2.
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    Selkirk reported that it is cross-owned with another lumber 
producer. That producer requested the Department to calculate a 
separate CVD rate for its company using the arm's length methodology. 
On this basis, we determine that it is necessary to postpone the 
calculation of an individual, separate rate for Selkirk until the 
analysis has been completed for Selkirk's cross-owned company. 
Accordingly, we will combine the results of Selkirk and its cross-owned 
company in the results calculated subsequent to these preliminary 
results.
    Finally, for these preliminary results, in those instances in which 
we determined that cross-ownership existed between companies during the 
POR, such as in the case of Commonwealth, we calculated the 
consolidated benefit for cross-owned companies in accordance with 19 
CFR 351.525(b)(6). Specifically, for cross-owned companies that are all 
in Group 2 and had harvesting operations during the POR, we calculated 
the consolidated benefit using the Group 2 methodology as described 
below in the ``Methodology'' section. We then divided the total 
consolidated benefit by the entity's consolidated sales (scope and non-
scope softwood lumber products, net of resales, and softwood lumber by-
products) to obtain the consolidated net subsidy rate.
    Shawood indicated that it did not harvest timber during the POR. 
Instead, it purchased its log inputs from a joint-owned logging company 
it created with Lukwa. Shawood and Lukwa each own fifty percent of the 
logging company. As stated above, under 19 CFR 351.525(b)(6)(iv), the 
cross-ownership standard is normally met where there is a majority 
voting ownership interest between two corporations or through common 
ownership of two (or more) corporations. Because Shawood does not have 
a majority interest in the logging company, we preliminary find that 
the two companies are not cross-owned within the meaning of 19 CFR 
351.525(b)(6)(iv). Accordingly, to calculate the countervailable 
benefit, we multiplied the volume of the logs and lumber that Shawood 
purchased by the amount of the provincial unit benefit calculated in 
the underlying investigation.
    With respect to Fryer, which is cross-owned with a holding company, 
and Cambie, whose cross-owned company is an inactive shell company, we 
applied the Group 2 methodology to the companies themselves, but not to 
their cross-owned companies. See company-specific analysis memorandum 
for further details.

Companies Addressed in These Preliminary Results

    This notice includes the preliminary results of review for the 
following 13 Group 2, Round 1 companies:

Cambie Cedar Products Ltd
Canadian Forest Products Ltd
Commonwealth Plywood Co. Ltd.
E. Tremblay et fils ltee
Federated Co-operatives Ltd
Greenwood Forest Products Ltd.
Kalesnikoff Lumber Co. Ltd.

[[Page 65882]]

Kenora Forest Products Ltd.
Lakeland Mills Ltd.
Lulumco Inc.
R. Fryer Forest Products Ltd.
Terminal Forest Products Ltd.
The Pas Lumber Company Ltd.

    These preliminary results also include the preliminary results of 
review for the following three Group 2, Round 2 companies:

Shawood Lumber Inc.
St. Jean Lumber (1984) Ltd.
Wynndel Box & Lumber Co. Ltd.

    In addition, these preliminary results include the recision for one 
company in Group 2, Round 1, three companies in Group 2, Round 2, and 
one company in Group 1, Round 1.

Kootenay Innovate Wood Inc.
Lukwa Mills Ltd.
South East Forest Products Ltd.
Teal Cedar Products Ltd.
West Fraser Mills Ltd.

Scope of the Reviews

    The products covered by this order are softwood lumber, flooring 
and siding (softwood lumber products). Softwood lumber products include 
all products classified under headings 4407.1000, 4409.1010, 4409.1090, 
and 4409.1020, respectively, of the Harmonized Tariff Schedule of the 
United States (HTSUS), and any softwood lumber, flooring and siding 
described below. These softwood lumber products include:
    (1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled, 
whether or not planed, sanded or finger-jointed, of a thickness 
exceeding six millimeters;
    (2) Coniferous wood siding (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed;
    (3) Other coniferous wood (including strips and friezes for parquet 
flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces (other than wood moldings and wood 
dowel rods) whether or not planed, sanded or finger-jointed; and
    (4) Coniferous wood flooring (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed.
    Although the HTSUS subheadings are provided for convenience and 
customs purposes, the written description of the merchandise subject to 
this order is dispositive.
    As specifically stated in the Issues and Decision Memorandum 
accompanying the Notice of Final Determination of Sales at Less Than 
Fair Value: Certain Softwood Lumber Products from Canada (67 FR 15539; 
April 2, 2002) (see comment 53, item D, page 116, and comment 57, item 
B-7, page 126), available at http://www.ia.ita.doc.gov, drilled and 
notched lumber and angle cut lumber are covered by the scope of this 
order.
    The following softwood lumber products are excluded from the scope 
of this order provided they meet the specified requirements detailed 
below:
    (1) Stringers (pallet components used for runners): If they have at 
least two notches on the side, positioned at equal distance from the 
center, to properly accommodate forklift blades, properly classified 
under HTSUS 4421.90.98.40.
    (2) Box-spring frame kits: If they contain the following wooden 
pieces--two side rails, two end (or top) rails and varying numbers of 
slats. The side rails and the end rails should be radius-cut at both 
ends. The kits should be individually packaged, they should contain the 
exact number of wooden components needed to make a particular box 
spring frame, with no further processing required. None of the 
components exceeds 1'' in actual thickness or 83'' in length.
    (3) Radius-cut box-spring-frame components, not exceeding 1'' in 
actual thickness or 83'' in length, ready for assembly without further 
processing. The radius cuts must be present on both ends of the boards 
and must be substantial cuts so as to completely round one corner.
    (4) Fence pickets requiring no further processing and properly 
classified under HTSUS heading 4421.90.70, 1'' or less in actual 
thickness, up to 8'' wide, 6' or less in length, and have finials or 
decorative cuttings that clearly identify them as fence pickets. In the 
case of dog-eared fence pickets, the corners of the boards should be 
cut off so as to remove pieces of wood in the shape of isosceles right 
angle triangles with sides measuring \3/4\ inch or more.
    (5) U.S. origin lumber shipped to Canada for minor processing and 
imported into the United States, is excluded from the scope of this 
order if the following conditions are met: (1) the processing occurring 
in Canada is limited to kiln-drying, planing to create smooth-to-size 
board, and sanding, and (2) if the importer establishes to CBP's 
satisfaction that the lumber is of U.S. origin.
    (6) Softwood lumber products contained in single family home 
packages or kits,\4\ 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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    \4\ 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 CBP 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 CBP 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

[[Page 65883]]

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.
    In addition, this scope language has been further clarified to now 
specify that all softwood lumber products entered from Canada claiming 
non-subject status based on U.S. country of origin will be treated as 
non-subject U.S.-origin merchandise under the countervailing duty 
order, provided that these softwood lumber products meet the following 
condition: Upon entry, the importer, exporter, Canadian processor and/
or original U.S. producer establish to CBP's satisfaction that the 
softwood lumber entered and documented as U.S.-origin softwood lumber 
was first produced in the United States as a lumber product satisfying 
the physical parameters of the softwood lumber scope.\5\ The 
presumption of non-subject status can, however, be rebutted by evidence 
demonstrating that the merchandise was substantially transformed in 
Canada.
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    \5\ See the scope clarification message ( 3034202), 
dated February 3, 2003, to the CBP, regarding treatment of U.S. 
origin lumber on file in the Central Records Unit, Room B-099 of the 
main Commerce Building.
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Methodology

A. Stumpage Programs

    These preliminary results include companies that source less than a 
majority of their wood (less than 50 percent of their inputs) from the 
United States, the Maritime Provinces, Canadian private lands, and/or 
Canadian companies excluded from the order, and have acquired Crown 
timber through their own tenure contracts. We have included in our 
subsidy calculations only harvested softwood sawlogs processed by the 
firm's sawmills. We calculated company-specific rates as follows: To 
obtain the company-specific stumpage benefit for logs harvested under a 
company's own tenure, we first calculated, on a species-specific basis, 
an average unit benefit from ``Crown land harvesting'' by dividing the 
stumpage fees each company paid by the total quantity harvested from 
Crown land to obtain the stumpage price. The resulting unit stumpage 
price was adjusted by the company-specific unit tenure costs to derive 
an adjusted stumpage price for each species.\6\ The adjusted species-
specific stumpage price then was compared to the appropriate benchmark 
for that province to determine the species-specific benefit per-unit, 
which was multiplied by the harvest volume \7\ for each species to 
obtain the total species-specific benefit. Species-specific benefits 
were summed up to derive the total benefit from Crown land harvesting. 
For all wood inputs (logs and lumber) from other subsidized sources, we 
applied the same methodology used in Group 1: We calculated the benefit 
by multiplying the quantity purchased by the province-specific stumpage 
benefit amount 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). Also see Notice of Final Affirmative Countervailing Duty 
Determination and Final Negative Critical Circumstances Determination: 
Certain Softwood Lumber Products From Canada (Final Determination), 67 
FR 15545 (April 2, 2002), and Issues and Decision Memorandum: Final 
Results of the Countervailing Duty Investigation of Certain Softwood 
Lumber Products from Canada (Investigation Decision Memo).
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    \6\ These cost adjustments were limited to those granted in the 
underlying investigation.
    \7\ Certain companies reported that certain harvested softwood 
sawlogs were not used in lumber production. These were excluded from 
our calculations.
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    We then divided the combined stumpage benefit resulting from 
harvesting under a company's own tenure and from purchases of logs and 
lumber through other subsidized sources by the appropriate value of the 
company's sales (scope and non-scope softwood lumber products, net of 
resales, and softwood lumber by-products) to determine the company's 
estimated subsidy rate from stumpage and then added any benefit from 
other programs to obtain the net subsidy rate for the company.
    As indicated in the Notice of Initiation/Round 1, we have not 
attributed a benefit to (1) logs or lumber acquired from the Maritime 
Provinces, (2) logs or lumber of U.S. origin, (3) lumber produced by 
companies excluded in the investigation, and (4) logs from Canadian 
private land. See 67 FR 46955, 46957. Furthermore, we are not including 
logs which the companies claim to have acquired and resold without any 
processing in our subsidy rate calculations. In addition, we are also 
not including in our subsidy calculations lumber purchased and resold 
without any further manufacturing.

Other Programs

    In the underlying investigation, the Department determined that the 
province of British Columbia provided countervailable benefits under 
the Forest Renewal program and the Job Protection program, while the 
province of Quebec provided countervailable benefits under the Private 
Forest Development Program (PFDP), loans issued by Investment Quebec, 
lending under Article 28 of the Society for the Industrial Development 
of Quebec (SDI), and loans issues by the Society for the Recuperation 
and Development of Quebec Forests (Rexfor). Based upon our decision in 
the underlying investigation, the Department requested information from 
companies regarding the use of these programs.
    Kalesnikoff was the only one that reported using one of such 
program, the Forest Renewal program. However, Kalesnikoff reported that 
it did not receive any grants or loans under this program during the 
POR; rather it acted as a delivery agent for silviculture and resource 
inventory activities. Kalesnikoff was reimbursed for non-profit 
activities on behalf of the Forest Renewal Program for the 
administration and overhead costs incurred in delivering this program 
to the Province. On this basis, we preliminarily find that Kalesnikoff 
did not receive countervailable benefits under this program. No other 
company reported using any of the British Columbia or Quebec programs 
during the POR.

Analysis of Comments Received

Comment 1: Whether Timber Sale Licenses Should Be Considered as Tenure 
Agreements and Cambie Cedar Products Ltd. Should Be in Group 2

    Cambie Cedar Products Ltd. (Cambie) asserts that there are several 
kinds of tenure arrangements in British Columbia which are considered 
both short-term agreements and long-term agreements. Cambie argues that 
Timber Sale Licenses cannot be described as

[[Page 65884]]

tenure agreements because they are awarded to the sealed tender bidder 
with the highest bonus bid through a Market Pricing System. Moreover, 
Cambie argues that the small companies that hold only Section 20 Timber 
Sale Licenses conduct their business in a way that closely approximates 
a free market system in the acquisition of timber. Therefore, they are 
the least likely to benefit from the set stumpage rates which are 
favorably applied to large tenure holders under Tree Farm Licenses and 
Forest Licenses. As a result of these differences between Timber Sale 
Licenses and tenure agreements, Cambie argues that Timber Sale Licenses 
should not be considered ``tenure'' for purposes of categorizing 
applicants into Group 1 or Group 2 for purposes of these expedited 
reviews.
    Cambie also argues that a distinction should be made between 
companies that had harvesting contracts during the POR, and those that 
actually harvested crown timber pursuant to harvesting rights that 
existed during the POR. In the instant case, Cambie reported that it 
obtained a one year Timber Sale License with respect to certain crown 
timber in British Columbia during the POR. However, Cambie also 
reported that it did not harvest any Crown timber during the POR and 
provided certifications from the province of British Columbia to 
support this claim. Therefore, Cambie concludes that its company should 
be classified under Group 1(b), ``companies that source less than a 
majority of their wood from the United States, Maritime Provinces, 
Canadian private lands, and/or Canadian companies excluded from the 
order and have not acquired Crown timber through their own tenure 
contracts during the POR.'' Thus, Cambie argues that the actual 
harvesting of Crown timber, rather than the existence of harvesting 
rights should govern whether a company is categorized within Group 1 or 
Group 2. Based on these arguments, Cambie contends that it should be 
considered a Group 1(b) company or alternatively, classified within 
Group 2. Cambie argues that if the Department determines that Cambie 
should be classified as a Group 2 company, it should be considered and 
analyzed first among that group because its data is not very complex.
    Petitioners contest Cambie's request that companies with Section 20 
Timber Sale Licenses should be reviewed using the Group 1 methodology 
for several reasons. According to petitioners, Section 20 sales are far 
below market value as recognized by the Department in the Final 
Determination. Petitioners assert that to the extent that these 
licenses exceed British Columbia administered stumpage rates generally 
paid, they would be reflected within the Department's subsidy 
calculations. Moreover, petitioners argue that as a tenure holder, 
Cambie should be subject to the calculation methodology of Group 2, 
irrespective as to whether or not it harvested crown timber during the 
POR.
Department's Position
    Record evidence indicates that Cambie did not harvest Crown timber 
during the POR. Therefore, questions surrounding how the Department 
should calculate benefits stemming from Crown harvest operations are 
moot. Accordingly, since Cambie has indicated that it has no 
countervailable log harvests, we derived the benefit attributable to 
Cambie's purchases of countervailable log and lumber inputs using the 
approach, effectively the Group I methodology, described in the 
``Methodology'' section of this notice.

Comment 2: Whether Harvested Crown Logs Not Entering the Respondent's 
Mill Should Be Excluded

    Canfor argues that harvested Crown logs that do not enter Canfor's 
mill should not be included in the calculation. Additionally, Canfor 
states that the cash deposit rate should reflect the actual subsidy 
benefit it received on the logs it harvested for its lumber production.
    According to petitioners, Canfor has suggested changes to the 
investigation methodology and the exclusion methodology. Petitioners 
assert that Canfor's contention that a stumpage benefit should be 
calculated only on the volume of crown logs that were manufactured into 
lumber is not consistent with the statute. Petitioners argue that a 
benefit has been conferred when a company pays less for goods than it 
would have paid absent the government subsidy program. Thus, 
petitioners assert that Canfor receives a countervailable subsidy 
benefit when it harvests timber at below-market prices.
Department's Position
    With respect to harvested Crown logs that do not enter a lumber 
producer's mill, we agree with Canfor. We note that to do otherwise 
would be inconsistent with our approach in the underlying 
investigation. See, the ``Numerator Issues'' section of the 
Investigation Decision Memo in which we stated that we were not 
deviating from the approach used in Lumber III, ``* * * because the 
stumpage benefit that we are calculating is that which is received by 
lumber producers which purchase the subsidized stumpage * * * the 
subsidy is properly attributed to the value of the lumber products 
produced from that input * * *'' See also the ``Denominator Issues'' 
section of the Investigation Decision Memo in which the Department 
stated that it was only including in the denominators those sales which 
were the result of the lumber manufacturing process.

Comment 3: Whether a Single, Provincial Unit-Benefit Should Be Applied 
to Purchased Logs and Lumber

    Canfor argues that the Department should calculate a benefit for 
countervailable log and lumber purchases using a species/regional 
specific benefit rate (as opposed to the single province specific unit 
benefit rate used in our prior expedited review notices--e.g., Notice 
of Initiation/Round 1. Canfor argues that, while the calculation 
methodology for purchases of logs and lumber was used in the exclusion 
process in the investigation as well as prior expedited review 
determinations, the methodology is distortive in provinces, such as 
British Columbia, where there are a variety of species groups and a 
wide disparity in stumpage fees among the species. For example, Canfor 
points out that the majority of logs and lumber harvested and acquired 
in Manitoba, Ontario, and Quebec fell into the spruce, pine, fir (SPF) 
category and, thus, the single, unit-benefit rate applied to purchased 
logs and lumber during the exclusion and expedited review process was 
almost identical to the SPF-specific stumpage rate for those provinces. 
However, they contend that in the case of British Columbia, the 
application of a single, unit-benefit to the purchases of logs and 
lumber overstates the benefit for certain, less expensive, species of 
logs and lumber acquired by the company. They further argue that the 
application of a single, unit-benefit to the purchases of logs and 
lumber fails to account for the real price differences that exist 
between logs and lumber acquired in the coastal and interior regions of 
the Province.
    According to Canfor, companies can easily identify and quantify the 
volumes of logs and lumber purchased by source, province, geographic 
area in British Columbia, and species purchased, because they maintain 
the records for this information. Thus, Canfor argues that the 
Department should apply its suggested methodology for purchased logs 
and lumber and calculate the subsidy based on species-specific and 
region-specific benefit rate.
    With respect to Canfor's argument that the Department's approach to

[[Page 65885]]

purchases of countervailable logs and lumber is distortive in the case 
of companies with operations in British Columbia, petitioners object to 
Canfor's suggestion, that the company provide data on the volume of 
lumber and logs purchased by province and species. Petitioners are 
opposed to this argument, because the information has not been 
verified. Moreover, Canfor's proposed methodology would result in 
special treatment that would not be applicable to other companies in 
the expedited review. Petitioners assert that the Department's 
methodology should be consistent for all companies. Therefore, 
petitioners contend if the Department accepts Canfor's proposed 
methodology, it must require the same information from all companies 
and apply the methodology consistently.
Department's Position
    We disagree with Canfor on these points. As explained above, these 
expedited reviews are predicated on the consistent application to all 
companies of a streamlined methodology which adheres, as closely as 
possible, to the methodology utilized in the underlying investigation.

Comment 4: Whether Benefit From Resold Lumber Should Be Included in 
Reseller's Company-Specific Calculation

    Canfor contends that resold lumber transactions should be excluded 
from the numerator and the denominator in the Department's company-
specific rate calculations. According to Canfor, a company may purchase 
lumber and resell it without ever taking possession of it. They contend 
that, for CBP purposes, the cash deposit rate applied to these entries 
would be that applicable to the manufacturer (i.e., either the 
manufacturer's company-specific rate or the country-wide rate found in 
the investigation). Canfor argues that including a benefit from such 
resales in the reseller's company-specific calculation is inappropriate 
as the reseller's rate will not be applied to such lumber. Likewise, 
the sales value of such lumber resales should not be included in the 
denominator for the reseller. Canfor concludes that only in cases where 
a company purchases and remanufacturers it, is it appropriate to 
calculate a stumpage benefit on the remanufactured lumber sold by that 
company and to include the sales value of the remanufactured lumber in 
the denominator of its subsidy rate calculation.
Department's Position
    With respect to resold lumber, we agree with Canfor that these 
transactions should not be included in the numerator or the denominator 
of the company's calculations. As explained in the ``Preliminary 
Results of Review'' section of the May Preliminary Results, in 
instances involving resales activity, we required information from all 
of the reseller's suppliers in order to calculate an individual net 
subsidy rate for those resales activities. In the case of Canfor, it 
did not provide any information regarding the suppliers of the 
merchandise that it resold. Therefore, consistent with the May 
Preliminary Results, we will calculate net subsidy rates for only 
lumber that Canfor has produced and exported to the United States. See 
id. at the ``Preliminary Results of Review'' section. Further, with 
respect to lumber that Canfor resold without any further processing or 
manufacturing, we will instruct the CBP to apply the company-specific 
rate applicable to the manufacturer of the resold lumber. If no 
company-specific rate was calculated for the manufacturer of the resold 
lumber, then we will instruct the CBP to apply the country-wide rate.

Comment 5: Whether Shawood Lumber Inc.'s Reporting on Affiliation Is 
Consistent

    Petitioners contend that Shawood Lumber Inc. (Shawood) has 
inconsistent reporting between its exclusion request and the expedited 
review. Specifically, petitioners state that Shawood reported an 
affiliated company in its exclusion request. However, in the expedited 
review, it did not report any affiliated companies. Moreover, in the 
company exclusion process, Shawood reported that it had received 
government assistance during the POI, but did not report government 
assistance in the expedited review process.
Department's Position
    We disagree with petitioners. With respect to whether Shawood 
reported affiliates in its expedited review application, the reporting 
methodologies used by participating companies differed between the 
exclusion process and the expedited review process. In the exclusion 
process, companies signed certifications regarding their affiliation 
and cross-ownership status that were based on questionnaires and 
guidelines compiled and issued by the Government of Canada (GOC). See 
the GOC's October 29, 2001 submission. In contrast, in the expedited 
reviews, the Department has sent questionnaires directly to the 
participating companies that contain specific definitions and 
instructions regarding the issue of affiliation, and cross-ownership, 
as well as on other Federal and Provincial programs. Therefore, it is 
entirely possible, since different authorities issued separate and 
different questionnaires, that some discrepancies would exist. In 
addition, Shawood has provided detailed information on its affiliated 
logging company in its original and supplemental questionnaire 
responses in the current proceeding.

Verification

    In accordance with 782(i)(3) of the Tariff Act of 1930, as amended 
(the Act), we may verify information submitted by respondents who 
receive a de minimis subsidy rate, prior to making our final 
determination.

Preliminary Results of Reviews

    In accordance with 19 CFR 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, 2000 to March 31, 2001, we 
preliminarily determine the net subsidy to be as follows:

----------------------------------------------------------------------------------------------------------------
                                                                    Net subsidy
                                                                    rate % for      Net subsidy      Total net
                Net subsidies--Producer/exporter                     stumpage       rate % for     subsidy rate
                                                                     programs     other programs
----------------------------------------------------------------------------------------------------------------
Group 2, Round 1 Companies:
    Cambie Cedar Products Ltd...................................           14.59  ..............  ..............
    Canadian Forest Products Ltd................................           12.24  ..............  ..............
    Commonwealth Plywood Co. Ltd................................            2.89  ..............  ..............
    E. Tremblay et fils ltee....................................            6.36  ..............  ..............
    Federated Co-operatives Ltd.................................           28.55  ..............  ..............
    Greenwood Forest Products Ltd...............................            7.95  ..............  ..............
    Kalesnikoff Lumber Co. Ltd..................................           12.10  ..............  ..............

[[Page 65886]]

 
    Kenora Forest Products Ltd..................................           20.29  ..............  ..............
    Lakeland Mills Ltd..........................................            8.85  ..............  ..............
    Lulumco Inc.................................................           13.74  ..............  ..............
    R. Fryer Forest Products Ltd................................           20.53  ..............  ..............
    Terminal Forest Products Ltd................................           10.00  ..............  ..............
    The Pas Lumber Company Ltd..................................            7.45  ..............  ..............
Group 2, Round 2 Companies:
    Shawood Lumber Inc..........................................            5.46  ..............  ..............
    St. Jean Lumber (1984) Ltd..................................           33.27  ..............  ..............
    Wynndel Box & Lumber Co. Ltd................................           12.89  ..............  ..............
----------------------------------------------------------------------------------------------------------------

    To the extent practicable, the Department will issue the final 
results of these reviews 30 days after the closing of the public 
comments. If the final results of these reviews remain the same as 
these preliminary results, the Department intends to instruct the CBP 
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 and exported 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. 
These rates will not apply to merchandise purchased by the reviewed 
companies and exported without further processing.
    If, in the final results, there are producers/exporters whose final 
estimated net subsidy rates are zero or de minimis, they 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, one percent ad 
valorem in this case, in accordance with section 19 CFR 
351.214(k)(3)(iv). Therefore, after the issuance of its final results, 
the Department intends to instruct CBP to liquidate, without regard to 
countervailing duties, all outstanding shipments of the subject 
merchandise produced and exported by excluded companies.
    These expedited reviews cover only those companies that we have 
specifically identified as qualifying for expedited reviews. We will 
instruct the CBP to continue to collect cash deposits for all non-
reviewed companies at the country-wide0 cash deposit rate established 
in the investigation.

Public Comment

    Pursuant to 19 CFR 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 351.309, interested 
parties may submit written comments in response to these preliminary 
results. 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 351.303(f). The due 
dates for the case briefs will be announced at a later date.
    Individuals who wish to request a hearing must submit a written 
request within 14 days of the publication of this notice in the Federal 
Register to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
NW, Washington, DC 20230. The time, date, and place of the hearing will 
be announced after the Department has released the dates of the 
briefing schedule. However, any party that wants to participate in a 
hearing must submit a written request within the time period specified 
above.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, ten copies of the business 
proprietary version and six copies of the non-proprietary version of 
the case briefs must be submitted to the Assistant Secretary.
    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 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 ensure that interested parties are informed of the 
briefing schedule.
    In the interests of giving each respondent an informed opportunity 
to request rescission of their expedited review, we have amended the 
timeline announced in the application form to request rescission of an 
expedited review. 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)(1).

    Dated: November 17, 2003.
James J. Jochum,
Assistant Secretary for Import Administration.
[FR Doc. 03-29308 Filed 11-21-03; 8:45 am]
BILLING CODE 3510-DS-P