[Federal Register Volume 71, Number 9 (Friday, January 13, 2006)]
[Notices]
[Pages 2189-2192]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-332]



[[Page 2189]]

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DEPARTMENT OF COMMERCE

International Trade Administration

(A-122-838)


Notice of Preliminary Results of Antidumping Duty Changed 
Circumstances Review: Certain Softwood Lumber Products from Canada

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

EFFECTIVE DATE: January 13, 2006.

FOR FURTHER INFORMATION CONTACT: Shane Subler or David Neubacher at 
(202) 482-0189 or (202) 482-5823, respectively; AD/CVD Operations, 
Office 1, Import Administration, International Trade Administration, 
U.S. Department of Commerce, 14\th\ Street & Constitution Avenue, NW., 
Washington, DC 20230.
SUMMARY: On June 21, 2005, the Department of Commerce (the Department) 
published a notice of initiation of a changed circumstances review of 
the antidumping duty order on certain softwood lumber products from 
Canada. See Initiation of Antidumping Duty Changed Circumstances 
Review: Certain Softwood Products from Canada, 70 FR 35632, dated June 
21, 2005 (Initiation Notice). The Department initiated this review to 
determine the appropriate cash deposit rate for West Fraser Mills 
Limited (West Fraser), which acquired Weldwood of Canada Limited 
(Weldwood) on December 31, 2004. We preliminarily determine that the 
post-acquisition West Fraser is the successor-in-interest to the pre-
acquisition West Fraser. Therefore, we preliminarily conclude that the 
post-acquisition West Fraser should be assigned the same cash deposit 
rate as West Fraser prior to the acquisition. Interested parties are 
invited to comment on these preliminary results.

SUPPLEMENTARY INFORMATION:

Background

    On April 29, 2005, the Coalition for Fair Lumber Imports Executive 
Committee (the Coalition), a domestic interested party to this 
proceeding, submitted a request that the Department initiate a changed 
circumstances review of the antidumping duty order on certain softwood 
lumber products from Canada pursuant to Section 751(b) of the Tariff 
Act of 1930, as amended (the Act). On June 21, 2005, the Department 
published the Initiation Notice in the Federal Register. Also on June 
21, 2005, the Department issued West Fraser a questionnaire requesting 
further details on its acquisition of Weldwood. On July 1, 2005, the 
Department granted West Fraser an extension until July 19, 2005, to 
file its response. The Department received West Fraser's response on 
July 19, 2005. The Coalition submitted comments to the Department on 
August 1, 2005.

Scope of the Order

    The products covered by this order are softwood lumber, flooring 
and siding (softwood lumber products). Softwood lumber products include 
all products classified under headings 4407.1000, 4409.1010, 4409.1090, 
and 4409.1020, respectively, of the Harmonized Tariff Schedule of the 
United States (HTSUS), and any softwood lumber, flooring and siding 
described below. These softwood lumber products include:
    (1) coniferous wood, sawn or chipped lengthwise, sliced or peeled, 
whether or not planed, sanded or finger-jointed, of a thickness 
exceeding six millimeters;
    (2) coniferous wood siding (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed;
    (3) other coniferous wood (including strips and friezes for parquet 
flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces (other than wood moldings and wood 
dowel rods) whether or not planed, sanded or finger-jointed; and
    (4) coniferous wood flooring (including strips and friezes for 
parquet flooring, not assembled) continuously shaped (tongued, grooved, 
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like) 
along any of its edges or faces, whether or not planed, sanded or 
finger-jointed.
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written description of the merchandise under review is 
dispositive.
Softwood lumber products excluded from the scope:
     trusses and truss kits, properly classified under HTSUS 
4418.90
     I-joist beams
     assembled box spring frames
     pallets and pallet kits, properly classified under HTSUS 
4415.20
     garage doors
     edge-glued wood, properly classified under HTSUS 
4421.90.97.40 (formerly HTSUS 4421.90.98.40)
     properly classified complete door frames
     properly classified complete window frames
     properly classified furniture
Softwood lumber products excluded from the scope only if they meet 
certain requirements:
     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 4421.90.97.40 (formerly HTSUS 4421.90.98.40).
     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.
     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.
     Fence pickets requiring no further processing and properly 
classified under HTSUS 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.
     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

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importer establishes to U.S. Customs and Border Protections's (CBP's) 
satisfaction that the lumber is of U.S. origin.
     Softwood lumber products contained in single family home 
packages or kits,\1\ regardless of tariff classification, are excluded 
from the scope of the orders if the following criteria are met:
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    \1\ To ensure administrability, we clarified the language of 
this exclusion 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, subfloor, sheathing, 
beams, posts, connectors and if included in 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) The whole package must be imported under a single consolidated 
entry when permitted by CBP, whether or not on a single or multiple 
trucks, rail cars or other vehicles, which shall be on the same day 
except when the home is over 2,000 square feet;
    (E) The following documentation must be included with the entry 
documents:
     a copy of the appropriate home design, plan, or blueprint 
matching the entry;
      a purchase contract from a retailer of home kits or 
packages signed by a customer not affiliated with the importer;
      a listing of inventory of all parts of the package or kit 
being entered that conforms to the home design package being entered;
      in the case of multiple shipments on the same contract, 
all items listed immediately above which are included in the present 
shipment shall be identified as well.
    We have determined that the excluded products listed above are 
outside the scope of this order provided the specified conditions are 
met. Lumber products that 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 covered under the scope of this order 
and may be classified under HTSUS subheadings 4418.90.40.90, 
4421.90.70.40, and 4421.90.98.40. Due to changes in the 2002 HTSUS 
whereby subheading 4418.90.40.90 and 4421.90.98.40 were changed to 
4418.90.45.90 and 4421.90.97.40, respectively, we are adding these 
subheadings as well.
    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 antidumping and 
countervailing duty orders, 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.\2\ 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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    \2\ See the scope clarification message (3034202), dated 
February 3, 2003, to 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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Preliminary Results of the Review

    In an antidumping duty changed circumstances review involving a 
successor-in-interest determination, the Department typically examines 
several factors including, but not limited to, changes in: (1) 
management; (2) production facilities; (3) supplier relationships; and 
(4) customer base. See Brass Sheet and Strip from Canada; Preliminary 
Results of Antidumping Duty Administrative Review, 57 FR 5128 (February 
12, 1992) (Canada Brass). The Department has discretion in determining 
successorship because there is no explicit legal standard for 
determining whether one company is a successor to another under the Act 
or under the Department's regulations. See Industrial Phosphoric Acid 
from Israel: Final Results of Changed Circumstances Review, 59 FR 6944-
945 (February 14, 1994) (Industrial Phosphoric Acid). Although no 
single factor or combination of factors will necessarily be 
dispositive, the Department generally will consider the new company to 
be the successor to the predecessor company if the resulting operations 
are essentially the same as those of the predecessor company. See, 
e.g., Canada Brass, 57 FR 5128; see also Industrial Phosphoric Acid, 59 
FR 6944-945. Thus, if the record evidence demonstrates that, with 
respect to the production and sale of the subject merchandise, the new 
company operates as the same business entity as the predecessor 
company, the Department may assign the new company the cash deposit 
rate of its predecessor. See, e.g., Fresh and Chilled Atlantic Salmon 
from Norway: Final Results of Changed Circumstances Antidumping Duty 
Administrative Review, 64 FR 9979-980 (March 1, 1999).
    In its July 19, 2005, questionnaire response,\3\ West Fraser stated 
that it purchased the sole Weldwood share from International Paper 
Company (IP) on December 31, 2004. The acquisition agreement and 
related amendments located at Exhibits 3 and 4 of the CCR Response 
indicate that IP transferred its sole outstanding share in Weldwood to 
West Fraser on the closing date of December 31, 2004. The certificate 
of amalgamation located at Exhibit 5 of the CCR Response indicates that 
West Fraser and Weldwood were amalgamated as one company as of January 
1, 2005.
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    \3\ See Letter from West Fraser to the Department, Re: Changed 
Circumstances Questionnaire - West Fraser's Questionnaire Response, 
dated July 19, 2005 (CCR Response).
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    As shown in Exhibit 7 of the CCR Response, West Fraser's board of 
directors did not change as a result of the acquisition. Weldwood had a 
single-member board that ceased to exist as of January 1, 2005. The 
board member accepted a position with IP. In addition, as detailed in 
Exhibit 8 of the CCR Response, the acquisition of Weldwood resulted in 
minimal changes to the composition of West Fraser's top management. 
Weldwood's vice-president of sales became West Fraser's vice-president 
for export lumber sales and market development (i.e., sales outside of 
North America). Two of Weldwood's remaining eight management officers 
accepted non-officer positions in operations for West Fraser. 
Weldwood's other five officers did not accept positions with West 
Fraser. The original 11 management

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officers of West Fraser all continued as officers following the 
acquisition.
    West Fraser's customer base also did not change significantly 
following the acquisition. At Exhibit 12 of the CCR Response, West 
Fraser provided a list of all of its U.S. and Canadian customers during 
the first five months of 2005 and the sales volume to these customers. 
The list also identifies whether these customers were customers of 
Weldwood or West Fraser prior to the acquisition. The list shows a 
strong similarity between the customer base of Weldwood and the 
customer base of West Fraser prior to the acquisition. A high 
percentage of the post-acquisition West Fraser's sales volume was to 
customers that were customers of West Fraser prior to the acquisition. 
Furthermore, West Fraser states that a number of its customers in 2005 
that purchased only from Weldwood in 2004 had purchased from West 
Fraser in prior years.
    West Fraser's supplier base also did not change significantly after 
the acquisition. On page 9 of the CCR Response, West Fraser states that 
all of Weldwood's largest suppliers also supplied West Fraser prior to 
the acquisition. West Fraser provides examples of these suppliers, 
including the provinces of Alberta and British Columbia (stumpage), 
Canadian National railway, and major energy suppliers. West Fraser 
acknowledges that many local suppliers to Weldwood mills have continued 
to supply the same mills after the acquisition.
    Of the four specific changed circumstances review analysis criteria 
listed in Canada Brass, the criterion that changed most significantly 
for West Fraser was its production capacity. Prior to the acquisition, 
West Fraser's production capacity for softwood lumber was 2,530 million 
board feet (MBF). This figure includes West Fraser's proportionate 
share of production at four mills that it owned jointly with Weldwood 
and other parties. Weldwood's production capacity at the time of the 
acquisition was 1,297 MBF, which also includes Weldwood's proportionate 
share of production at three jointly-owned mills. As a result of adding 
Weldwood's capacity, West Fraser increased its production capacity by 
48.7 percent immediately following the acquisition. West Fraser adds, 
however, that it will finish reconstructing and expanding its mill in 
Quesnel, British Columbia, in 2006. It claims that the 119 MBF 
expansion was planned before the acquisition of Weldwood and does not 
relate to the acquisition. Furthermore, West Fraser states that it has 
an agreement with the Canadian Commissioner of Competition to sell its 
interest in two mills that it owned jointly with Weldwood. It states 
that the sale of the mills will decrease its capacity by approximately 
343 MBF. Therefore, West Fraser calculates that its net increase in 
softwood lumber production capacity as a result of the acquisition is 
36 percent, which includes the effect of the Quesnel reconstruction and 
the sale of the jointly-owned mills.
    In addition to the four CCR criteria specified in Canada Brass, the 
questionnaire to West Fraser requested details on other aspects of the 
company's operations. First, the CCR Response indicates that West 
Fraser's product line did not change significantly as a result of the 
acquisition. In Exhibit 10 of the CCR Response, West Fraser listed the 
total volume of U.S. and Canadian sales by species and grade for 
Weldwood, for West Fraser prior to the acquisition, and for West Fraser 
during the first five months following the acquisition. The sales 
information shows that approximately 2.5 percent of West Fraser's 
combined U.S. and Canadian sales volume during the first five months of 
2005 was of a grade and species combination that West Fraser did not 
sell in 2004. Although Weldwood sold some products that West Fraser did 
not sell prior to the acquisition, the sales volumes for these products 
were much lower than for the products sold by both companies prior to 
the acquisition. In addition, West Fraser's top 10-selling products in 
the United States and Canada during the first five months of 2005 were 
sold by both companies prior to the acquisition. A review of the other 
top-selling products for Weldwood and for West Fraser prior to the 
acquisition shows a close similarity.
    Furthermore, other information in the CCR Response indicates that 
West Fraser's operations did not change significantly as a result of 
the acquisition. First, Weldwood no longer exists as a corporate 
entity. West Fraser does not sell products under the Weldwood brand. 
Furthermore, West Fraser is expanding its headquarters in Quesnel, 
British Columbia, and will close Weldwood's Vancouver headquarters upon 
completion of the expansion. West Fraser explains that its sales 
personnel now manage all sales activity at Weldwood's former Vancouver 
office. As a result of the headquarters closure, only one of Weldwood's 
North American sales employees has accepted a position with West Fraser 
in Quesnel. The others have either left the company or have announced 
plans to leave by the end of 2005. Also, West Fraser will continue to 
use Lumbertrak, its product management software, for all sales 
operations. Finally, West Fraser has maintained three Weldwood sales 
personnel in Japan, but it has consolidated all export sales operations 
(i.e., sales outside of the United States and Canada) at its export 
sales office in Vancouver, which West Fraser operated prior to the 
acquisition.
    Based on our review of West Fraser's questionnaire response, we 
preliminarily determine that the post-acquisition West Fraser is the 
successor-in-interest to the pre-acquisition West Fraser. In its 
analysis of changes to the respondent's management in Industrial 
Phosphoric Acid, the Department stated, ``The changes in (the 
respondent's) personnel are well within the normal range of personnel 
changes that one would expect over time within the same operation.''\4\ 
We find that the overall changes to West Fraser's operations are well 
within the range of changes that one would expect over time in the same 
operation.
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    \4\ See Industrial Phosphoric Acid at 6944.
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    The most significant change to West Fraser's operations is the 
increase in its production capacity. In analyzing whether West Fraser's 
operations have changed significantly as a result of the acquisition, 
however, the Department must consider West Fraser's operations as a 
whole. We find that the capacity increase is outweighed by the absence 
of significant changes to West Fraser's board of directors, top 
management, suppliers, customer base, product line, corporate 
structure, brand identification, sales process, and sales operations. 
Therefore, we preliminarily determine that the post-acquisition West 
Fraser should be assigned the same cash deposit rate of West Fraser 
prior to the acquisition.
    If the above preliminary results are affirmed in the Department's 
final results, the cash deposit rate from this changed circumstances 
review will apply to all entries of the subject merchandise entered, or 
withdrawn from warehouse, for consumption on or after the date of 
publication of the final results of this changed circumstances review. 
See Granular Polytetrafluoroethylene Resin from Italy; Final Results of 
Antidumping Duty Changed Circumstances Review, 68 FR 25327 (May 12, 
2003). This deposit rate shall remain in effect until publication of 
the final results of the third

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antidumping duty administrative review.

Public Comment

    Any interested party may request a hearing within 30 days of 
publication of this notice. See 19 CFR 351.310(c). Any hearing, if 
requested, will be held 44 days after the date of publication of this 
notice, or the first working day thereafter. Interested parties may 
submit case briefs not later than 30 days after the date of publication 
of this notice. See 19 CFR 351.309(c)(ii). Rebuttal briefs, which must 
be limited to issues raised in such briefs, must be filed not later 
than 37 days after the date of publication of this notice. See 19 CFR 
351.309(d). Parties who submit arguments are requested to submit with 
the argument (1) a statement of the issue, (2) a brief summary of the 
argument, and (3) a table of authorities. In accordance with 19 CFR 
351.216(e), we will issue the final results of this changed 
circumstances review no later than March 10, 2006.
    This notice is in accordance with sections 751(b) and 777(i)(1) of 
the Act and section 351.221(c)(3)(i) of the Department's regulations.

    Dated: January 9, 2006.
David M. Spooner,
Assistant Secretaryfor Import Administration.
[FR Doc. E6-332 Filed 1-12-06; 8:45 am]
BILLING CODE 3510-DS-S