[Federal Register Volume 71, Number 134 (Thursday, July 13, 2006)]
[Notices]
[Pages 39667-39670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-11063]


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DEPARTMENT OF COMMERCE

International Trade Administration

C-122-815


Pure Magnesium and Alloy Magnesium from Canada: Preliminary 
Results of Countervailing Duty Administrative Reviews and Intent to 
Rescind

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

SUMMARY: The Department of Commerce is conducting administrative 
reviews of the countervailing duty orders on pure magnesium and alloy 
magnesium from Canada for the period January 1, 2004, through December 
31, 2004. We preliminarily find that a producer/exporter has received 
countervailable subsidies during the period of review. If the final 
results remain the same as these preliminary results, we will instruct 
U.S. Customs and Border Protection to assess countervailing duties as 
detailed in the ``Preliminary Results of Reviews'' section of this 
notice. Interested parties are invited to comment on these preliminary 
results (see the ``Public Comment'' section of this notice).

EFFECTIVE DATE: July 13, 2006.

FOR FURTHER INFORMATION CONTACT: Andrew McAllister or Steve Williams, 
AD/CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington DC 20230; telephone (202) 482-1174 
or (202) 482-4619, respectively.

SUPPLEMENTARY INFORMATION:

Case History

    On August 31, 1992, the Department of Commerce (``the Department'') 
published in the Federal Register the countervailing duty orders on 
pure magnesium and alloy magnesium from Canada (see Final Affirmative 
Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium 
from Canada, 57 FR 39392 (July 13, 1992) (``Magnesium Investigation''). 
On August 1, 2005, the Department published a notice of ``Opportunity 
to Request Administrative Review'' of these countervailing duty orders 
(see Antidumping or Countervailing Duty Order, Finding, or Suspended 
Investigation; Opportunity To Request Administrative Review, 70 FR 
44085). We received timely requests for review from Norsk Hydro Canada, 
Inc. (``NHCI'') and from the petitioner, US Magnesium LLC (``US 
Magnesium'') for reviews of NHCI and Magnola

[[Page 39668]]

Metallurgy Inc. (``Magnola''). NHCI also requested that the Department 
revoke the countervailing duty orders with respect to NHCI. On 
September 16, 2005, we received comments from US Magnesium arguing that 
NHCI's revocation request was without merit. On September 23, 2005, 
NHCI submitted a rebuttal to the September 16, 2005, submission by US 
Magnesium. On September 28, 2005, we initiated these reviews covering 
shipments of subject merchandise from NHCI and Magnola (see Initiation 
of Antidumping and Countervailing Duty Administrative Reviews and 
Request for Revocation in Part, 70 FR 56631).
    On October 5, 2005, NHCI requested that the Department continue the 
suspension of liquidation for NHCI's subject merchandise during this 
POR until final disposition of a dispute settlement proceeding under 
NAFTA (USA-CDA-00-1904-09 (panel)). On June 23, 2006, the Department 
granted NHCI's request to continue suspension of liquidation of its 
subject merchandise entries during this POR.
    On November 2, 2005, we issued countervailing duty questionnaires 
to NHCI, Magnola, Government of Qu[eacute]bec (``GOQ''), and the 
Government of Canada (``GOC''). On November 14, 2005, Magnola notified 
the Department that it had ceased operations and had no shipments of 
the subject merchandise during the POR. We received questionnaire 
responses from GOQ and GOC on December 9, 2005, and from NHCI on 
December 16, 2005.
    On January 13, 2006, we received additional information from NHCI 
regarding its revocation request. On June 12, 2006, NHCI withdrew its 
request for revocation.

Scope of the Orders

    The products covered by these orders are shipments of pure and 
alloy magnesium from Canada. Pure magnesium contains at least 99.8 
percent magnesium by weight and is sold in various slab and ingot forms 
and sizes. Magnesium alloys contain less than 99.8 percent magnesium by 
weight with magnesium being the largest metallic element in the alloy 
by weight, and are sold in various ingot and billet forms and sizes.
    The pure and alloy magnesium subject to the orders is currently 
classifiable under items 8104.11.0000 and 8104.19.0000, respectively, 
of the Harmonized Tariff Schedule of the United States (``HTSUS''). 
Although the HTSUS subheadings are provided for convenience and customs 
purposes, the written descriptions of the merchandise subject to the 
orders are dispositive.
    Secondary and granular magnesium are not included in the scope of 
these orders. Our reasons for excluding granular magnesium are 
summarized in Preliminary Determination of Sales at Less Than Fair 
Value: Pure and Alloy Magnesium From Canada, 57 FR 6094 (February 20, 
1992).

Intent to Rescind

    As noted above, the Department was notified by Magnola that it 
ceased operations and had no shipments of subject merchandise during 
the POR. The Department confirmed, using CBP data, that Magnola did not 
ship subject merchandise to the United States during the POR. 
Therefore, pursuant to 19 CFR 351.213(d)(3), we are preliminarily 
rescinding the administrative review of the countervailing duty order 
on alloy magnesium with respect to Magnola.

Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is January 1, 2004, through December 31, 2004.

Subsidies Valuation Information

Discount rate: As noted below, the Department preliminarily finds that 
NHCI benefitted from countervailable subsidies during the POR. In 
accordance with 19 CFR 351.524(d)(3), it is the Department's preference 
to use a company's long-term, fixed-rate cost of borrowing in the same 
year a grant was approved as the discount rate. However, where a 
company does not have any debt that can be used as an appropriate basis 
for a discount rate, the Department's next preference is to use the 
average cost of long-term fixed-rate loans in the country in question. 
In the investigation and previous reviews, the Department determined 
that NHCI received and benefitted from countervailable subsidies from 
the Article 7 grant from the Qu[eacute]bec Industrial Development 
Corporation (``Article 7 grant''). See Magnesium Investigation. In line 
with the Department's practice, we used NHCI's cost of long-term, 
fixed-rate debt in the year in which the Article 7 grant was approved 
as the discount rate for purposes of calculating the benefit pertaining 
to the POR.
Allocation period: In the investigations and previous administrative 
reviews of these cases, the Department used as the allocation period 
for non-recurring subsidies the average useful life (``AUL'') of 
renewable physical assets in the magnesium industry as recorded in the 
Internal Revenue Service's 1977 Class Life Asset Depreciation Range 
System (``the IRS tables''), i.e., 14 years. Pursuant to 19 CFR 
351.524(d)(2), we use the AUL in the IRS tables as the allocation 
period unless a party can show that the IRS tables do not reasonably 
reflect either the company-specific or country-wide AUL for the 
industry. During these reviews, none of the parties contested using the 
AUL reported for the magnesium industry in the IRS tables. Therefore, 
we continue to allocate non-recurring benefits over 14 years.
    For non-recurring subsidies, we applied the ``0.5 percent expense 
test'' described in 19 CFR 351.524(b)(2). In this test, we compare the 
amount of subsidies approved under a given program in a particular year 
to sales (total or export, as appropriate) in that year. If the amount 
of the subsidies is less than 0.5 percent of sales, the benefits are 
expensed in their entirety in the year of receipt, rather than 
allocated over the AUL period.

Analysis of Programs

I. Programs Preliminarily Determined to Confer Countervailable 
Subsidies
    A. Article 7 Grant from the Qu[eacute]bec Industrial Development 
Corporation (``SDI'')

    SDI (Soci[eacute]t[eacute] de D[eacute]veloppement Industriel du 
Qu[eacute]bec) administers development programs on behalf of the GOQ. 
SDI provides assistance under Article 7 of the SDI Act in the form of 
loans, loan guarantees, grants, assumptions of costs associated with 
loans, and equity investments. This assistance is provided for projects 
that are capable of having a major impact upon the economy of 
Qu[eacute]bec. Article 7 assistance greater than 2.5 million dollars 
must be approved by the Council of Ministers and assistance over 5 
million dollars becomes a separate budget item under Article 7. 
Assistance provided in such amounts must be of ``special economic 
importance and value to the province.'' (See Magnesium Investigation, 
57 FR at 30948.)
    In 1988, NHCI was awarded a grant under Article 7 to cover a large 
percentage of the cost of certain environmental protection equipment. 
The grant was disbursed in 1990 and 1991. In the Magnesium 
Investigation, the Department determined the Article 7 grant confers a 
countervailable subsidy within the meaning of section 771(5) of the 
Tariff Act of 1930, as amended (``the Act''). The grant is a direct 
transfer of funds from the GOQ bestowing a benefit in the amount of the 
grant. We previously determined that NHCI received a disproportionately 
large share of assistance under this program, and, on this basis, we

[[Page 39669]]

determined that the Article 7 grant was limited to a specific 
enterprise or industry, or group of enterprises or industries, within 
the meaning of section 771(5A)(D)(iv) of the Act. In these reviews, 
neither the GOQ nor NHCI has provided new information which would 
warrant reconsideration of this determination.
    In the Magnesium Investigation, the Department determined that the 
Article 7 assistance received by NHCI constituted a non-recurring grant 
because it represented a one-time provision of funds. In the current 
reviews, no new information has been placed on the record that would 
cause us to depart from this treatment. To calculate the benefit, we 
performed the expense test, as explained in the ``Allocation period'' 
section above, and found that the benefits approved were more than 0.5 
percent of NHCI's total sales. Therefore, we allocated the benefits 
over time. We used the grant methodology as described in 19 CFR 
351.524(d) to calculate the amount of benefit allocable to the POR. We 
then divided the benefit attributable to the POR by NHCI's total sales 
of Canadian-manufactured products in the POR. On this basis, we 
preliminarily determine the countervailable subsidy from the Article 7 
grant to be 0.51 percent ad valorem for NHCI.
II. Programs Preliminarily Determined To Be Not Used
    We examined the following programs and preliminarily determine that 
NHCI did not apply for or receive benefits under these programs during 
the POR:

 Emploi-Qu[eacute]bec Manpower Training Program
 St. Lawrence River Environment Technology Development Program
 Program for Export Market Development
 The Export Development Corporation
 Canada-Qu[eacute]bec Subsidiary Agreement on the Economic 
Development of the Regions of Qu[eacute]bec
 Opportunities to Stimulate Technology Programs
 Development Assistance Program
 Industrial Feasibility Study Assistance Program
 Export Promotion Assistance Program
 Creation of Scientific Jobs in Industries
 Business Investment Assistance Program
 Business Financing Program
 Research and Innovation Activities Program
 Export Assistance Program
 Energy Technologies Development Program
 Financial Assistance Program for Research Formation and for 
the Improvement of the Recycling Industry
 Transportation Research and Development Assistance Program
III. Program Previously Determined To Be Terminated
 Exemption from Payment of Water Bills

Adjustment of Countervailing Duty Cash Deposit Rate

    In its January 13, 2006, submission, NHCI contends that the 
Department should set NHCI's cash deposit rate to zero for pure 
magnesium and alloy magnesium at the final results of these 
administrative reviews. NHCI asserts that, as of that date, the only 
subsidy at issue for NHCI (i.e., the Article 7 grant) will have been 
fully amortized, and there will be no basis or need for collecting cash 
deposits from NHCI. In support of its argument, NHCI cites to Stainless 
Steel Sheet and Strip in Coils from France: Final Results of 
Countervailing Duty Administrative Review, 68 FR 53963 (September 15, 
2003) (``SSSSC from France'') and Final Results of Countervailing Duty 
Administrative Reviews: Low Enriched Uranium From Germany, the 
Netherlands, and the United Kingdom, 69 FR 40869 (July 7, 2004) 
(``Uranium'').
    In its December 9, 2005, submission, GOC supported NHCI's arguments 
for setting the cash deposit rate at zero.
    As discussed below under the ``Cash Deposit Instructions'' section, 
we do not intend to issue cash deposit instructions as a result of 
these reviews. Therefore, NHCI's argument is moot.

Preliminary Results of Reviews

    In accordance with 19 CFR 351.221(b)(4)(i), we calculated an 
individual subsidy rate for the producer/exporter subject to these 
administrative reviews. For the period January 1, 2004, through 
December 31, 2004, we preliminarily find the net subsidy rate for NHCI 
to be 0.51 percent. If the final results of these reviews remain the 
same as these preliminary results, the Department intends to instruct 
U.S. Customs and Border Protection (``CBP'') to assess countervailing 
duties at this net subsidy rate. We will disclose our calculations to 
the interested parties in accordance with 19 CFR 351.224(b).

Cash Deposit Instructions

    On June 26, 2006, the ITC voted in favor of revoking the 
countervailing duty orders on pure magnesium and alloy magnesium from 
Canada (see Pure and Alloy Magnesium from Canada, 71 FR 36359 (June 26, 
2006)). The effective date of the revocations is August 16, 2005. As a 
result of the ITC's determination, we do not intend to issue cash 
deposit instructions.
    However, were the Department to issue cash deposit instructions, we 
preliminarily determine that the estimated net subsidy for future NHCI 
imports would be zero. Consequently, no cash deposits of estimated 
countervailing duties would be required on shipments of the subject 
merchandise from the reviewed entity, entered, or withdrawn from 
warehouse, for consumption on or after the date of publication of the 
final results of these reviews.

Liquidation Instructions

    Pursuant to 19 U.S.C. 1516a(g)(5)(C)(i), the Department will not 
order the liquidation of entries of pure magnesium or alloy magnesium 
from Canada exported by NHCI on or after January 1, 2004, through 
December 31, 2004, pending final disposition of a dispute settlement 
proceeding under NAFTA (USA-CDA-00-1904-09 (panel)) with respect to 
Pure and Alloy Magnesium From Canada; Final Results of Full Sunset 
Review, 65 FR 41436 (July 5, 2000). Liquidation of NHCI entries will 
occur at the rates described in these final results of reviews, if 
appropriate, following the final disposition of the previously 
mentioned NAFTA dispute settlement proceedings.

Public Comment

    Pursuant to 19 CFR 351.310(c), any interested party may request a 
hearing within 30 days of publication of this notice. Any hearing, if 
requested, will be held 42 days after the publication of this notice, 
or the first workday thereafter. Issues raised in the hearing will be 
limited to those raised in the case and rebuttal briefs. Pursuant to 19 
CFR 351.309(c), interested parties may submit case briefs within 30 
days of the date of publication of this notice. Rebuttal briefs, which 
must be limited to issues raised in the case briefs, may be filed not 
later than 35 days after the date of publication of this notice. See 19 
CFR 351.309(d). Parties who submit case briefs or rebuttal briefs in 
this proceeding are requested to submit with each argument (1) a 
statement of the issue and (2) a brief summary of the argument with an 
electronic version included.
    The Department will issue the final results of this administrative 
review, including the results of its analysis of issues raised in any 
such written briefs or hearing, within 120 days of

[[Page 39670]]

publication of these preliminary results. See section 751(a)(3) of the 
Act.
    We are issuing and publishing these results in accordance with 
sections 751(a)(1) and 777(i)(1) of the Act.

    Dated: July 6, 2006.
David M. Spooner,
Assistant Secretary for Import Administration.
[FR Doc. E6-11063 Filed 7-12-06; 8:45 am]
BILLING CODE 3510-DS-S