02-522

[Federal Register: May 22, 2002 (Volume 67, Number 99)]

[Page 36070-36077]

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DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-839]

Notice of Amended Final Affirmative Countervailing Duty
Determination and Notice of Countervailing Duty Order: Certain Softwood
Lumber Products From Canada

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

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

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EFFECTIVE DATE: May 22, 2002.

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

The Applicable Statute and Regulations

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

Scope of Order

The products covered by this order are softwood lumber, flooring
and siding (softwood lumber products). Softwood lumber products include
all products classified under headings 4407.1000, 4409.1010, 4409.1090,
and 4409.1020, respectively, of the Harmonized Tariff Schedule of the
United States (HTSUS), and any softwood lumber, flooring and siding
described below. These softwood lumber products include:
(1) Coniferous wood, sawn or chipped lengthwise, sliced or peeled,
whether or not planed, sanded or finger-jointed, of a thickness
exceeding six millimeters;
(2) Coniferous wood siding (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces, whether or not planed, sanded or
finger-jointed;
(3) Other coniferous wood (including strips and friezes for parquet
flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces (other than wood moldings and wood
dowel rods) whether or not planed, sanded or finger-jointed; and
(4) Coniferous wood flooring (including strips and friezes for
parquet flooring, not assembled) continuously shaped (tongued, grooved,
rabbeted, chamfered, v-jointed, beaded, molded, rounded or the like)
along any of its edges or faces, whether or not planed, sanded or
finger-jointed.
Although the HTSUS subheadings are provided for convenience and
U.S. Customs purposes, the written description of the merchandise
subject to this order is dispositive.
As specifically stated in the Issues and Decision Memorandum
accompanying the Notice of Final Determination of Sales at Less Than
Fair Value: Certain Softwood Lumber Products from Canada, 67 FR 15539
(April 2, 2002) (See comment 53, item D, page 116, and comment 57, item
B-7, page 126), available at WWW.enforcement.trade.gov, drilled and notched
lumber and angle cut lumber are covered by the scope of this order.
The following softwood lumber products are excluded from the scope
of this order provided they meet the specified requirements detailed
below:
(1) Stringers (pallet components used for runners): if they have at
least two notches on the side, positioned at equal distance from the
center, to properly accommodate forklift blades, properly classified
under HTSUS 4421.90.98.40.
(2) Box-spring frame kits: if they contain the following wooden
pieces--two side rails, two end (or top) rails and varying numbers of
slats. The side rails and the end rails should be radius-cut at both
ends. The kits should be individually packaged, they should contain the
exact number of wooden components needed to make a particular box
spring frame, with no further processing required. None of the
components exceeds 1'' in actual thickness or 83'' in length.
(3) Radius-cut box-spring-frame components, not exceeding 1'' in
actual thickness or 83'' in length, ready for assembly without further
processing. The radius cuts must be present on both ends of the boards
and must be

[[Page 36071]]

substantial cuts so as to completely round one corner.
(4) Fence pickets requiring no further processing and properly
classified under HTSUS heading 4421.90.70, 1'' or less in actual
thickness, up to 8'' wide, 6' or less in length, and have finials or
decorative cuttings that clearly identify them as fence pickets. In the
case of dog-eared fence pickets, the corners of the boards should be
cut off so as to remove pieces of wood in the shape of isosceles right
angle triangles with sides measuring \3/4\ inch or more.
(5) U.S. origin lumber shipped to Canada for minor processing and
imported into the United States, is excluded from the scope of this
order if the following conditions are met: 1) the processing occurring
in Canada is limited to kiln-drying, planing to create smooth-to-size
board, and sanding, and 2) if the importer establishes to Customs'
satisfaction that the lumber is of U.S. origin.
(6) Softwood lumber products contained in single family home
packages or kits,\1\ regardless of tariff classification, are excluded
from the scope of this order if the importer certifies to items 6 A, B,
C, D, and requirement 6 E is met:
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\1\ To ensure administrability, we clarified the language of
exclusion number 6 to require an importer certification and to
permit single or multiple entries on multiple days as well as
instructing importers to retain and make available for inspection
specific documentation in support of each entry.
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A. The imported home package or kit constitutes a full package of
the number of wooden pieces specified in the plan, design or blueprint
necessary to produce a home of at least 700 square feet produced to a
specified plan, design or blueprint;
B. The package or kit must contain all necessary internal and
external doors and windows, nails, screws, glue, sub floor, sheathing,
beams, posts, connectors, contract decking, trim, drywall and roof
shingles specified in the plan, design or blueprint;
C. Prior to importation, the package or kit must be sold to a
retailer of complete home packages or kits pursuant to a valid purchase
contract referencing the particular home design plan or blueprint, and
signed by a customer not affiliated with the importer;
D. Softwood lumber products entered as part of a single family home
package or kit, whether in a single entry or multiple entries on
multiple days, will be used solely for the construction of the single
family home specified by the home design matching the entry.
E. For each entry, the following documentation must be retained by
the importer and made available to the U.S. Customs Service upon
request:
i. A copy of the appropriate home design, plan, or blueprint
matching the entry;
ii. A purchase contract from a retailer of home kits or packages
signed by a customer not affiliated with the importer;
iii. A listing of inventory of all parts of the package or kit
being entered that conforms to the home design package being entered;
iv. In the case of multiple shipments on the same contract, all
items listed in E(iii) which are included in the present shipment shall
be identified as well.
Lumber products that the Customs Service may classify as stringers,
radius cut box-spring-frame components, and fence pickets, not
conforming to the above requirements, as well as truss components,
pallet components, and door and window frame parts, are covered under
the scope of this order and may be classified under HTSUS subheadings
4418.90.45.90 , 4421.90.70.40, and 4421.90.97.40.
Finally, as clarified throughout the course of the investigation,
the following products, previously identified as Group A, remain
outside the scope of this order. They are:
1. Trusses and truss kits, properly classified under HTSUS 4418.90;
2. I-joist beams;
3. Assembled box spring frames;
4. Pallets and pallet kits, properly classified under HTSUS
4415.20;
5. Garage doors;
6. Edge-glued wood, properly classified under HTSUS item
4421.90.98.40;
7. Properly classified complete door frames;
8. Properly classified complete window frames;
9. Properly classified furniture.

Exclusion of Maritime Products

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

Company Exclusions

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

Amended Final Determination

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

I. General Allegations

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

[[Page 36072]]

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

[[Page 36073]]

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

II. Province-specific Allegations

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

[[Page 36074]]

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

[[Page 36075]]

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

[[Page 36076]]

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

Countervailing Duty Order

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

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

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

[[Page 36077]]

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

Notice of Review

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

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