68 FR 25339, May 12, 2003

DEPARTMENT OF COMMERCE

International Trade Administration

[C-122-815]
 
Pure Magnesium and Alloy Magnesium from Canada: Preliminary 
Results of Countervailing Duty Administrative Reviews

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

ACTION: Notice of Preliminary Results of Countervailing Duty 
Administrative Reviews.

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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, 2001 through December 
31, 2001. We preliminarily find that certain producers/exporters have 
received countervailable subsidies during the period of review. If the 
final results remain the same as these preliminary results, we will 
instruct the Customs Service to assess countervailing duties as 
detailed in the ``Preliminary Results of Review'' section of this 
notice. Interested Parties are invited to comment on these preliminary 
results (see the Public Comment section of this notice).

EFFECTIVE DATE: May 12, 2003.

FOR FURTHER INFORMATION CONTACT: Melanie Brown, AD/CVD Enforcement, 
Group I, Office 1, Import Administration, U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW, Washington, DC 20230, 
telephone: (202) 482-4987

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 (57 FR 39392). On August 
6, 2002, the Department published a notice of ``Opportunity to Request 
Administrative Review'' of these countervailing duty orders (67 FR 
50856). We received a timely request for review of Norsk Hydro Canada, 
Inc. (``NHCI'') and Magnola Metallurgy, Inc. (``Magnola'') from the 
petitioner, U.S. Magnesium, LLC. On September 25, 2002, we initiated 
this review covering shipments of subject merchandise from NHCI and 
Magnola (67 FR 60210).
    On December 3, 2002, we published Pure and Alloy Magnesium from 
Canada: Correction of Notice of Initiation and Partial Rescission of 
Countervailing Duty Administrative Review (67 FR 71936). In that 
notice, we stated that the correct POR for these administrative reviews 
is January 1, 2001 through December 31, 2001, and rescinded the reviews 
with respect to Magnola, because Magnola is currently a party in a new 
shipper administrative review covering the same POR and the same 
subject merchandise. Therefore, in accordance with 19 CFR 351.213(b), 
these reviews cover NHCI, a producer/exporter of the subject 
merchandise. These reviews cover 16 subsidy programs.
    On December 5, 2002, we issued countervailing duty questionnaires 
to NHCI, the Government of Quebec (``GOQ''), and the Government 
of Canada (``GOC''). We received questionnaire responses from the GOQ 
and the GOC on January 13, 2003, and from NHCI on January 27, 2003.

Scope of the Reviews

    The products covered by these reviews 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 review 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).

Period of Review

    The period of review (``POR'') for which we are measuring subsidies 
is from January 1, 2001 through December 31, 2001.

Subsidies Valuation Information

    Discount rate: As noted below, the Department preliminarily finds 
that NHCI benefitted from one countervailable subsidy program during 
the POR: Article 7 grants from the Quebec Industrial Development 
Corporation. As in the investigations and previous administrative 
reviews of these cases, we have used the company's cost of long-term, 
fixed-rate debt in the year in which this 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 section 351.524(d)(2) of the countervailing duty 
regulations, the Department will use the AUL in the IRS tables as the 
allocation period unless a

[[Page 25340]]

party can show that the IRS tables do not reasonably reflect the 
company-specific AUL or the country-wide AUL for the industry. If a 
party can show that either of these time periods differs from the AUL 
in the IRS tables by one year or more, the Department will use the 
company-specific AUL or the country-wide AUL for the industry as the 
allocation period.
    Neither NHCI nor the petitioner has contested using the AUL 
reported for the magnesium industry in the IRS tables. Therefore, we 
continue to allocate non-recurring benefits over 14 years.

Analysis of Programs

I. Program Preliminarily Determined to Confer Countervailable Subsidies
A. Article 7 Grant from the Quebec Industrial Development 
Corporation (``SDI'')
    SDI (Societe de Developpement Industriel du 
Quebec) 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 
Quebec. 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 Final Affirmative 
Countervailing Duty Determinations: Pure Magnesium and Alloy Magnesium 
from Canada, 57 FR 30946, 30948 (July 13, 1992) (``Magnesium 
Investigation'').)
    In 1988, NHCI was awarded a grant under Article 7 to cover a large 
percentage of the cost of certain environmental protection equipment. 
In the Magnesium Investigation, the Department determined that NHCI 
received a disproportionately large share of assistance under Article 
7. On this basis, we determined that the Article 7 grant was limited to 
a specific enterprise or industry, or group of enterprises or 
industries, and, therefore, countervailable. 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 found that the 
Article 7 assistance received by NHCI constituted a non-recurring grant 
because it represented a one-time provision of funds. In the 
Preliminary Results of First Countervailing Duty Administrative 
Reviews: Pure Magnesium and Alloy Magnesium From Canada, 61 FR 11186, 
11187 (March 19, 1996), we found this determination to be consistent 
with the principles enunciated in the Allocation section of the General 
Issues Appendix (``GIA'') appended to the Final Countervailing Duty 
Determination; Certain Steel Products from Austria, 58 FR 37225, 37226 
(July 9, 1993). In the current review, no new information has been 
placed on the record that would cause us to depart from this treatment. 
Therefore, in accordance with section 351.524(b)(2) of our regulations, 
we continue to allocate the benefit of this grant over time. We used 
our standard grant methodology as described in section 351.524(d) of 
the regulations to calculate the countervailable subsidy. We 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 SDI grant to 
be 1.68 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:
  • St. Lawrence River Environment Technology Development Program
  • Program for Export Market Development
  • The Export Development Corporation
  • Canada-Quebec Subsidiary Agreement on the Economic Development of the Regions of Quebec
  • 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
  • Transportation Research and Development Assistance Program
    III. Program Previously Determined To Be Terminated
  • Exemption from Payment of Water Bills In the administrative reviews covering calendar year 1997, the Department found that this program was terminated during the POR. In our final results, we stated that we, therefore, did not intend to continue to examine this program in the future (see Pure Magnesium and Alloy Magnesium from Canada: Final Results of Countervailing Duty Administrative Reviews, 64 FR 48805, 48806 (September 8, 1999)). Alleged Over-assessment of Countervailing Duties In its January 27, 2003 questionnaire response, NHCI contends that the Department should adjust the assessment rate applied to the value of entries made during the POR in order to avoid alleged over- countervailing in connection with cash deposits retained on 1997 entries. NHCI states that the Department issued appropriate liquidation instructions to the Customs Service (``Customs'') following the completion of the 1997 administrative review, but that Customs erroneously liquidated hundreds of NHCI entries at the cash deposit rate at the time of entry, rather than at the rate established in the final results of the 1997 administrative review. The Department does not have the authority to address what is essentially a customs protest issue concerning entries from a prior, completed review in the context of this administrative review. Parties cannot revive an issue for which the deadlines for a proper challenge have already passed by raising it in an on-going administrative proceeding. Therefore, the Department will not address an issue which is not properly before the agency in this review. Preliminary Results of Review In accordance with 19 CFR 351.221(b)(4)(I), we calculated a subsidy rate for NHCI, the sole producer/exporter subject to these administrative reviews. For the period January 1, 2001, through December 31, 2001, we preliminarily find the net subsidy rate for NHCI to be 1.68 percent ad valorem. We will disclose our calculations to the interested parties in accordance with section 351.224(b) of the regulations. Assessment Rates If the final results of these reviews are affirmative, the Department intends to instruct Customs to assess countervailing duties at the net subsidy rate. The Department will issue appropriate assessment instructions directly to the Customs Service within 15 days of publication of the final results of these reviews. For the period January 1, 2001, through December 31, 2001, the assessment rates applicable to [[Page 25341]] all non-reviewed companies covered by these orders are the cash deposit rates in effect at the time of entry, except for Timminco Limited which was excluded from the orders in the original investigations. Cash Deposit Instructions The Department also intends to instruct Customs to collect cash deposits of estimated countervailing duties at the rate of 1.68 percent on the f.o.b. value of all shipments of the subject merchandise from NHCI entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of these administrative reviews. We will instruct Customs to continue to collect cash deposits for non-reviewed companies, (except Timminco Limited which was excluded from the orders during the investigations) at the most recent company- specific or country-wide rate applicable to the company. Accordingly, the cash deposit rate that will be applied to non-reviewed companies covered by these orders is that established in Pure and Alloy Magnesium From Canada; Final Results of the Second (1993) Countervailing Duty Administrative Reviews, 62 FR 48607 (September 16, 1997) or the company-specific rate published in the most recent final results of an administrative review in which a company participated. These rates shall apply to all non-reviewed companies until a review of a company assigned these rates is requested. Public Comment Interested parties may request a hearing within 30 days of the date of publication of this notice. Any hearing, if requested, will be held two days after the scheduled date for submission of rebuttal briefs (see below). Interested parties may submit written arguments in case briefs within 30 days of the date of publication of this notice. Rebuttal briefs, limited to issues raised in case briefs, may be filed no later than five days after the date of filing the case briefs. Parties who submit briefs in these proceedings should provide a summary of the arguments not to exceed five pages and a table of statutes, regulations, and cases cited. Copies of case briefs and rebuttal briefs must be served on interested parties in accordance with 19 CFR 351.303(f). Representatives of parties to the proceeding may request disclosure of proprietary information under administrative protective order no later than 10 days after the representative's client or employer becomes a party to the proceeding, but in no event later than the date the case briefs, under 19 CFR 351.309(c)(1)(ii), are due. The Department will publish a notice of the final results of these administrative reviews within 120 days from the publication of these preliminary results. These administrative reviews and notice are in accordance with sections 751(a)(1) and 777(I)(1) of the Act. Dated: May 5, 2003. Joseph A. Spetrini, Acting Assistant Secretary for Import Administration. [FR Doc. 03-11742 Filed 5-9-02; 8:45 am]