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is January 1, 2001 through December 31, 2001, and rescinded the reviews 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
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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]