(Cite as: 64 FR 57040, *57057)
barley farmers to export for their own account. However, as a practical matter, in order to benefit from the PDS program, farmers
essentially have to find extraordinary sales opportunities because the PDS price is set relatively high and consistently higher than
the CWB pool return. Thus, it is unlikely that a barley farmer would be able to find sales opportunities sufficiently attractive to
make the PDS program a worthwhile endeavor. Nevertheless, as noted above, we have concluded that, even assuming a restraint
on exports, the operations of the CWB did not provide a benefit to Canadian cattlemen during the POI.
Comment 6: Freight Adjustments
The GOC states that any comparisons of barley prices must account for freight. Although the petitioner did attempt to make a
freight adjustment in a few of its price comparisons, the adjustments were "absurdly low" and, after proper adjustments for freight
are made, the price differentials alleged by the petitioner disappear.
The petitioner provides several price comparisons which show a significant, long-term price differential between prices in the
designated area and prices in export markets. In a few of these comparisons, the petitioner made an adjustment for freight based
upon freight costs from Calgary to Vancouver. According to the petitioner, even after one accounts for freight, there is
(Cite as: 64 FR 57040, *57057)
still a significant price differential.
Department's Position: Freight is a key element in the price of Canadian feed barley; all feed barley prices throughout the
designated area track the price in Lethbridge. To reflect this market reality, for example, feed barley futures contracts traded on
the Winnipeg Commodity Exchange are designed with "regional discounts" which account for the location of barley and the cost of
shipping that barley to Lethbridge (as well as local supply and demand factors). See CWB Verification Report at 16. Therefore, any
comparison of prices at different geographic locations must account for freight costs.
Although the petitioner adjusted an average price in the designated area for freight, the adjustments did not adequately reflect the
real cost of transporting grain grown throughout the designated area to Vancouver. Specifically, the petitioner used the freight
rate from Calgary to Vancouver to adjust an average price based on prices throughout the designated area. The train route from
Calgary to Vancouver is shorter than all other points in the designated area and, therefore, freight costs from this point are likely
to be lower than everywhere else. Record evidence shows that freight costs to Vancouver from other points in the designated area
can be substantially more than the cost of freight from Calgary.
Therefore, in making our point-to-point price comparisons, we made freight adjustments which corresponded with the specific
location of the barley price
(Cite as: 64 FR 57040, *57057)
used in the comparison (i.e., Saskatoon or Lethbridge). After adjusting for freight in our point-to-point comparisons, we found no
consistent pattern of price differentials when comparing the prices of feed barley sold in the designated area and the prices of feed
barley outside of Canada.
Comment 7: Export Price Benchmarks
The petitioner argues that the Department should use several pricing series to represent export prices: (1) Canadian export
statistics, (2) U.S. Portland and PNW prices, (3) PDS prices, and (4) U.S. import statistics. With respect to Canadian export
statistics, the petitioner first notes that Canadian "exports" to the U.S. are in fact U.S. import statistics prepared by the U.S. Census
Bureau and argues that the Department should not disregard the U.S. import data as it did in the Preliminary Determination in
calculating Canadian export prices to the U.S. Furthermore, the petitioner argues that this data provides a better basis for
computing overall available export opportunities than the actual transaction data reported by the CWB by virtue of the additional
charges incurred by the CWB on the transaction data and because any reporting errors in the U.S. import data due to freight would
be minor.
The petitioner further suggests that U.S. prices in Portland or the PNW should be used over prices in Great Falls (as was done in
the Preliminary
(Cite as: 64 FR 57040, *57057)
Determination) because, as stated in comment 4 above, a rational exporter would not ship to Great Falls, but to the market that
provides the highest price. Moreover, according to the petitioner, record evidence indicates that Portland prices may be
indicative of the best export opportunity available.
Finally, the petitioner suggests that PDS prices could be used as an export price because the PDS prices represent the best
determination of the CWB as to its own export opportunity price. In addition, the petitioner states that because PDS prices are
posted daily at all elevators, they are not affected by freight charges and, thus, do not need to be adjusted for freight costs.
The GOC argues that each of the petitioner's export price suggestions suffers from numerous factual and legal shortcomings. First,
the Canadian export statistics and U.S. import statistics are unreliable because they reflect shipments, not sales, and thus cannot
be compared with Canadian domestic sales prices. Moreover, as established at verification, some values reported in the U.S.
import statistics do, in fact, include freight. Second, there is no evidence on the record to suggest that Portland or PNW prices are
the prices that Canadian cattlemen would pay in the absence of the CWB. Moreover, when proper freight adjustments are made to
this price series, the differential disappears. Third, PDS prices do not reflect conditions in Canada or the price that Canadian
cattlemen would pay, and there is no evidence that significant
(Cite as: 64 FR 57040, *57057)
quantities of barley could be sold at PDS prices. In addition, the petitioner is incorrect in stating that PDS prices would not need to
be adjusted for freight because they are posted at all elevators. PDS prices are based in Vancouver and St. Lawrence and, thus,
*57058
(Cite as: 64 FR 57040, *57058)
would have to be adjusted for freight when comparing them to prices within the designated area. Fourth, with respect to U.S.
import statistics, it is not reasonable to assert that these statistics are more reliable than actual CWB transaction data, especially
in light of the known deficiencies with the U.S. data.
Department's Position: As described in the CWB section above, we made several price comparisons. In doing so, we used prices
from a variety of sources (including the petitioner's second suggestion to use Portland prices), making appropriate adjustments
for freight when necessary. For further discussion of the prices selected for our comparisons, see CWB Analysis Memorandum.
With respect to PDS prices, although they are posted at every elevator throughout the designated area, PDS prices are based in
Vancouver or St. Lawrence and the amount a farmer would have to pay to "repurchase" his barley from the pool would be net of
freight from that location to either Vancouver or St. Lawrence. Thus, to compare accurately PDS prices with prices in the
designated area, PDS prices need to be adjusted for freight. We note that if one were to employ the petitioner's suggestion and
compare PDS prices to designated area prices, after adjusting for freight, there is not a consistent
(Cite as: 64 FR 57040, *57058)
price differential. See Final Calculations.
With respect to the petitioner's first and fourth pricing suggestions, the evidence on the record makes clear that there are
problems with both the Canadian export statistics and U.S. import statistics. For example, the import/export statistics reflect
shipments, not sales, and thus, cannot reliably be compared with domestic sales prices. In addition, the Canadian export statistics
to Japan include values for both feed and malting barley. We further note that although the export/import statistics are reported
f.o.b. at the port, the particular port is unknown so there is no means to adjust those figures precisely for freight to make an
appropriate comparison with domestic prices.
Furthermore, we determine that the actual CWB export sale transactions to the U.S. that we verified are more reliable than prices
derived from secondary sources such as U.S. import statistics. We conducted a thorough verification of the CWB's export sales and
confirmed that all prices were reported accurately and that all freight adjustments were reasonable. In addition, record evidence
demonstrates that, in certain instances, freight is improperly included in the values reported in the U.S. statistics. For these
reasons, we did not rely on derived prices from the volume and value figures reported in the export/import statistics.
(Cite as: 64 FR 57040, *57058)
Comment 8: Use of Actual Versus Bid or Offer Prices
The petitioner suggests that, in determining the proper domestic pricing series to use for comparison purposes, the Department
should rely on pricing series based on "bid" or "offer" prices as well as pricing series that measure actual transactions. ("Bid" prices
are the prices at which elevators are willing to purchase barley from the producer; "offer" prices are the prices at which the
elevator is willing to sell (or offer) barley to consumers. The difference between bid and offer prices is the elevator margin.)
Moreover, the Department should not exclude particular pricing series on the grounds that they include elevation charges.
According to the petitioner, if there is a high level of competition among elevators, some may absorb elevation charges and
others may not. Since there is no means to adjust for these differentials, there would be no reason to exclude certain price series
that are based on commercial elevator offer prices.
The GOC, while it does not object to the use of pricing series based on bids or offers, believes that the other pricing series,
especially those based on cash or transaction prices, are equally or more reliable and should not be discarded in favor of bid or
offer prices.
Department's Position: We have used both price series based on actual transactions and those based on bid or offer prices in our
calculations to
(Cite as: 64 FR 57040, *57058)
determine a domestic price for comparison purposes. Further, we agree with the petitioner that there is no means on the record
to adjust precisely for elevation charges. See CWB Analysis Memorandum.
Comment 9: Reliance on Lethbridge as a Domestic Pricing Point
The petitioner states that the Department should not rely too heavily on Lethbridge prices in calculating Canadian domestic
prices for the final determination. The petitioner argues that, since Lethbridge is a net import market for barley, Lethbridge prices
would be indicative of the high-water mark, not of overall price levels in the designated area.
The GOC argues that, since barley transactions are carried out by private barley producers and not by the GOC, there is no real
"government barley price" in Canada to which any comparison can be done. However, if prevailing prices in the designated
area are construed as a government price, Lethbridge prices are the most obvious to use as a domestic point since Lethbridge is
the point in Western Canada from which all other feed barley is priced.
Department's Position: Although we agree with the petitioner that we should not rely exclusively on Lethbridge prices as the
measure of the domestic prices for barley in Canada, we agree with the GOC that Lethbridge is an important pricing point in
the designated area. Therefore, we have used, but
(Cite as: 64 FR 57040, *57058)
not relied exclusively upon, Lethbridge prices in our various comparisons.
As discussed in the CWB section above, in the first comparison, we adjusted the Lethbridge price downward to account for truck
freight from Saskatoon. In the second comparison, we relied entirely on Lethbridge because certain CWB export sales were
reported only on a Lethbridge basis, which made Lethbridge the only useable Canadian comparison price. In the third and fourth
comparisons, we combined the Lethbridge price with other Canadian prices to calculate average prices. Thus, in the last two
comparisons, we accounted for barley prices throughout the designated area.
Comment 10: Prices of Western Canadian Barley Sold in Ontario
The petitioner states that an analysis of domestic prices within the designated area should not include the Ontario locations of
Thunder Bay and Georgian Bay because these points are not within the designated area.
The GOC argues that, although the Ontario pricing points to which the petitioner refers are physically located outside of the
designated area, prices in these locations represent prices of Western Canadian barley and can be properly included in the
analysis.
Department's Position: For the final determination, we have modified the average price for the designated area to exclude Ontario
prices. Although the
(Cite as: 64 FR 57040, *57058)
GOC is correct in stating that Ontario prices for Thunder Bay and Georgian Bay are for barley produced in the designated area and
shipped to Ontario, these prices would include freight to Ontario. Thus, the inclusion of these prices in the average designated area
price that we calculated for use in one of our price comparisons would not be appropriate. *57059
(Cite as: 64 FR 57040, *57059)
Comment 11: Use of Facts Available To Determine Export Prices to Japan
The petitioner argues that the Department should use adverse facts available when determining the export price to Japan because
the CWB failed to provide pricing information that it maintains as the sole exporter of Canadian barley.
The GOC states that, to its knowledge, it has submitted information that has been satisfactory to the Department. Moreover, the
GOC asserts that the information it has submitted has allowed the Department to sufficiently address the major issues at hand.
Department's Position: Although we would have preferred to obtain CWB third country pricing data, we have determined that, for
the purposes of this investigation, there is sufficient pricing information on the record to make appropriate price comparisons
based upon published pricing surveys at specific locations. Thus, the use of adverse facts available based upon deficient
secondary sources is not warranted.
(Cite as: 64 FR 57040, *57059)
Comment 12: Countervailability of Provincial Loan Guarantee Programs
The GOA, GOS, GOM and GOO contend that their respective loan guarantee programs do not provide a countervailable benefit as
defined in Section 771(5)(E)(iii) of the statute because the programs do not lower the cost of borrowing. Respondents state that
the Department confirmed at verification that it is the highly structured nature and security requirements of the associations
participating in the loan guarantee programs, and not the guarantees, that determine the interest rates charged to participants.
Specifically, respondents argue that the guarantee is commercially insignificant when compared to other aspects of the program
such as the substantial security provided to lenders by the associations, the local monitoring undertaken by each associations'
staff and the branding requirements with respect to the cattle purchased by association members.
The petitioner argues that, contrary to respondents' assertion, the verification record does not establish that the loan guarantee
programs are not countervailable. Absent the loan guarantee programs, individual cattle producers would be seeking to obtain
loans rather than large cattle associations. These small cattle operations would face dramatically higher interest rates and
stringent loan terms. This is evidenced by the Saskatchewan
(Cite as: 64 FR 57040, *57059)
Agricultural Value-Added Loan Fund, where borrowers pay prime plus 4 percent. The petitioner urges the Department to use this
as the benchmark for the provincial loan guarantee programs.
In the event that the Department uses information obtained from banks at verification to derive the benchmark rate, the
petitioner contends that the Department should, at a minimum, apply a benchmark rate of prime plus 2.25 percent for purposes of
the final determination. Petitioner asserts that this interest rate, derived from comments made by Saskatchewan commercial
lenders at verification, more accurately reflects the cost of borrowing for association members than the benchmark rate used at
the Preliminary Determination.
Department's Position: At verification, private bank officials explained that several attributes of the associations were considered
in setting the interest rate on association loans. Specifically, bank officials mentioned that the administrative and managerial
features of the associations provide lenders with substantial security against default. We agree that these attributes would make
these loans attractive to lending institutions, even absent the guarantees. Nevertheless, the provincial governments do provide
the guarantees on these loans. As discussed in the "Programs Determined To Be Countervailable" section, the guarantees are
financial contributions and specific to cattle producers. Therefore, we have analyzed whether the guarantees confer a benefit by
measuring the difference between the amount the
(Cite as: 64 FR 57040, *57059)
associations pay on the guaranteed loans and the amount they would pay for a comparable commercial loan absent the guarantee.
Regarding the petitioner's claim, we disagree that we should use interest rates that would be paid by individual farmers as a
benchmark for loans taken out by associations. This is because loans to individual cattle producers do not represent "comparable
commercial loans" to loans taken out by associations. Thus, we have not incorporated the lending rates available under the
Saskatchewan Agricultural Value-Added Loan Fund into our analysis. Moreover, we verified that this program does not currently
exist and that cattle producers never participated in it. Consequently, loan rates established by that program are not relevant to
this investigation.
Comment 13: Alberta Feeder Association Loan Guarantee
First, the GOA contends that the Department failed to take into account the marginal nature of the government guarantee. The
GOA explains that the program only guarantees 15 percent of the total amount of the loan and, therefore, it is not credible for such
a small guarantee to have the economic impact reflected in the Department's preliminary benchmark rate.
Second, the GOA argues that the Department should incorporate the discounted lending rates obtained by Alberta feeder
associations from bank marketing
(Cite as: 64 FR 57040, *57059)
efforts into its calculation of the provincial benchmark rate. The GOA notes that the identical interest rate was offered to a variety
of borrowers throughout Canada during the POI and, therefore, the Department should not treat these lending arrangements
as a subsidy.
Finally, the GOA contends that because the benchmark rates obtained at verification are fixed rates, the Department should adjust
the floating rate feeder association loans to the equivalent fixed rate. The GOA states that the Department confirmed at
verification that lenders offer borrowers a choice of fixed or variable rate loans, and that banks set the two rates so they present
equivalent financial risk to the loans. Consequently, the GOA argues, the Department can adjust the variable interest rates on
loans that are guaranteed to what they would be if they had been taken out as fixed rate loans and compare them to the fixed rate
benchmark.
Department's Position: As discussed in the Subsidies Valuation Information section, we have revised the benchmark interest rate
used at the Preliminary Determination with respect to the provincial loan guarantee programs and have calculated
province-specific benchmark rates based on verified information. The Alberta benchmark rate was calculated by averaging the
verified range of lending rates the associations could obtain in the market absent the government guarantee. Accordingly, the
benchmark rate we derived from the information collected at verification captures the marginal nature of the guarantee. In
(Cite as: 64 FR 57040, *57059)
addition, our revised benchmark included the discounted lending rates the feeder associations received from bank marketing
efforts because the association membership was eligible for these rates regardless of the government guarantee.
With respect to the GOA's assertion that we should adjust variable rate association loans to the equivalent fixed rate, it is not clear
from the verification record that the benchmark information we collected was expressed in terms of fixed rates only. Therefore,
we have not *57060
(Cite as: 64 FR 57040, *57060)
made an upward adjustment to the floating rate loans for our final results.
Comment 14: The Base Prime Rates Should Be Adjusted To Reflect Bank Prime Rates
The petitioner argues that the Department should upwardly adjust the prime rate used in the Preliminary Determination to reflect
the commercial prime rate available to borrowers during the POI. Petitioner states that the Department verified that the
base-lending rate used to calculate the interest charged on association loans is the bank prime rate, which is typically the Bank of
Canada prime rate plus a spread of .25 percent to .5 percent. Therefore, for purposes of the final determination the
Department should add the average of this range, or .375 percent, to the prime rate used in the Preliminary Determination.
(Cite as: 64 FR 57040, *57060)
The GOC, GOA and GOS each comment that the petitioner is mistaken and that the rate the Department used in its Preliminary
Determination was the commercial prime rate of interest charged by private Canadian banks. Respondents note that this
information was discussed and confirmed at verification.
Department's Position: As noted by the respondents, we verified that the prime rate used as the base-lending rate in our
calculations at the Preliminary Determination was "bank prime," or the prime rate charged by private commercial banks in
Canada. Accordingly, we have not adjusted the prime rate for purposes of our final results.
Comment 15: Exclusion of Saskatchewan Breeder Association Loan Guarantee Program
The GOS argues that because the Department specifically excluded breeding livestock from the scope of this investigation, the
Department should exclude the Saskatchewan Breeder Association Loan Guarantee program from further consideration. The
respondent notes that the Department verified that this program is available only in connection with the purchase of breeding
stock. Furthermore, the respondent notes that in previous determinations related to livestock the Department has declined to
countervail programs related to
(Cite as: 64 FR 57040, *57060)
breeding livestock because breeding stock was not covered by the order. See Live Swine from Canada; Preliminary Results of
Countervailing Duty Administrative Reviews, 55 FR 20812, 20817 (May 21, 1990) ("Live Swine from Canada
1990").
The petitioner contends that the respondent's argument fails to recognize that participants in the Saskatchewan Breeder
Association Loan Guarantee program can sell the calves born to breeding livestock purchased with loans made available under
this program. Because calves need not be sold for breeding purposes and may be placed directly into the production cycle, the
benefits from this program accrue to all cattle producers. In addition, the petitioner argues that the respondent's reference to Live
Swine from Canada 1990 should be disregarded by the Department because the program in question was limited to veterinary
care provided directly to breeding stock.
Department's Position: We agree with the GOS and have not countervailed this program because breeding livestock is not covered
by the scope of this investigation. As noted by the GOS, we verified that loans from this program are limited to the purchase of
breeding stock. As in Live Swine from Canada 1990, any benefits would thus be tied to breeding stock only. While we agree
with the petitioner that the program in question is different from that examined in Live Swine from Canada 1990, the fact
remains that in both cases the alleged benefits from each program go directly to non-subject merchandise
(Cite as: 64 FR 57040, *57060)
and, thus, are not covered by the scope of the respective investigations.
Comment 16: Specificity of FIMCLA
The GOC argues that the FIMCLA program is not specific because the value of the benefits received by the hog and cattle
industries are in proportion to these producers share of the Canadian agricultural economy. The GOC notes that in the Preliminary
Determination, the Department compared the number of FIMCLA loan guarantees obtained by the cattle and hog industries to the
total number of FIMCLA loan guarantees approved during the POI, without reference to any benchmark of proportionality. The
GOC contends that this analysis is flawed for two reasons.
First, the GOC argues that it is Department practice to compare the benefits received by a particular enterprise with some
objective benchmark in order to determine proportionality. See Certain Steel Products from Korea, 58 FR 37338, 37343 (July 9,
1993) ("Korean Steel"). Second, the GOC contends that the Department recently emphasized that it looks to the value, not the
number, of guaranteed loans for purposes of assessing disproportionality of loan guarantees. See Stainless Steel Plate from South
Africa, 64 FR 15553, 15564 (March 31, 1999).
The GOC states that use of the farm cash receipts statistics submitted to the
(Cite as: 64 FR 57040, *57060)
Department would permit the Department to address these flaws. The GOC explains that this data demonstrates that, during the
POI, the share of FIMCLA benefits received by the cattle and hog industries was significantly less than the share of farm cash
receipts generated by those industries. Accordingly, the Department should find that FIMCLA is not specific and, therefore, not
countervailable.
The petitioner counters that the GOC's argument is flawed for various reasons and that the Department should continue to find the
FIMCLA program de facto specific in accordance with section 771(5A)(D)(iii) of the Act. With respect to the GOC's argument for an
objective benchmark, the petitioner contends that only in unusual circumstances will the Department resort to examining de
facto specificity by determining whether the benefits received by a particular enterprise or industry or group were
disproportionate in relation to the economy as a whole. In support of its argument, the petitioner cites 19 CFR 351.525 of the New
CVD Regulations, which discusses that the type of subsidy under investigation in Korean Steel, governmental use of the
economy-wide banking system to direct credit to steel producers, required a broader analysis. (See Countervailing Duties;
Final Rule, 63 FR 65348, 65359 (November 25, 1998). The petitioner argues that unlike Korean Steel, the FIMCLA program
targets only one sector of the Canadian economy rather than the entire economy. Therefore, use of an external reference point is
not warranted in
(Cite as: 64 FR 57040, *57060)
this situation. Rather, the Department should continue with its standard methodology of examining the level of benefits received
by one industry in comparison to other industries participating in the program.
The petitioner further argues that, in case an outside reference point is applied, the use of farm cash receipts is not reasonable.
The petitioner notes that to the extent the farm cash receipts simply reflect the effects of subsidization, it would not be surprising
that the amount of subsidies would parallel the dispersion of income. Moreover, long-term loans should not be measured on this
basis because the GOC has reported this information for only one year, which was a calender year and not the POI.
Finally, the petitioner contends that the starting point of the Department's analysis of specificity is the number of users. (See
Countervailing Duties; Final Rule, 63 FR 65348, 65359 (November 25, 1998)). Using this methodology, the beef and hog
industries have historically *57061
(Cite as: 64 FR 57040, *57061)
received between 25 and 30 percent of the FIMCLA loan guarantees and, as such, the Department's Preliminary Determination
regarding FIMCLA should be upheld.
Department's Position: We disagree with the GOC in part. Disproportionality is fact-specific and determined on a case-by-case
basis. As noted by the petitioner, the nature of the subsidy being investigated in Korean Steel was unusual and required a special
analytical framework. Our typical specificity analysis examines disproportionality by reference to actual users
(Cite as: 64 FR 57040, *57061)
of the program. In other words, we compare the share of the subsidy received by producers of the subject merchandise to the
shares received by other industries using the program. See Final Negative Countervailing Duty Determination and Final
Negative Critical Circumstances Determination: Certain Laminated Hardwood Trailer Flooring (LHF) from Canada, 62 FR
5201, 5209 (February 4, 1997). Consistent with our usual practice, we have compared the level of benefits received by the beef
and hog sectors under the FIMCLA program to the assistance received by the other agricultural industries participating in the
program.
We agree, however, with the GOC that our disproportionality analysis should focus on the level of benefits provided rather than on
the number of subsidies given to different industries. Therefore, we have revised our analysis to compare the value of the loan
guarantees provided to industries participating in the FIMCLA program. Based on this comparison, we continue to find that the
beef and hog industries received a disproportionate amount of assistance under the FIMCLA program during the POI.
Accordingly, we confirm our preliminary finding that the FIMCLA program is de facto specific to the beef and hog sectors in
accordance with section 771(5A)(D)(iii) of the Act.
Provision of Goods or Services
(Cite as: 64 FR 57040, *57061)
Comment 17: PFRA
The GOC argues that the Act does not permit the Department to countervail the public pastures provided under the PFRA if the
price charged by the government for their use is consistent with the prevailing market. PFRA rates are comparable to the private
pasture rates reported for Manitoba and Saskatchewan, according to the GOC, when the factors that diminish the value of public
pastures are taken into account. The GOC argues that PFRA pastures have the following disadvantages: cows are commingled,
cattle owners' access to their cattle is restricted, the PFRA forage is of poorer quality, certain specialty services are not provided,
and public pastures are subject to multiple use. Because of such factors, according to the GOC, many of the surveyed ranchers
indicated that they prefer private land over PFRA pastures and that many PFRA patrons move to private land when it becomes
available.
The GOC requests that adjustments be made to private pasture rates to account for the differences between the two types of
pasture services. The GOC notes that it has provided information on adjustments for three differences relating to: (1) The timing of
the sale of cull cows, (2) early weaning and timing of the sale of calves, and (3) transportation to the pasture. The GOC urges the
Department to make these adjustments and contends that when the adjustments are made, the Department will conclude that
PFRA pasture services are not provided
(Cite as: 64 FR 57040, *57061)
for less than adequate remuneration.
Lastly, while the GOC was only able to quantify the factors mentioned above, the GOC states that the Department should also
consider other factors (disease associated with commingled pastures and the failure to provide specialized services offered by
private pastures) that diminish the value of PFRA pastures.
The petitioner urges the Department to examine closely the differences in the public and private pastures alleged by the GOC.
Specifically, according to the petitioner, the GOC has not established that cattle producers using private pastures have greater
flexibility than public pasture users with respect to the timing of cattle removal. According to the petitioner, the timing of cattle
removal on public pastures is not as rigid as portrayed by the GOC because roundup dates on public pastures are not necessarily
set at the same time for all lessees and can be negotiated with the Pasture Manager. To support its argument, the petitioner cites to
the PFRA Rules and Regulations, which state that when round up dates are not set the resulting date will be "a matter of mutual
agreement between the patrons and the Pasture Manager and will depend upon pasture operation at the time." Thus, according to
the petitioner, the GOC has not established that cattle producers cannot remove cattle from public pastures on request.
Moreover, the petitioner claims that the GOC has failed to support the amount
(Cite as: 64 FR 57040, *57061)
of the adjustment for culled cows. Specifically, the GOC has not established that producers cull one cow in ten on private pastures
or that owners place older cows on public pastures.
Lastly, the petitioner states that the GOC has not supported its claim that private pastures provide grazing within 25 miles from
the patron's farm or that transportation costs between private and public pastures are materially different.
The petitioner also challenges the GOC's reliance on a survey conducted for the purposes of this investigation to substantiate the
need for these adjustments. According to the petitioner, the Department should not make adjustments that reflect the personal
preferences of a limited survey of cattlemen. The petitioner argues that the personal preferences of the surveyed ranchers are not
sufficient to establish that the PFRA pastures do not have an advantage over private pastures.
Department's Position: In accordance with section 771(5)(E) of the Act, when comparing the prices charged for public pasture
services to those charged by private providers we have attempted to ensure that the prices compared are for nearly identical
services. That is, when feasible, we have taken into account prevailing market conditions which include price, quality, availability,
marketability, transportation, and other conditions of purchase or sale. In this regard, when it appears that a difference exists
between a public good or
(Cite as: 64 FR 57040, *57061)
service and a benchmark good or service, we will consider making an adjustment when the difference is quantifiable and is clearly
demonstrated by evidence on the record. See Lumber at 22595.
In this case, we agree that the GOC has identified and supported certain adjustments that should be made. Specifically, we adjusted
for the difference in costs associated with the timing of the sale of cull cows on private and public pastures. Since ranchers using
private pastures have access to their herds and, hence, can cull cows in mid-summer, they receive a different service and a price
adjustment is warranted. While the GOC argued that this adjustment should be larger, the information on the record did not fully
substantiate the calculations suggested by the GOC. For example, while the GOC suggested that old cows would be culled in
mid-summer, while cow prices are at their peak, we agree with the petitioner that there is no evidence that a patron would
actually pay to have an old cow pastured for a season if the cow was already planned to be culled. Finally, while the petitioner has
argued that PFRA patrons may be able to manage their herds and benefit from the early sale of culled cows and calves in the same
manner as private pasture patrons, we found at *57062
(Cite as: 64 FR 57040, *57062)
verification that the PFRA roundup and drop off procedures are quite rigid and do not generally allow for the management that
the petitioner suggests.
With respect to the transportation adjustment urged by the GOC, the record
(Cite as: 64 FR 57040, *57062)
does contain evidence that nearly ten percent of community pasture patrons incur high transportation costs because they live
further than 50 miles from their respective pastures. However, the GOC did not provide evidence that this was unique to users of
public pastures. Regarding the requested adjustment for differences in weaning and the timing of the sale of calves, the GOC did
not provide evidence indicating that the majority of private pasture patrons choose to wean their calves early or that they
actually sell calves at different times than community pasture patrons. Finally, as in the Preliminary Determination and as noted
above, we have not made adjustments for costs that the GOC was unable to quantify.
With respect to the petitioner's challenge of the GOC's survey, while the number of people surveyed was limited, we determine that
the survey conducted by the GOC provides an objective and representative measure of the costs faced by patrons of private
pastures in Canada.
Comment 18: Appropriate Benchmark for Provincial Public Lease and Pasturing Rates
With respect to all three provinces which offer Crown lands for grazing and pasturing, the petitioner argues that the Department
should rely on an average of the private rates for full-service pasturing in Manitoba and Saskatchewan
(Cite as: 64 FR 57040, *57062)
and the private lease rate for land reported by the GOA as a representative benchmark. According to the petitioner, the statute
specifically requires the Department to determine the adequacy of remuneration based on prevailing conditions "in the country."
The GOA contends that, not only is there no justification for using the hybrid number the petitioner has developed on areas
outside of Alberta, but that the petitioner's data do not meet the criteria outlined in the Department's regulations at 19 CFR
351.511(a) for a proper benchmark because they simply do not represent the value of comparable land. The GOA further states
that the Department is obliged by the Act and its regulations to use a benchmark that represents the prevailing market value of the
good or service being evaluated. According to the GOA, the goods are public grazing leases in the various provinces and the only
"prevailing market value" for a good with such inherently local value is a local, provincial benchmark.
Department's Position: As stated in the Final Affirmative Countervailing Duty Determination: Certain Stainless Steel Wire
Rod From Italy, 63 FR 40474, 40481 (July 29, 1998), "the adequacy of remuneration is normally determined in relation to local
prevailing market conditions as defined by section 771(5)(E) of the Act to include, "* * * price, quality, availability, marketability,
transportation, and other conditions of purchase or sale." Consequently, the lease rates for private land in each province, when
accurate
(Cite as: 64 FR 57040, *57062)
and available, are an appropriate starting point for comparison to the respective lease rates for public land in each province.
Comment 19: Use of Facts Available With Respect to Alberta Crown Lands Basic Grazing Program
The petitioner argues that the Department should reject the GOA's entire response with respect to the leasing of Crown lands and
instead apply adverse facts available because the GOA failed to report benefits, in the form of excess compensation from oil and
gas companies, from the leasing of such lands.
The GOC and the GOA argue that the petitioner's comments on this issue and the petitioner's August 25, 1999, submission which
first raised Bill 31 should be stricken from the record because the petitioner's submission was untimely. Specifically, the GOA cites
to the Department's regulations at 19 CFR 351.301(b)(1) pointing out that the deadline for submission of factual information
related to the GOA was June 9, 1999, which was seven days prior to the Alberta verification.
Department's Position: We disagree with the respondents that the petitioner's information regarding Bill 31 and the compensation
system for lessees of public and private land should be stricken from the record. Although it was initially submitted after the
deadline, we subsequently requested the information under
(Cite as: 64 FR 57040, *57062)
section 351.301(c)(2)(i) of our regulations. Moreover, we believe this bill was highly relevant to the information sought in the our
questionnaire. Bill 31 amends, among other acts, Alberta's Public Lands Act and the Surface Rights Act, the legislation underlying
one of the programs being investigated in this proceeding (the Alberta Crown Lands Basic Grazing Program). Although the change
in the Act may have occurred after the period of investigation and may not yet be in effect, our questionnaire specifically
requested that the GOA describe any anticipated changes in the program and asked for documentation substantiating the GOA's
answer.
We believe that disclosure of Bill 31 would have given the Department a fuller understanding of the lease system in effect during
the POI. In particular, information regarding the passage of Bill 31 includes statements implying that cattlemen who graze their
livestock on public lands in Alberta receive excessive compensation from oil and gas operators who lease the subsurface rights.
As the petitioner originally alleged, and we sought to investigate, the question of whether the GOA was adequately remunerated
for its provision of Crown lands has been a central issue throughout this case. Therefore, as stated above, we believe this
information was highly relevant to our enquiry.
In light of this, the petitioner has argued that the Department should reject all of the GOA's response with respect to the Alberta
Crown Lands Basic Grazing Program. However, we do not believe the criteria for making such a
(Cite as: 64 FR 57040, *57062)
determination have been met. In particular, section 782(e) of the Act states that we shall not decline to consider information that
is necessary to the determination if the information is timely, verifiable, not so incomplete that it cannot serve as a reliable basis
for a determination, can be used without undue difficulties, and the interested party has demonstrated that it acted to the best of
its ability. All of the information presented by the GOA, other than information regarding the Surface Rights Act and Bill 31,
complies with these criteria and, thus, it would be inappropriate for us to disregard the information in making our determination.
However, with respect to the impact the Surface Rights Act and Bill 31 have on our adequacy of remuneration determination, we
are using the facts otherwise available. The use of facts available is supported under section 776(a) of the Act because the
necessary information is not available on the record. Although interested parties were given the opportunity and did submit
information on this issue, the approaching deadline for determination did not provide us the opportunity to make the additional
inquiries necessary for us to make a determination that does not rely on the facts available. In choosing the appropriate facts
available, the petitioner has argued that we should use an inference that is adverse to the interests of the GOA. However, we do not
agree that the GOA failed to cooperate by not acting to the best of its *57063
(Cite as: 64 FR 57040, *57063)
ability. While the GOA did not provide information that we