Final Results of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada

AGENCY:

Import Administration, International Trade Administration, Department of Commerce.

ACTION:

Notice of Final Results of Countervailing Duty Expedited Reviews.

SUMMARY:

On August 14, 2002, the Department of Commerce (the Department) published in the Federal Register its preliminary results of 18 expedited reviews of the countervailing duty order on certain softwood lumber products from Canada for the period April 1, 2000 through March 31, 2001. See Preliminary Results of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada, 67 FR 52945 (August 14, 2002) (Preliminary Results). On November 5, 2002, the Department published its final results for 13 of these 18 expedited reviews. See Final Results and Partial Recission of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products From Canada (67 FR 67388; November 5, 2002) (Final Results). Based on our analysis of additional information and verification of the questionnaire responses, we have made changes to the estimated net subsidy rates determined in the Preliminary Results for an additional three companies in their expedited reviews. Therefore, these final results for these three expedited reviews differ from the preliminary results. For information on estimated net subsidies, please see the “Final Results of Reviews” section of this notice. In accordance with these final results of reviews, we will instruct the Bureau of Customs and Border Protection (BCBP) to refund all collected cash deposits and waive future cash deposits requirements for each reviewed company as detailed in the “Final Results of Reviews” section of this notice.

EFFECTIVE DATE:

May 7, 2003.

FOR FURTHER INFORMATION CONTACT:

Gayle Longest, Office of AD/CVD Enforcement VI, Group II, Import Administration, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue, N.W., Washington, D.C. 20230; telephone: (202) 482-3338.

SUPPLEMENTARY INFORMATION:

Background

On May 22, 2002, the Department published in the Federal Register its amended final affirmative countervailing duty determination and countervailing duty order on certain softwood lumber products (subject merchandise) from Canada (67 FR 36070), as amended (67 FR 37775; May 30, 2002). On July 17, 2002, the Department published a Notice of Initiation of Expedited Reviews which covered 73 companies that filed complete and timely review applications. (See Notice of Initiation of Expedited Reviews of the Countervailing Duty Order: Certain Softwood Lumber Products from Canada, (67 FR 46955; July 17, 2002) (Notice of Initiation).)

As explained in the Notice of Initiation, we segregated the 73 applicants into two groups. Group 1 consists of 45 companies that obtain the majority of their wood (over 50 percent of their inputs) from the United States, the Maritime Provinces, Canadian private lands, and Canadian companies excluded from the order, as well as companies that source less than a majority of their wood from these sources and do not have tenure. Group 2 includes 28 companies that source less than a majority of their wood from these sources and have acquired Crown timber through their own tenure contracts.

In our review of the applications in Group 1, we noted that, in order to conduct our analysis, we required only minimal supplemental data for 24 of the 45 companies. The other Group 1 companies required additional information and more extensive analysis. Rather than delaying the process to provide all Group 1 companies the opportunity to submit the necessary information, we issued a short questionnaire to the 24 companies requiring only minimal information and set a short deadline for the response. Of the 24 companies, 18 were able to supply the information by the deadline. We completed our preliminary analysis of those 18 companies, using the Group 1 methodology (see “Methodology” section below). See Preliminary Results.

On September 6, 2002, petitioners filed comments to the Preliminary Results. Two companies subsequently requested an analysis of whether they benefited from subsidies bestowed on their inputs: Les Bois d'Oeuvre Beaudoin & Gauthier Inc. and Meunier Lumber Company Ltd. Three other companies, Interbois Inc. (Interbois), Les Moulures Jacomau 2000, Inc. (Jacomau), and Richard Lutes Cedar, Inc. (RLC), were verified subsequent to the preliminary results of expedited reviews. We provided these three companies and petitioners with an opportunity to comment on the verification reports. We received comments on the verification reports from petitioners on October 31, 2002 and rebuttal comments from respondents on November 7, 2002, and November 22, 2002.

During the comment period for these three companies, the Department issued the Final Results for 13 of the 18 companies that were included in the Preliminary Results. We are continuing to process the other applications in Groups 1 and 2, and have issued questionnaires to both groups. This notice includes the final results of expedited reviews for Interbois, Jacomau and RLC.

Scope of the reviews

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 BCBP 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.ia.ita.doc.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 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 BCBP's 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:

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, and if included in the purchase 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 BCBP 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 BCBP 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.

In addition, this scope language has been further clarified to now specify that all softwood lumber products entered from Canada claiming non-subject status based on U.S. country of origin will be treated as non-subject U.S.-origin merchandise under the countervailing duty order, provided that these softwood lumber products meet the following condition: upon entry, the importer, exporter, Canadian processor and/or original U.S. producer establish to BCBP's satisfaction that the softwood lumber entered and documented as U.S.-origin softwood lumber was first produced in the United States as a lumber product satisfying the physical parameters of the softwood lumber scope.² The presumption of non-subject status can, however, be rebutted by evidence demonstrating that the merchandise was substantially transformed in Canada.

Verification

The Department verified Interbois, Jacomau, and RLC from September 30, 2002, through October 3, 2002. On October 22, 2002, we issued the following reports: Verification of Interbois, Inc. in the Countervailing Duty Expedited Review of Certain Softwood Lumber Products from Canada (Interbois Verification Report), Verification of Les Moulures Jacomau 2000, Inc. in the Countervailing Duty Expedited Review of Certain Softwood Lumber Products from Canada (Jacomau Verification Report), and Verification of Richard Lutes Cedar, Inc. in the Countervailing Duty Expedited Review of Certain Softwood Lumber Products from Canada (RLC Verification Report). We provided these companies and petitioners with an opportunity to comment on the verification reports. We received comments from petitioners and rebuttal comments from respondents.

Methodology

These final results include companies that obtain the majority of their wood (over 50 percent of their inputs) from the United States, the Maritime Provinces, Canadian private lands, and/or Canadian companies excluded from the order. We calculated company-specific rates based on the Group 1 methodology described in the notice of preliminary results. To obtain the company-specific stumpage benefit, we multiplied the quantity of lumber inputs (except for those specified below) by the province-specific stumpage benefit calculated in the underlying investigation, i.e., the average per-unit differential between the calculated adjusted stumpage fee for the relevant province and the appropriate benchmark for that province. For those provinces, such as British Columbia and Ontario, for which we calculated more than one per-unit benefit in the investigation, we calculated one province-wide per-unit benefit by weight-averaging the previously calculated values by the corresponding volumes of harvested softwood. As indicated in the Notice of Initiation, we have not attributed a benefit to (1) logs or lumber acquired from the Maritime Provinces, (2) logs or lumber of U.S. origin, (3) lumber produced by mills excluded in the investigation, or (4) logs from Canadian private land. We divided the stumpage benefit by the appropriate value of the company's sales to determine the company's estimated subsidy rate from stumpage and then added any benefit from other programs to obtain the cash deposit rate for the company.

Analysis of Comments Received

The issues raised in the comments on the verification reports by interested parties are addressed in the “Issues and Decision Memorandum: Final Results of Expedited Review of 3 Companies Covered by the August 14, 2002 Notice of Preliminary Results of the Countervailing Duty Expedited Reviews of Certain Softwood Lumber Products from Canada” (Decision Memorandum), dated concurrently with this notice, which is hereby adopted by this notice. As noted in the Decision Memorandum, we are addressing in these final results those issues that are related to the three companies included in this notice. Other issues, related for instance to whether certain companies benefitted from subsidies bestowed on their inputs or Group 2 methodology, will be addressed in the context of subsequent reviews. A list of the issues which parties have raised, and to which we have responded, all of which are in the Decision Memorandum, is attached to this notice as Appendix I. The Decision Memorandum is on file in the Central Records Unit in room B-099 of the Main Commerce Building. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov , under the heading “Federal Register Notices.” The paper copy and electronic version of the Decision Memorandum are identical in content.

Changes Since the Preliminary Results

We amended data for Interbois, Jacomau and RLC based on information obtained during verification. See the Interbois Verification Report, Jacomau Verification Report, and RLC Verification Report for a further discussion of such revisions.

Final Results of Review

We have calculated an individual subsidy rate for each producer/exporter subject to these expedited reviews. For the period April 1, 2000 to March 31, 2001, we determine the net subsidy to be as follows:

Because the rates for these companies are less than one percent ad valorem, which is de minimis, we determine that these companies are excluded from the countervailing duty order. We will instruct the BCBP to refund all cash deposits of estimated countervailing duties collected on all shipments of the subject merchandise produced and exported by these three reviewed companies. In addition, we will instruct the BCBP to waive cash deposit requirements of estimated countervailing duties on all shipments of the subject merchandise produced and exported by these three companies, entered, or withdrawn from warehouse, for consumption on or after the date of publication of the final results of these reviews.

This notice covers only those three companies that we have specifically identified herein. We will instruct the BCBP to continue collecting cash deposits for all non-reviewed companies at the cash deposit rates established in the amended final determination on softwood lumber from Canada, 67 FR 36070 (May 22, 2002), and/or the final results of expedited reviews, 67 FR 67388 (November 5, 2002).

These expedited reviews and notice are issued and published in accordance with section 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, (19 U.S.C. 1675(a)(1) and 19 U.S.C. 1677(f)(I)).

Appendix I - Issues and Decision Memorandum

Summary and Background

Analysis of Comments Received

Comment 1: Verification of RLC's Estimated Input Data

Comment 2: Verification of the Origin of RLC's Logs and Lumber

Comment 3: Verification of RLC's Estimated Sales Data

Comment 4: Interbois' Lumber Output