SUPPLEMENTARY INFORMATION:

Background

On June 7, 2005, the Department published in the Federal Register the Preliminary Results. We invited interested parties to comment on the results. Since the Preliminary Results, the following events have occurred.

On June 10, 2005, petitioners submitted, pursuant to 19 CFR 351.301(c), rebuttal/clarifying evidence in response to new factual information placed on the record of the review by the Department at the time of the Preliminary Results .^[1] On June 20, 2005, Canadian parties submitted factual information in response to petitioners' June 10, 2005 filing. On July 1, 2005, the Department extended the deadline for filing case and rebuttal briefs until August 11 and August 18, respectively. See the July 1, 2005 memorandum to the file from Eric B. Greynolds, Program Manager, Office of AD/CVD Enforcement III.

On November 2, 2005, we issued a supplemental questionnaire to the GOC as well to the provincial governments in which we requested that they respond ( printed page 73449) to the pass-through appendix included in the Department's September 8, 2004 initial questionnaire. On November 10, 2005, the Canadian parties responded to our supplemental questionnaire. Further, pursuant to the due dates established in our November 2, 2005 supplemental questionnaire, on November 16, 2005, interested parties submitted case briefs limited to the Canadian parties' questionnaire response. Interested parties submitted rebuttal comments on November 18, 2005.

Scope of the Order

The products covered by this order are softwood lumber, flooring and siding (softwood lumber products). Softwood lumber products include all products classified under subheadings 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 customs purposes, the written description of the merchandise subject to this order is dispositive.

As specifically stated in the Issues and Decision Memorandum accompanying the Notice of Final Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada, 67 FR 15539 (April 2, 2002) ( see comment 53, item D, page 116, and comment 57, item B-7, page 126), available at www.ia.ita.doc.gov/​frn, 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 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 the satisfaction of U.S. Customs and Border Protection (CBP) that the lumber is of U.S. origin.

(6) Softwood lumber products contained in single family home packages or kits ,^[2] 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 CBP 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 CBP may classify as stringers, radius cut box- ( printed page 73450) 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 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 was further clarified to 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 CBP'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.^[3] The presumption of non-subject status can, however, be rebutted by evidence demonstrating that the merchandise was substantially transformed in Canada.

Analysis of Comments Received

All issues raised in the case and rebuttal briefs by parties to this review are addressed in the Decision Memorandum, which is hereby adopted by this notice. A list of 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. Parties can find a complete discussion of all issues raised in this review and the corresponding recommendations in this public memorandum which is on file in the CRU. In addition, a complete version of the Decision Memorandum can be accessed directly on the World Wide Web at http://ia.ita.doc.gov/​frn. The paper copy and electronic version of the Decision Memorandum are identical in content.

Final Results of Review

In accordance with section 777(A)(e)(2)(B) of the Act, we have calculated a single country-wide ad valorem subsidy rate of 8.70 percent to be applied to all producers and exporters of the subject merchandise from Canada, other than those producers that have been excluded from the order.

The Department has previously excluded the following companies from this order:

• Armand Duhamel et fils Inc.
• Bardeaux et Cedres
• Beaubois Coaticook Inc.
• Busque & Laflamme Inc.
• Carrier & Begin Inc.
• Clermond Hamel
• J.D. Irving, Ltd.
• Les Produits Forestiers D.G., Ltee
• Marcel Lauzon Inc.
• Mobilier Rustique
• Paul Vallee Inc.
• Rene Bernard, Inc.
• Roland Boulanger & Cite. Ltee
• Scierie Alexandre Lemay
• Scierie La Patrie, Inc.
• Scierie Tech, Inc.
• Wilfrid Paquet et fils, Ltee
• B. Luken Logging Ltd.
• Frontier Lumber
• Sault Forest Products Ltd.
• Interbois Inc.
• Les Moulures Jacomau
• Richard Lutes Cedar Inc.
• Boccam Inc.
• Indian River Lumber
• Sechoirs de Beauce Inc.

See Notice of Amended Final Affirmative Countervailing Duty Determination and Notice of Countervailing Duty Order: Certain Softwood Lumber Products from Canada, 67 FR 36068 (May 22, 2002), as corrected (67 FR 37775, May 30, 2002), Final Results of Countervailing Duty Expedited Reviews: Certain Softwood Lumber Products from Canada, 68 FR 24436 (May 7, 2003), and Final Results, Reinstatement, Partial Rescission of Countervailing Duty Expedited Reviews, and Company Exclusions: Certain Softwood Lumber Products From Canada, 69 FR 10982 (March 9, 2004). The exclusion applies to all subject merchandise produced and exported by the companies listed above.

Finally, certain softwood lumber products from the Maritime Provinces are exempt from this countervailing duty order. This exemption, however, does not apply to softwood lumber products produced in the Maritime Provinces from Crown timber harvested in any other province.

Pursuant to 19 CFR 356.8, the Department shall not order liquidation until the “forty-first day after the date of publication of the notice ...” following an administrative review of merchandise exported from Canada or Mexico. Accordingly, we will instruct CBP, on or after the 41^st day after publication of the final results of this review, to liquidate shipments of certain softwood lumber products from Canada entered, or withdrawn from warehouse, for consumption from April 1, 2003, through March 31, 2004, at the above indicated aggregate ad valorem net subsidy rate. We will direct CBP to exempt from the application of the order only entries of softwood lumber products from Canada which are accompanied by an original Certificate of Origin issued by the Maritime Lumber Bureau (MLB), and those of the excluded companies listed above.

In addition, we will instruct CBP to collect cash deposits of estimated countervailing duties in the amounts indicated above of the f.o.b. price on all shipments of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the date of publication of these final results of review.

Return or Destruction of Proprietary Information

This notice serves as a reminder to parties subject to administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of return/destruction of APO material or conversion to judicial protective order is hereby requested. Failure to comply is a violation of the APO.

This administrative review and this notice are issued and published in accordance with sections 751(a)(1) and 777(i) of the Act.

Appendix I

METHODOLOGY AND BACKGROUND INFORMATION

Subsidies Valuation Information

A. Allocation Period

B. Recurring and Non-Recurring Benefits

C. Benchmarks for Loans

D. Aggregate Subsidy Rate Calculations

1. Provincial Crown Stumpage Programs

2. Other Programs

E. Numerator and Denominator Used for Calculating the Stumpage Programs' Net Subsidy Rates^[4]

1. Aggregate Numerator and Denominator

2. Adjustments to Account for Companies Excluded from the Countervailing Duty Order

3. Pass-Through

ANALYSIS OF PROGRAMS

I. Provincial Stumpage Programs Determined to Confer Subsidies

A. Financial Contribution and Specificity

B. Benefit

1. Use of First-Tier Benchmarks in Measuring Stumpage Programs Administered by the GOA, GOBC, GOO, GOQ, GOM, and GOS

2. Private Stumpage Prices in New Brunswick and Nova Scotia May Serve as a First-Tier Benchmark in Alberta, Manitoba, Ontario, Quebec, and Saskatchewan

C. Application of Maritime Prices

1. Indexing

2. Costs That Must Be Paid in Order to Harvest Private Standing Timber in New Brunswick and Nova Scotia

3. Weighting of Studwood in the Nova Scotia Benchmark

D. Selection of Benchmark Price Used for British Columbia

E. Application of U.S. Log Prices

1. Selection of Data Sources

2. Derivation of U.S. Log Prices on a per Unit Basis for Use in Comparison to Log Prices on the B.C. Coast and Interior

F. Calculation of Provincial Benefits

1. Methodology for Adjusting the Unit Prices of the Crown Stumpage Programs Administered by the GOA, GOS, GOM, GOO, and GOQ

2. Methodology for Adjusting the Unit Prices of the Crown Stumpage Program Administered by the GOBC

G. Calculation of Provincial and Country-Wide Rate

II. Non-Stumpage Programs Determined To Confer Subsidies

A. Programs Administered by the Government of Canada

1. Western Economic Diversification Program (WDP): Grants and Conditionally Repayable Contributions

2. Natural Resources Canada (NRCAN) Softwood Marketing Subsidies

B. Programs Administered by the Government of British Columbia

1. Forestry Innovation Investment Program (FIIP)

2. British Columbia Private Forest Property Tax Program

C. Programs Administered by the Government of Quebec

Private Forest Development Program

III. Programs Determined Not to Confer a Benefit

A. Programs of the Government of Canada

1. Federal Economic Development Initiative in Northern Ontario (FEDNOR)

2. Payments to the Canadian Lumber Trade Alliance (CLTA) & Independent Lumber Remanufacturing Association (ILRA)

B. Programs of the Government of British Columbia

Forest Renewal B.C. Program/Land Base Investment Program

C. Programs of the Government of Quebec

1. Assistance Under Article 28 of Investment Quebec

2. Assistance from the Societe de Recuperation d'Exploitation et de Developpement Forestiers du Quebec (Rexfor)

IV. Total Ad Valorem Rate

V. Analysis of Comments

A. Company-Specific Review Comments

Comment 1: Company-Specific Reviews

B. Subsidy Valuation Comments

1. Numerator

a. Treatment of Company-Specific Data of Excluded Companies

Comment 2: Whether Benefits to Excluded Companies Should Be Deducted from Numerator of Net Subsidy Calculation

b. Pass-Through

Comment 3: U.S. Law and WTO Agreements Require the Department to Conduct a Pass-Through Analysis

Comment 4: Whether the Department's Evaluation Criteria Is Relevant to a Pass-through Analysis

Comment 5: Whether Company-Specific Details are Required for the Department to Conduct a Pass-through Analysis

Comment 6: Benchmark to Be Used When Conducting a Pass-through Analysis

Comment 7: Whether the Department Rejected The GOO's Pass-through Claim Based on an Incorrect Understanding of Record Evidence

Comment 8: Whether the Department's November 2, 2005, Supplemental Questionnaire Imposed Unreasonable Burdens on Canadian Parties

2. Denominator

Comment 9: Attribution of Stumpage Benefit

C. Provincial Stumpage Program Comments

1. Scope and Specificity

Comment 10: Scope of the Order

Comment 11: Whether the Provincial Stumpage Programs Are Specific

2. Whether Private Stumpage Prices from Inside the Respective Subject Provinces Are Viable Benchmarks^[5]

a. Alberta

Comment 12: Whether Timber Damage Assessment Data May Serve as a Benchmark in Alberta

b. British Columbia

Comment 13: Whether the BCTS Auction Sales Are Distorted or Suppressed by Crown Stumpage Rates

Comment 14: Whether BCTS Auction Prices for Timber are Valid First-Tier benchmarks

Comment 15: B.C. Domestic Log Prices Constitute Valid Third-Tier Benchmark

c. Ontario

Comment 16: The Department Should Compare the Price for Ontario Crown Softwood Timber with Private Stumpage Prices in Ontario

Comment 17: Ontario Crown Stumpage Was Provided for More than Adequate Remuneration in Comparison to Ontario's Unsubsidized Domestic Log Market

d. Quebec

Comment 18: Whether Prices for Private Standing Timber in Quebec Are Distorted by Prices Charged in Quebec's Public Forest

Comment 19: Basis for the Department's Findings Regarding Quebec's Private Forest

3. Private Stumpage Prices from the Maritime Provinces

Comment 20: Whether the Law Requires That the Benefit Be Determined Using ( printed page 73452) Benchmarks That Reflect Market Conditions in Jurisdiction in Which the Good Is Provided

Comment 21: Whether Private Standing Timber in the Marities is Comparable to Standing Timber in Provinces East of British Columbia

Comment 22: Whether Quebec's Private Forest Is More Competitive than That of the Maritimes

Comment 23: Whether the Department Market Conditions in New Brunswick and Nova Scotia Are Similar Enough to Be Combined into a Single Benchmark Price

Comment 24: Whether the Private Stumpage Prices in the Maritimes, as Reported by AGFOR, Reflect Actual Stumpage Transactions

Comment 25: Whether Tree Diameters in Alberta and the Maritimes are Sufficiently Comparable

4. Use of U.S. Prices as Benchmark for Measuring the Adequacy of Remuneration

Comment 26: Montana as an Alternate Benchmark for Alberta

Comment 27: Use of Cross-Border Benchmark

Comment 28: Whether Fundamental Differences in Log Market Conditions Exist in the U.S. Pacific Northwest and British Columbia

Comment 29: Whether U.S. Log Price Data Are Complete, Representative, and Reliable

Comment 30: B.C. Log Import and Export Data

D. Stumpage Calculation Issues

1. Calculation of Maritime Benchmark

Comment 31: Data Used to Index Private Maritime Stumpage Prices to the POR

Comment 32: Rounding of the Maritimes Stumpage Index

Comment 33: Method Used to Weight Average Benchmark Prices in New Brunswick

Comment 34: Weighting of Benchmark Studwood Stumpage Prices in Nova Scotia

Comment 35: Method for Deriving a Single Weight Average Price for Standing Timber Prices from New Brunswick and Nova Scotia

Comment 36: Application of Marketing Fees Added to Maritimes Benchmark

Comment 37: Calculation of Marketing Board Levies Added to Private Stumpage Prices in New Brunswick

Comment 38: Calculation of Silviculture Fee Added to Private Stumpage Prices in Nova Scotia

2. Calculation of British Columbia Benchmark

Comment 39: Factor Used to Convert from Tons to Thousand Board Feet

Comment 40: Log Market Report Data Relate Only to Small Log Sales

Comment 41: High Value of Cypress

Comment 42: Log Price Data from Other States that Border British Columbia

Comment 43: Negative Species-Specific Benefit

Comment 44: Volume Conversion Factors Used for U.S. Log Prices Expressed in Thousand Board Feet

Comment 45: Pond Values

Comment 46: Stud Log Values

Comment 47: Additional U.S. Log Price Data

Comment 48: Averaging of U.S. Benchmark Log Values

3. Adjustments to Government Stumpage Prices

a. Alberta

Comment 49: Whether the Department Properly Adjusted the GOA's Administered Stumpage Price

b. British Columbia

Comment 50: Old-Growth Adjustment

Comment 51: Other Harvesting Costs for B.C. Interior

Comment 52: Proper Calculation of Profit Earned by B.C. Tenureholders

c. Saskatchewan

Comment 53: Whether the Department Properly Adjusted the GOS's Administered Stumpage Price

d. Manitoba

Comment 54: Whether the Department Properly Adjusted the GOM's Administered Stumpage Price

e. Ontario

Comment 55: Whether the Department Properly Adjusted the GOO's Administered Stumpage Price to Account for Road Costs

Comment 56: Whether the Department Properly Adjusted the GOO's Administered Stumpage Price to Account for Longer Distances from Stump to Mill and Mill to Market

Comment 57: Whether Maritimes “Studwood” Is More Comparable To Timber Entering Ontario Sawmills Than Maritimes “Sawlogs”

f. Quebec

Comment 58: Quebec Road Costs

E. Whether to Measure the Adequacy of Remuneration of the Administered Stumpage Programs Under Tier III of the Department's Regulations

Comment 59: Market Principles as Benchmark Under Third-Tier Category

F. Miscellaneous Comment

Comment 60: Tenure Security

G. Non-Stumpage Program Issues

Comment 61: Whether Loans Provided by Community Futures Development Corporations Provide a Countervailable Subsidy

Comment 62: Western Economic Diversification Program

Comment 63: Whether the Canadian Forest Service Industry, Trade and Economics Program Provides a Countervailable Subsidy

Comment 64: Article 28 of Investissement Quebec

Comment 65: SGF-Rexfor

Comment 66: Whether the Land Base Investment Program (LBIP) is Countervailable

Comment 67: Whether the Private Forest Development Program (PFDP) Is Countervailable

Comment 68: Natural Resources Canada (NRCan) Softwood Lumber Marketing Research Subsidies Under the Value-to-Wood Program (VWP) and the National Research Institutes Initiative (NRII)

Comment 69: Whether Forestry Innovation Investment (“FII”) Expenditures Are Countervailable

Comment 70: Denominator Used to Calculate the FII Subsidies

Comment 71: Litigation-Related Payments to Forest Products Association of Canada (FPAC)

Comment 72: British Columbia Private Forest Land Tax Program