Notice of Preliminary Results of Antidumping Duty Administrative Review and Partial Rescission: Certain Softwood Lumber Products From Canada, 33063-33082 [E5-2885]

Agencies

• DEPARTMENT OF COMMERCE
• International Trade Administration

[Federal Register Volume 70, Number 108 (Tuesday, June 7, 2005)]
[Notices]
[Pages 33063-33082]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2885]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF COMMERCE

International Trade Administration

[A-122-838]


Notice of Preliminary Results of Antidumping Duty Administrative 
Review and Partial Rescission: Certain Softwood Lumber Products From 
Canada

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

EFFECTIVE DATE: June 7, 2005.
SUMMARY: The Department of Commerce (the Department) is conducting an 
administrative review of the antidumping duty order on Certain Softwood 
Lumber Products from Canada for the period May 1, 2003, to April 30, 
2004 (the POR). We preliminarily determine that sales of subject 
merchandise made by Abitibi-Consolidated Inc. (Abitibi), Buchanan 
Lumber Sales Inc. (Buchanan), Canfor Corporation (Canfor), Tembec Inc. 
(Tembec), Tolko Industries Ltd. (Tolko), Weldwood of Canada Limited 
(Weldwood), West Fraser Mills Ltd. (West Fraser), and Weyerhaeuser 
Company (Weyerhaeuser), have been made below normal value. In addition, 
based on the preliminary results for these respondents selected for 
individual review, we have preliminarily determined a weighted-average 
margin for those companies that requested, but were not selected for, 
individual review. If these preliminary results are adopted in our 
final results, we will instruct U.S. Customs and Border Protection 
(CBP) to assess antidumping duties on appropriate entries based on the 
difference between the export price and constructed export price, and 
the normal value. Furthermore, requests for review of the antidumping 
order for the following thirteen companies were withdrawn: Age Cedar 
Products, Anderson Wholesale, Inc., Bay Forest Products Ltd., Coast 
Forest & Lumber Assoc., Coast Lumber, Inc., Duluth Timber Company, Les 
Produits Forestiers Latierre, North Pacific, Usine Sartigan Inc., 
Council of Forest Industries, Specialites G.D.S. Inc., BC Veneer 
Products Ltd., and Edge Grain Forest Products. Because the withdrawal 
requests were timely and there were no other requests for review of the 
companies, we are rescinding the review for these companies. See 19 CFR 
351.213(d)(i). Interested parties are invited to comment on these 
preliminary results and partial rescission.

FOR FURTHER INFORMATION CONTACT: Daniel O'Brien or Constance Handley, 
AD/CVD Operations, Office 1, Import Administration, International Trade 
Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW, Washington, DC 20230; telephone: (202) 482-
1376 or (202) 482-0631, respectively.

SUPPLEMENTARY INFORMATION:

Background

    On May 3, 2004, the Department published a notice of opportunity to 
request an administrative review of this order. See Notice of 
Opportunity to Request Administrative Review of Antidumping or 
Countervailing Duty Order, Finding, or Suspended Investigation, 69 FR 
24117, (May 3, 2004). On May 28, 2004, in accordance

[[Page 33064]]

with section 751(a) of the Tariff Act of 1930 (the Act) and 19 CFR 
351.213(b), the Coalition for Fair Lumber Imports (the Coalition), a 
domestic interested party in this case, requested a review of 
producers/exporters of certain softwood lumber products. Also, between 
May 3, and June 2, 2004, Canadian producers requested a review on their 
own behalf or had a review of their company requested by a U.S. 
importer.
    On June 30, 2004, the Department published a notice of initiation 
of administrative review of the antidumping duty order on certain 
softwood lumber products from Canada, covering the POR. See Notice of 
Initiation of Antidumping and Countervailing Duty Administrative 
Reviews and Request for Revocation in Part, 69 FR 39409 (June 30, 
2004).1\1\
---------------------------------------------------------------------------

    \1\ This notice was further amended. See Notice of Initiation of 
Antidumping and Countervailing Duty Administrative Reviews and 
Request for Revocation in Part, 69 FR 45010 (July 28, 2004); see 
also Notice of Initiation of Antidumping and Countervailing Duty 
Administrative Reviews and Request for Revocation in Part, 69 FR 
52857 (August 30, 2004).
---------------------------------------------------------------------------

    The Department received requests for review from more than 400 
companies. Accordingly, in July 2004, in advance of issuing antidumping 
questionnaires, the Department issued to all companies pursuing an 
administrative review, a letter requesting total quantity and value of 
subject merchandise exported to the United States during the POR. 
Companies were required to submit their responses to the Department by 
July 22, 2004. In addition, we received comments from interested 
parties on the respondent selection process, which included proposed 
methodologies.
    Upon consideration of the information received with respect to 
respondent selection, on August 23, 2004, the Department selected as 
mandatory respondents the eight largest exporters/producers of subject 
merchandise during the POR: Abitibi, Buchanan, Canfor, Tembec, Tolko, 
Weldwood, West Fraser, and Weyerhaeuser. See Memorandum from James 
Kemp, International Trade Compliance Analyst, to Jeffrey May, Deputy 
Assistant Secretary, regarding Selection of Respondents (August 23, 
2004) (Selection of Respondents Memorandum). See also Selection of 
Respondents section below.
    On August 24, 2004, the Department issued sections A, B, C, D, and 
E of the antidumping duty questionnaire to the selected respondents. 
The respondents submitted their initial responses to the antidumping 
questionnaire from September through December of 2004. After analyzing 
these responses, we issued supplemental questionnaires to the 
respondents to clarify or correct the initial questionnaire responses. 
We received timely responses to these questionnaires.

Partial Rescission

    On July 22, 2004, Specialites G.D.S. Inc. withdrew its request for 
administrative review and on September 9, 2004, BC Veneer Products 
Ltd., and Edge Grain Forest Products withdrew their requests for 
administrative review of the antidumping duty order. On July 7, 2004, 
the Coalition, with respect to Age Cedar Products, Anderson Wholesale, 
Inc., Bay Forest Products Ltd., Coast Forest & Lumber Assoc., Coast 
Lumber, Inc., Duluth Timber Company, Les Produits Forestiers Latierre, 
North Pacific, Usine Sartigan Inc., and Council of Forest Industries, 
also withdrew its request for administrative reviews of the antidumping 
duty order. Because the requests were timely filed, i.e., within 90 
days of publication of the Initiation Notice, and because there were no 
other requests for review of the above-mentioned companies, we are 
rescinding the review with respect these companies in accordance with 
19 CFR 351.213(d)(1). The Coalition also withdrew its request with 
regard to Buchanan Distribution Inc., Les Produits Forestiers Temrex, 
and Usine St. Alphonse, Inc. Les Produits Forestiers Temrex Usine St. 
Alphonse, Inc. is, in fact, a single entity, although it appeared as 
two entities in the June 30, 2004, initiation notice pursuant to the 
Coalition's request. Buchanan Distribution Inc. and Les Produits 
Forestiers Temrex Usine St. Alphonse, Inc. are, respectively, 
affiliated and collapsed with Buchanan and Tembec, and, therefore they 
continue to be covered by the review.

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 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;-2
    (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 under 
review is dispositive.
    Softwood lumber products excluded from the scope:
     trusses and truss kits, properly classified under HTSUS 
4418.90
     I-joist beams
     assembled box spring frames
     pallets and pallet kits, properly classified under HTSUS 
4415.20
     edge-glued wood, properly classified under HTSUS 
4421.90.97.40 (formerly HTSUS 4421.90.98.40).
     properly classified complete door frames.
     properly classified complete window frames
     properly classified furniture
Softwood lumber products excluded from the scope only if they meet 
certain requirements:
     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 4421.90.97.40 (formerly HTSUS 4421.90.98.40).
     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

[[Page 33065]]

make a particular box-spring frame, with no further processing 
required. None of the components exceeds 1'' in actual thickness or 
83'' in length.
     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.
     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.
 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 CBP's 
satisfaction that the lumber is of U.S. origin.
     Softwood lumber products contained in single family home 
packages or kits,\2\ regardless of tariff classification, are excluded 
from the scope of the orders if the following criteria are met:
---------------------------------------------------------------------------

    \2\ To ensure administrability, we clarified the language of 
this exclusion to require an importer certification and to permit 
single or multiple entries on multiple days. We also instructed 
importers to retain and make available for inspection specific 
documentation in support of each entry.
---------------------------------------------------------------------------

    (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, subfloor, sheathing, 
beams, posts, connectors and if included in 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) The whole package must be imported under a single consolidated 
entry when permitted by CBP, whether or not on a single or multiple 
trucks, rail cars or other vehicles, which shall be on the same day 
except when the home is over 2,000 square feet;
    (E) The following documentation must be included with the entry 
documents:
     a copy of the appropriate home design, plan, or blueprint 
matching the entry;
     a purchase contract from a retailer of home kits or 
packages signed by a customer not affiliated with the importer;
     a listing of inventory of all parts of the package or kit 
being entered that conforms to the home design package being entered;
     in the case of multiple shipments on the same contract, 
all items listed immediately above which are included in the present 
shipment shall be identified as well.
    We have determined that the excluded products listed above are 
outside the scope of this order provided the specified conditions are 
met. Lumber products that CBP 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 4418.90.40.90, 
4421.90.70.40, and 4421.90.98.40. Due to changes in the 2002 HTSUS 
whereby subheading 4418.90.40.90 and 4421.90.98.40 were changed to 
4418.90.45.90 and 4421.90.97.40, respectively, we are adding these 
subheadings as well.
    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 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.
---------------------------------------------------------------------------

    \3\ See the scope clarification message (3034202), dated 
February 3, 2003, to CBP, regarding treatment of U.S.-origin lumber 
on file in the Central Records Unit, Room B-099 of the main Commerce 
Building.
---------------------------------------------------------------------------

Selection of Respondents

    Section 777A(c)(1) of the Act directs the Department to calculate 
individual dumping margins for each known exporter and producer of the 
subject merchandise. However, section 777A(c)(2) of the Act gives the 
Department the discretion, when faced with a large number of exporters/
producers, to limit its examination to a reasonable number of such 
companies if it is not practicable to examine all companies. Where it 
is not practicable to examine all known exporters/producers of subject 
merchandise, this provision permits the Department to review either: 
(1) a sample of exporters, producers, or types of products that is 
statistically valid based on the information available at the time of 
selection, or (2) exporters and producers accounting for the largest 
volume of the subject merchandise that can reasonably be examined.
    Responses to the Department's information request were received 
July 13 through July 27, 2004. After consideration of the data 
submitted, and the complexities unique to this proceeding, as well as 
the resources available to the Department, we determined that it was 
not practicable in this review to examine all known exporters/producers 
of subject merchandise. We found that given our resources, we would be 
able to review the eight exporters/producers with the greatest export 
volume, as identified above. For a more detailed discussion of 
respondent selection in this review, See Selection of Respondents 
Memorandum. We received a written request from one company\4\ to be 
included as a voluntary respondent in this review.
---------------------------------------------------------------------------

    \4\ In this proceeding, we received a written request from 
Riverside Forest Products (June 24, 2004) to be a voluntary 
respondent. As all the mandatory respondents participated, we were 
unable to accommodate this request.
---------------------------------------------------------------------------

Collapsing Determinations

    The Department's regulations provide for the treatment of 
affiliated producers as a single entity where: (1) those producers have 
production facilities for similar or identical products that would not 
require substantial retooling of either facility in order to 
restructure manufacturing priorities; and (2) the

[[Page 33066]]

Department concludes that there is a significant potential for the 
manipulation of price or production.\5\ In identifying a significant 
potential for the manipulation of price or production, the Department 
may consider such factors as: (i) the level of common ownership; (ii) 
the extent to which managerial employees or board members of one firm 
sit on the board of directors of an affiliated firm; and (iii) whether 
operations are intertwined, such as through the sharing of sales 
information, involvement in production and pricing decisions, the 
sharing of facilities or employees, or significant transactions between 
the affiliated producers.\6\ These factors are illustrative, and not 
exhaustive.
---------------------------------------------------------------------------

    \5\ See 19 CFR 351.401(f)(1).
    \6\ See 19 CFR 351.401(f)(2).
---------------------------------------------------------------------------

    Canfor and Slocan merged operations on April 1, 2004. On December 
20, 2004, the Department determined that the post-merger Canfor is the 
successor-in-interest to both the pre-merger Canfor and Slocan. See 
Notice of Final Results of Antidumping Duty Administrative Review and 
Notice of Final Results of Antidumping Duty Changed Circumstances 
Review: Certain Softwood Lumber Products from Canada, 67 FR 75921 
(December 20, 2004). For the purposes of these preliminary results, we 
have calculated three separate margins: one each for Canfor and Slocan 
individually for the eleven months of the POR prior to April 1, 2004, 
and a third margin for the post-merger Canfor for April 2004. The 
resulting cash deposit rate is a weighted average of the three 
calculated margins. In addition, Canfor purchased Daaquam Lumber Inc. 
(Daaquam) on May 27, 2003. Daaquam functions as an independent 
subsidiary within Canfor Corporation. Canfor reported all sales of 
lumber produced by the former Daaquam facilities during the POR. For 
purposes of this review, we considered only those sales made after the 
date of purchase. Finally, Canfor reported the sales of its affiliates 
Lakeland Mills Ltd. and The Pas Lumber Company Ltd.\7\
---------------------------------------------------------------------------

    \7\ Canfor continues to be collapsed with its affiliate Skeena 
Cellulose. However, Canfor was excused from reporting sales of its 
affiliates because of their low volume. We note that in the last 
review Canfor was collapsed with its affiliates Howe Sound Pulp and 
Paper Limited Partnership (Howe Sound). In the current review, 
Canfor reported that Howe Sound had sold all of its lumber-producing 
equipment. Therefore, we have removed Howe Sound from the Canfor 
Group.
---------------------------------------------------------------------------

    In addition, respondents reported, in their questionnaire 
responses, the sales of certain affiliated companies. Abitibi reported 
the sales of subject merchandise produced by its affiliates Produits 
Forestiers Petit Paris, Inc., Produits Forestiers La Tuque, Inc., and 
Societe en Commandite Scierie Opticiwan. Buchanan reported the sales of 
its affiliates Atikokan Forest Products Ltd., Long Lake Forest Products 
Inc., Nakina Forest Products Limited, Buchanan Distribution Inc., 
Buchanan Forest Products Ltd., Great West Timber Ltd., Dubreuil Forest 
Products Ltd., Northern Sawmills Inc., and McKenzie Forest Products 
Inc. Buchanan was excused from reporting the sales of the subject 
merchandise produced by its affiliate, Solid Wood Products Inc. Tembec 
reported the sales of Les Industries Davidson, Inc.\8\ as well as 
Tembec affiliates Marks Lumber Ltd., Temrex Limited Partnership, and 
791615 Ontario Limited (Excel Forest Products). Tolko was excused from 
reporting the sales of Gilbert Smith Forest Products, Ltd., although 
(Gilbert Smith) continues to be collapsed with Tolko.\9\ Weldwood 
reported the sales of its affiliated reseller Weldwood Sales 
Incorporated (WSI) in its questionnaire response. In addition, Weldwood 
reported sales from joint venture mills that it operates. These 
operations are Babine Forest Products Company, Decker Lake Forest 
Products Limited, and Houston Forest Products Company. Weldwood also 
reported sales of subject merchandise from Sunpine Forest Products 
Limited, a subsidiary of Sunpine Incorporated, which is a subsidiary of 
Weldwood. West Fraser reported the sales of its affiliates West Fraser 
Forest Products Inc. (WFFP) and Seehta Forest Products Ltd. 
Weyerhaeuser reported the sales of its affiliate Weyerhaeuser 
Saskatchewan Ltd. Upon review of the questionnaire responses, we 
determined that the affiliates discussed above were properly collapsed 
with the respective respondent companies for the purposes of this 
review.
---------------------------------------------------------------------------

    \8\ Tembec purchased the shares of Davidson on November 5, 2001, 
and as of December 27, 2003, Davidson became a division of Tembec. 
The Davidson Division's financial results have been fully 
consolidated in Tembec's financial statements for the entirety of 
the POR. Therefore, we are no longer listing Davidson separately as 
part of the Tembec Group.
    \9\ We note that in the first administrative review, Tolko's 
affiliate Compwood Products Ltd. (Compwood) was listed as part of 
the Tolko Group. Tolko has not been collapsed with Compwood, a 
laminated beam producer. Rather Tolko has reported sales to Compwood 
as sales to an affiliated party.
---------------------------------------------------------------------------

    The Department excused individual respondents from reporting the 
sales of specific merchandise or sales by certain affiliates during 
this review. These specific reporting exemptions were granted to the 
companies because the sales were determined to be a relatively small 
percentage of total U.S. sales, burdensome to the company to report and 
for the Department to review, and would not materially affect the 
results of this review.\10\
---------------------------------------------------------------------------

    \10\ See Memorandum from James Kemp, David Neubacher, and 
Ashleigh Batton to Susan Kuhbach, regarding Individual Reporting 
Exemption Requests of Certain Respondent Companies (October 7, 
2004); see also Memorandum from James Kemp, David Neubacher, and 
Ashleigh Batton to Susan Kuhbach, regarding Individual Reporting 
Exemption Requests of Buchanan Lumber Sales Ltd., West Fraser Mills 
Ltd., and Weyerhaeuser Company (October 19, 2004); see also 
Memorandum from Ashleigh Batton and Shane Subler to Susan Kuhbach 
regarding Buchanan Lumber Sales Ltd. and Weldwood of Canada Limited 
Individual Reporting Exemption Requests (November 1, 2004); see also 
Memorandum from Ashleigh Batton to Susan Kuhbach regarding 
Individual Reporting Exemption Request for Buchanan Lumber Sales 
Ltd. (December 13, 2004).
---------------------------------------------------------------------------

Treatment of Sales Made on a Random-Lengths Basis

    All of the respondents made a portion of their sales during the POR 
on a random-length\11\ (also referred to as a mixed-tally) basis. 
Information on the record indicates that the respondents negotiate a 
single per-unit price for the whole tally with the customer, but that 
they take the composition of lengths in the tally into account when 
quoting this price. The price on the invoice is the blended (i.e., 
average) price for the tally. Therefore, the line-item price on the 
invoice to the customer does not reflect the value of the particular 
product, but rather the average value of the combination of products.
---------------------------------------------------------------------------

    \11\ For the purposes of this review, we are defining a random-
length sale as any sale which contains multiple lengths, for which a 
blended (i.e., average) price has been reported.
---------------------------------------------------------------------------

    Sections 772(a) and (b) and 773(a)(1)(B)(i) of the Act direct the 
Department to use the price at which the product was sold in 
determining export price (EP), constructed export price (CEP), and 
normal value (NV). In this case, the price at which the products were 
sold is the total amount on the invoice. The respondents' choice to 
divide that price evenly over all products on the invoice represents an 
arbitrary allocation which is not reflective of the underlying value of 
the individual products within the tally. However, with the exception 
of Weldwood and West Fraser, the respondents do not keep track of any 
underlying single-length prices in such a way that they can 
``deconstruct'' or reallocate the prices on the invoice to more 
properly reflect the relative differences in the market value of each 
unique product that were taken into account in determining the total 
invoice price.

[[Page 33067]]

    For all companies except Weldwood and West Fraser, for purposes of 
these preliminary results, we reallocated the total invoice price of 
sales made on a random-lengths basis, where possible, using the average 
relative values of company-specific, market-specific single-length 
sales made within a two-week period (i.e., one week on either side) of 
the tally whose price is being reallocated. If no such sales were 
found, we looked in a four-week period (i.e., two weeks on either side 
of the sale). We note that a single-length-sale match must be available 
for each line item in the tally in order to perform a reallocation 
based on relative price. If there were not single-length sales for all 
items in the tally within a four-week period, we continued to use the 
reported price as neutral facts available, pursuant to section 
776(a)(1) of the Act. For Weldwood and West Fraser, we used the 
reported length-specific prices. This methodology was fully described 
in detail during the last administrative review. See Notice of Final 
Results of Antidumping Duty Administrative Review and Notice of Final 
Results of Antidumping Duty Changed Circumstances Review: Certain 
Softwood Lumber Products from Canada, 69 FR 75921 (December 20, 2004) 
and accompanying Issues and Decision Memorandum at comment 5.

Fair Value Comparisons

    We compared the EP or the CEP, as applicable, to the NV, as 
described in the Export Price and Constructed Export Price and Normal 
Value sections of this notice. We first attempted to compare 
contemporaneous sales in the U.S. and comparison markets of products 
that were identical with respect to the following characteristics: 
product type, species, grade group, grade, dryness, thickness, width, 
length, surface, trim and processing type. Where we were unable to 
compare sales of identical merchandise, we compared products sold in 
the United States with the most similar merchandise sold in the 
comparison markets based on the characteristics of grade, dryness, 
thickness, width, length, surface, trim and processing type,\12\ in 
this order of priority. Consistent with prior segments of this 
proceeding, we did not match across product type, species or grade 
group. Where there were no appropriate comparison-market sales of 
comparable merchandise, we compared the merchandise sold in the United 
States to constructed value (CV), in accordance with section 773(a)(4) 
of the Act. We generally relied on the date of invoice as the date of 
sale. Consistent with the Department's practice, where the invoice was 
issued after the date of shipment, we relied on the date of shipment as 
the date of sale.
---------------------------------------------------------------------------

    \12\ We note that Tembec requested that the Department revise 
the model match criteria to include a new length category for nine-
foot lumber. While Tembec submitted some information on stud prices, 
it did not address all categories of nine-foot lumber for which it 
was requesting a change. Further, none of the other interested 
parties requested that nine-foot lumber be treated differently than 
that size of lumber had been treated in the investigation or first 
review, nor did they break out sales of nine-foot lumber. While 
Tembec argued that its sales of nine-foot lumber were unique and 
deserved distinctive treatment, we note that published prices also 
exist for seven-foot six-inch studs, which continue to be grouped 
with other studs of similar length. Therefore, for purposes of the 
current review we have continued to use the length categories 
established in the underlying investigation.
---------------------------------------------------------------------------

Export Price and Constructed Export Price

    In accordance with section 772 of the Act, we calculated either an 
EP or a CEP, depending on the nature of each sale. Section 772(a) of 
the Act defines EP as the price at which the subject merchandise is 
first sold before the date of importation by the exporter or producer 
outside the United States to an unaffiliated purchaser in the United 
States, or to an unaffiliated purchaser for exportation to the United 
States.
    Section 772(b) of the Act defines CEP as the price at which the 
subject merchandise is first sold in the United States before or after 
the date of importation, by or for the account of the producer or 
exporter of the merchandise, or by a seller affiliated with the 
producer or exporter, to an unaffiliated purchaser, as adjusted under 
sections 772(c) and (d) of the Act.
    For all respondents, we calculated EP and CEP, as appropriate, 
based on prices charged to the first unaffiliated customer in the 
United States. We found that all of the respondents made a number of EP 
sales during the POR. These sales are properly classified as EP sales 
because they were made outside the United States by the exporter or 
producer to unaffiliated customers in the United States prior to the 
date of importation.
    We also found that each respondent made CEP sales during the POR. 
Some of these sales involved softwood lumber sold from U.S. reload or 
through vendor-managed inventory (VMI) locations. Because such sales 
were made by the respondent after the date of importation, the sales 
are properly classified as CEP sales. In addition, Weldwood, West 
Fraser, and Weyerhaeuser made sales to the United States through U.S. 
affiliates.
    We made company-specific adjustments as follows:
     (A) Abitibi
    Abitibi made both EP and CEP transactions. We calculated an EP for 
sales where the merchandise was sold directly by Abitibi to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts of the record. We 
calculated a CEP for sales made by Abitibi to the U.S. customer through 
VMI or reload centers after importation into the United States. EP and 
CEP were based on the packed, delivered, ex-mill, and free-on-board 
(FOB) reload center prices, as applicable.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to reload and VMI centers, as well 
as freight to the U.S. customer, warehousing, brokerage and handling, 
and inland insurance. We also deducted any billing adjustments, 
discounts, and rebates.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses (e.g., credit expenses) and imputed 
inventory carrying costs. Abitibi did not report any other indirect 
selling expenses incurred in the United States. In accordance with 
section 772(d)(3) of the Act, we deducted an amount of profit allocated 
to the expenses deducted under sections 772(d)(1) and (2) of the Act. 
See Memorandum from Saliha Loucif to the File, regarding Abitibi's 
Analysis for the Preliminary Results (May 31, 2005) (Abitibi's 
Preliminary Calculation Memorandum).
    (B) Buchanan
    Buchanan made both EP and CEP transactions during the POR. We 
calculated an EP for sales where the merchandise was sold directly by 
Buchanan to the first unaffiliated purchaser in the United States prior 
to importation, and CEP was not otherwise warranted based on the facts 
on the record. We calculated a CEP for sales made by Buchanan to the 
U.S. customer through reload centers after importation into the United 
States. EP and CEP were based on the packed, delivered, ex-mill, FOB 
mill, and FOB reload center prices, as applicable.
    We made deductions from starting prices for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to reload centers, freight to the 
U.S. customer,

[[Page 33068]]

warehousing, brokerage, and a movement variance. We also deducted any 
discounts from the starting price, and added any billing adjustments 
and other miscellaneous charges/credits.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses, (e.g., credit expenses) and imputed 
inventory carrying costs. In accordance with section 772(d)(3) of the 
Act, we deducted an amount of profit allocated to the expenses deducted 
under sections 772(d)(1) and (2) of the Act. See Memorandum from 
Ashleigh Batton to the File, regarding Buchanan's Analysis for the 
Preliminary Results (May 31, 2005) (Buchanan's Preliminary Calculation 
Memorandum).
    (C) Canfor
    Canfor made both EP and CEP transactions. We calculated an EP for 
sales where the merchandise was sold directly by Canfor to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts of the record. We 
calculated a CEP for sales made by Canfor to the U.S. customer through 
VMI or reload centers after importation into the United States. EP and 
CEP were based on the packed, delivered, ex-mill, FOB mill, and FOB 
reload center prices, as applicable.
    From its sales locations in the United States and Canada, Canfor 
made sales of Canfor-produced merchandise that had been commingled with 
lumber from other producers. Canfor provided a weighting factor to 
determine the quantity of Canfor-produced Canadian merchandise for all 
sales. We are using the weighting factors to estimate the volume of 
Canfor-produced merchandise included in each sale.
    In some cases, the other producers knew or had reason to know that 
the merchandise purchased by Canfor was destined for the United States. 
For example, Canfor occasionally purchased merchandise from another 
producer and had the producer arrange freight from the producer's mill 
in Canada to the customer in the United States. We did not include such 
sales in our margin calculations. In other situations, Canfor purchased 
merchandise and the producer shipped it to U.S. reload centers, VMI 
locations, or to Canfor USA where it was commingled with lumber 
produced by Canfor. While the producer had knowledge that these sales 
were destined for the United States, Canfor was unable to link the 
purchases of lumber with a specific sale to the unaffiliated customer. 
Therefore, Canfor developed the weighting factor to determine, based on 
inventory location and control-number and the percentage of lumber at 
the specific inventory location and control-number, the percentage of 
lumber at the inventory location that was produced by Canfor. We are 
multiplying the weighting factor by the quantity of lumber in each sale 
to estimate the volume of Canfor-produced merchandise in each sale in 
the United States and home market, and to eliminate the estimated non-
Canfor produced merchandise.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to reload centers or VMI 
locations, as well as freight to the U.S. customer, warehousing, 
brokerage and handling, and miscellaneous movement charges. We also 
deducted any discounts and rebates from the starting price.
    In addition to these adjustments, for CEP sales, in accordance with 
section 772(d)(1) of the Act, we adjusted the starting price by the 
amount of direct selling expenses and revenues (e.g., credit expenses 
and interest revenue). We further reduced the starting price by the 
amount of indirect selling expenses incurred in the United States. 
Additionally, in accordance with section 772(d)(3) of the Act, we 
deducted an amount of profit allocated to the expenses deducted under 
sections 772(d)(1) and (2) of the Act. Canfor reported a limited number 
of sales of purchased lumber for which the producer did not have 
knowledge that the lumber was destined for the United States. Because 
the lumber was very small in quantity and separately identifiable, we 
removed it from our calculation. Finally, we made additional 
corrections to the U.S. sales data based upon our findings at 
verification. See Memorandum from Daniel O'Brien and David Neubacher to 
the File, regarding Canfor's Analysis for the Preliminary Results (May 
31, 2005) (Canfor's Preliminary Calculation Memorandum).
    (D) Tembec
    Tembec made both EP and CEP transactions during the POR. We 
calculated an EP for sales where the merchandise was sold directly by 
Tembec to the first unaffiliated purchaser in the United States prior 
to importation. We calculated a CEP for sales made by Tembec to the 
U.S. customer through U.S. reload facilities or through VMI facilities. 
EP and CEP were based on the packed, delivered, FOB mill, FOB reload/
VMI center and FOB destination prices, as applicable.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to Canadian reload centers and 
Canadian warehousing expenses, as well as freight to the U.S. customer 
or reload facility, U.S. warehousing expenses, and U.S. brokerage. We 
also deducted from the starting price any discounts and rebates.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses (e.g., credit expenses) and indirect 
selling expenses. Finally, in accordance with section 772(d)(3) of the 
Act, we deducted an amount of profit allocated to the expenses deducted 
under sections 772(d)(1) and (2) of the Act. See Memorandum from Saliha 
Loucif to the File, regarding Tembec's Analysis for the Preliminary 
Results (May 31, 2005) (Tembec's Preliminary Calculation Memorandum).
    (E) Tolko
    Tolko made both EP and CEP transactions. We calculated EP for sales 
where the merchandise was sold directly by Tolko to the first 
unaffiliated purchaser in the United States prior to importation, and 
CEP was not otherwise warranted based on the facts of the record. We 
calculated CEP for sales made by Tolko to the U.S. customer through VMI 
or reload centers after importation into the United States. EP and CEP 
were based on the packed, delivered, ex-mill, FOB mill, and FOB reload 
center prices, as applicable.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to reload centers or VMI 
locations, as well as freight to the U.S. customer, warehousing, 
brokerage and handling, and miscellaneous movement charges. We also 
deducted any discounts and rebates from the starting price.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses (e.g., credit expenses, warranty 
expenses) and imputed inventory carrying costs. Finally, in accordance 
with section 772(d)(3) of the Act, we deducted an amount for profit 
allocated to the expenses deducted under sections 772(d)(1) and (2) of 
the Act. See Memorandum from Daniel Alexy to the File, regarding 
Tolko's Analysis for the

[[Page 33069]]

Preliminary Results (May 31, 2005) (Tolko's Preliminary Calculation 
Memorandum).
    (D) Weldwood
    Weldwood made both EP and CEP transactions. We calculated an EP for 
sales in which the merchandise was sold directly by Weldwood to the 
first unaffiliated purchaser in the United States prior to importation, 
and in which CEP was not otherwise warranted based on the facts of the 
record. We calculated a CEP for sales made by WSI to the U.S. customer 
through reload centers after importation into the United States. EP and 
CEP were based on the ex-mill, carriage paid to reload (CPT reload), 
and delivered prices, as applicable.
    In accordance with section 772(c)(2)(A) of the Act, we reduced the 
starting price to account for movement expenses. These included the net 
freight expenses incurred in transporting merchandise to reload 
centers, net freight to the U.S. customer, and U.S. brokerage. We also 
deducted early payment discounts, credit or debit adjustments, and 
other relevant price adjustments from the starting price.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses (e.g., credit expenses) and imputed 
inventory carrying costs. In accordance with section 772(d)(3) of the 
Act, we deducted an amount of profit allocated to the expenses deducted 
under sections 772(d)(1) and (2) of the Act. Finally, we made 
additional corrections to the U.S. sales data based upon our findings 
at verification. See Memorandum from Shane Subler to the File, 
regarding Weldwood's Analysis for the Preliminary Results (May 31, 
2005) (Weldwood's Preliminary Results Calculation Memorandum).
    (E) West Fraser
    West Fraser made both EP and CEP transactions. We calculated an EP 
for sales where the merchandise was sold directly by West Fraser to the 
first unaffiliated purchaser in the United States prior to importation, 
and CEP was not otherwise warranted based on the facts of the record. 
We calculated a CEP for sales made by WFFP to the U.S. customer through 
VMI or reload centers after importation into the United States. EP and 
CEP were based on the packed, delivered, ex-mill, and FOB reload center 
prices, as applicable.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
incurred in transporting merchandise to reload centers and to VMI 
customers, freight to the U.S. customer, warehousing, and U.S. and 
Canadian brokerage. We also deducted any discounts and rebates from the 
starting price.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including direct selling expenses, (e.g., credit expenses) and imputed 
inventory carrying costs. Finally, in accordance with section 772(d)(3) 
of the Act, we deducted an amount of profit allocated to the expenses 
deducted under sections 772(d)(1) and (2) of the Act. See Memorandum 
from David Neubacher to the File, regarding West Fraser's Analysis for 
the Preliminary Results (May 31, 2005) (West Fraser's Preliminary 
Calculation Memorandum).
    (F) Weyerhaeuser
    Weyerhaeuser made both EP and CEP transactions. We calculated an EP 
for sales where the merchandise was sold directly by Weyerhaeuser to 
the first unaffiliated purchaser in the United States prior to 
importation, and CEP was not otherwise warranted based on the facts of 
the record. We calculated a CEP for sales made by Weyerhaeuser to the 
U.S. customer through reload centers, VMIs, and Weyerhaeuser's 
affiliated reseller Weyerhaeuser Building Materials (WBM) after 
importation into the United States. EP and CEP were based on the 
packed, delivered, or FOB prices.
    From its sales locations in the United States and Canada, 
Weyerhaeuser made sales of merchandise which had been commingled with 
that of other producers. Weyerhaeuser provided a weighting factor to 
determine the quantity of Weyerhaeuser-produced Canadian merchandise 
for these sales. We are multiplying the weighting factor by the 
quantity of lumber in each U.S. and home market sale to estimate the 
volume of Weyerhaeuser-produced merchandise in each transaction and to 
eliminate the estimated non-Weyerhaeuser-produced merchandise from our 
margin calculation.
    In some cases, the other producers knew or had reason to know that 
the merchandise purchased by Weyerhaeuser was destined for the United 
States. For example, Weyerhaeuser routinely purchased merchandise and 
arranged freight from the producer's mill in Canada to the customer in 
the United States. We did not include such sales in our margin 
calculations. In other situations, Weyerhaeuser purchased merchandise 
and shipped it to U.S. warehouses where it was commingled with lumber 
produced by Weyerhaeuser. While the producer had knowledge that these 
sales were destined for the United States, Weyerhaeuser was unable to 
link the purchases with the specific sale to the unaffiliated customer. 
Therefore, Weyerhaeuser developed a second weighting factor to 
determine the quantity of the sale for which the third-party producer 
did not know, or have reason to know, that the merchandise was destined 
for the United States. We are multiplying the weighting factor by the 
quantity of lumber in each U.S. sale to estimate the volume of 
merchandise for which the producer did not have knowledge of 
destination in each transaction. We included this quantity in our 
margin calculation and excluded the estimated volume for which the 
producer did have knowledge of U.S. destination.
    We made deductions from the starting price for movement expenses in 
accordance with section 772(c)(2)(A) of the Act. These include freight 
to U.S. and Canadian warehouses or reload centers, warehousing expense 
in Canada and the United States, brokerage and handling, and freight to 
the final customer. We also deducted from the starting price any 
discounts, billing adjustments, and rebates.
    In accordance with section 772(d)(1) of the Act, for CEP sales, we 
deducted from the starting price those selling expenses that were 
incurred in selling the subject merchandise in the United States, 
including indirect selling expenses and direct selling expenses (e.g., 
credit expenses). Additionally, in accordance with section 772(d)(3) of 
the Act, we deducted an amount for CEP profit. See Memorandum from 
Constance Handley to the File, regarding Weyerhaeuser's Analysis for 
the Preliminary Results (May 31, 2005) (Weyerhaeuser's Preliminary 
Calculation Memorandum).

Normal Value

A. Selection of Comparison Markets
    Section 773(a)(1) of the Act directs that NV be based on the price 
at which the foreign like product is sold in the home market, provided 
that the merchandise is sold in sufficient quantities (or value, if 
quantity is inappropriate) and that there is no particular market 
situation that prevents a proper comparison with the EP or CEP. The Act 
contemplates that quantities (or value) will normally be considered 
insufficient if they are less than five percent of the aggregate 
quantity (or value) of sales of the subject merchandise to the United 
States. We

[[Page 33070]]

found that all eight respondents had viable home markets for lumber.
    To derive NV, we made the adjustments detailed in the Calculation 
of Normal Value Based on Home-Market Prices and Calculation of Normal 
Value Based on Constructed Value, sections below.
B. Cost of Production Analysis
    Because the Department found in the most recently completed segment 
of the proceeding at the time the questionnaire was sent (i.e., the 
investigation), that five\13\ of the respondents made sales in the home 
market at prices below the cost of producing the merchandise and 
excluded such sales from NV, the Department determined that there were 
reasonable grounds to believe or suspect that softwood lumber sales 
were made in Canada at prices below the cost of production (COP) in 
this administrative review for those five respondents. See section 
773(b)(2)(A)(ii) of the Act. As a result, the Department initiated a 
COP inquiry for such respondents.
---------------------------------------------------------------------------

    \13\ Abitibi, Tembec, West Fraser, Weyerhaeuser, and Canfor. As 
discussed above, during the investigation, Canfor and Slocan merged 
as of April 1, 2004. Both companies had sales which were disregarded 
because they were below the cost of production.
---------------------------------------------------------------------------

    On December 21, 2004, the Coalition made an allegation of sales 
below the cost of production (COP) with respect to Weldwood. We found 
that the Coalition's allegation provided the Department with a 
reasonable basis to believe or suspect that sales in the home market 
have been made at prices below the COP by Weldwood. Accordingly, we 
initiated an investigation to determine whether Weldwood's home market 
sales of certain softwood lumber products were made at prices below the 
COP during the POR. See Memorandum from Shane Subler to Susan Kuhbach, 
regarding Allegation of Sales Below Cost of Production for Weldwood 
(January 26, 2005).
    Furthermore, during the first administrative review, we determined 
to disregard sales made by Buchanan and Tolko that were below the cost 
of production. In accordance with section 773(b)(2)(A)(i) of the Act, 
the Department initiated a COP inquiry to determine whether Buchanan 
and Tolko made home-market sales at prices below their respective COPs 
during this POR.
    1. Calculation of COP
    In accordance with section 773(b)(3) of the Act, we calculated a 
weighted-average COP based on the sum of the cost of materials and 
fabrication for the foreign like product, plus amounts for general and 
administrative (G&A) expenses, selling expenses, packing expenses and 
interest expenses.
    2. Cost Methodology
    In our section D questionnaire, we solicited information from the 
respondents that allows for a value-based cost allocation methodology 
for wood and sawmill costs (i.e., those costs presumed to be joint 
costs), including by-product revenue. We allowed for the value 
allocation to cover species, grade, and dimension (i.e., thickness, 
width and length). For production costs that are separately 
identifiable to specific products (e.g., drying or planing costs), we 
directed parties to allocate such costs only to the associated products 
using an appropriate allocation basis (e.g., MBF). In allocating wood 
and sawmill costs (including by-product revenue) based on value, costs 
associated with a particular group of co-products were to be allocated 
only to those products (i.e., wood costs of a particular species should 
only be allocated to that species).
    Further, we directed the parties to use weighted-average world-wide 
prices in deriving the net realizable values (NRV) used for the 
allocation. We used world-wide prices to ensure that all products 
common to the joint production process, not just those sold in a 
particular market, are allocated their fair share of the total joint 
costs. Finally, we directed the parties to perform the value allocation 
on the mill/facility level, using the company-wide weighted-average 
world-wide NRV for the specific products produced at the mill, along 
with the mill-specific production quantities.
    Consistent with our methodology in the first administrative review, 
we requested that the respondents break out the random-length sales 
separately from length-specific sales and to develop a two-tiered 
allocation method. First, we directed the respondents to perform the 
price-based cost allocation (including the random-length-tally sales) 
without regard to length. Second, we directed them to allocate the 
resulting product costs into length-specific costs. In performing the 
second step, we set out a hierarchy when looking for surrogate sales as 
allocation factors: 1) length-specific sales of the identical product; 
2) length-specific sales of products that are identical to the product 
except for width; and 3) length-specific sales of products identical to 
the product except for NLGA grade equivalent. For purposes of these 
preliminary results, we have used the programs and calculations 
provided by respondents except in the case of West Fraser and Weldwood. 
For West Fraser and Weldwood, this step was not necessary due to their 
ability to provide length-specific sales data. See Treatment of Sales 
Made on a Random-Lengths Basis section above. In addition, we excluded 
the price of purchased and resold lumber from our calculation of the 
respondent's per unit product costs.\14\
---------------------------------------------------------------------------

    \14\ W knowledge that the product was for export to the United 
States. e note that the vast majority of purchased lumber was 
excluded from our sales analyses as the producer had.
---------------------------------------------------------------------------

    3. Individual Company Adjustments
    We relied on the COP data submitted by each respondent in its cost 
questionnaire response, except in specific instances where based on our 
review of the submissions and our verification findings, we believe 
that an adjustment is required, as discussed below.
    For the calculation of general and administrative (G&A) expenses 
for all companies, we did not include the legal fees which were paid 
directly by the company to its legal counsel and consultants associated 
with the AD and CVD proceedings. However, we included the fees paid to 
the provincial associations because none of the companies was able to 
substantiate that these payments were for legal representation 
associated with the AD and CVD proceedings.
    In accordance with section 773(f)(1) of the Act, for companies that 
had inter-divisional byproduct transactions where the transfer price 
was significantly higher than an arm's-length market price, we adjusted 
the transfer price to the market price. For companies that had 
byproduct transactions with affiliates where the transfer price was 
higher than the market price, we adjusted the transfer price to the 
market price in accordance with section 773(f)(2) of the Act.
     (A) Abitibi
    1) We adjusted Abitibi's byproduct offset for wood chip revenue in 
British Columbia to reflect the average market price it obtained from 
unaffiliated parties.
    2) We included in Abitibi's G&A expense rate calculation the 
goodwill impairment that was written of in its normal books and 
records. Additionally, we excluded the plant closure costs.
    3) Because Abitibi reported net financing income, we included zero 
financing costs.
    See Memorandum from Michael Harrison to Neal M. Halper regarding 
Abitibi's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
    (B) Canfor

[[Page 33071]]

    1) We adjusted the Pas' byproduct offset for wood chip revenue in 
British Columbia to reflect the average market price it obtained from 
unaffiliated parties.
    2) We increased Canfor's reported cost of manufacturing (COM) to 
reflect arm's length prices of contract logging performed by affiliated 
parties in accordance with section 773(f)(2) of the Act.
    3) For the Lakeland entity, we reclassified the ``other income'' 
items from financial expenses to G&A expenses.
    4) For the Canfor entity, we excluded the gain on sales of land 
from the G&A expense rate calculation. We also included in G&A certain 
wood paneling division costs which related to the general operations of 
the company. In addition, we included costs associated with maintenance 
and downtime that had been excluded.
    5) For the Slocan entity, we identified a startup adjustment 
related to the Mackenzie Mill in the first administrative review. We 
included the adjustment in our cost calculations for this review.
    6) Because Canfor reported net financing income, we included zero 
financing costs.
    See Memorandum from Gina K. Lee to Neal M. Halper regarding 
Canfor's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
     (C) Tembec
    1) We used Tembec's unconsolidated financial statements of the 
lumber-producing entities to calculate the G&A expense rate. We 
included the impairment of goodwill and write down of fixed assets in 
the G&A expenses.
    2) Because Tembec reported net financing income, we included zero 
financing costs.
    3) We adjusted Tembec's province specific byproduct offset for wood 
chip revenue to reflect the average market price it obtained from 
unaffiliated parties.
    4) We excluded Tembec's claimed byproduct offset for the whole log 
chip revenues because whole log chipping is not a byproduct of lumber 
production.
    5) We adjusted the reported variable wood costs to reflect the cost 
of external log sales.
    See Cost Memorandum from Sheikh Hannan to Neal Halper regarding 
Tembec's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
    (D) Tolko
    1) We increased Tolko's reported wood costs to reflect arm's length 
prices of logs purchased from affiliated parties in accordance with 
section 773(f)(2) of the Act.
    2) We revised Tolko's financial expense calculation. Due to the 
claimed proprietary nature of the adjustment, we discuss this more 
fully in the calculation memo cited below.
    See Memorandum from Nancy M. Decker to Neal M. Halper regarding 
Tolko's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
    (E) Weldwood
    1) We used Weldwood's submitted cost file that allocates the 
timberland units' log costs to the sawmills based on the average log 
cost from each timberland.
    2) We revised the planer cost of one mill to account for trim loss 
on rough lumber inter-company sales and to reclassify certain planer 
costs.
    3) We revised the variable drying cost of three mills to account 
for drying expenses related to inter-company sales of dried rough 
lumber.
    4) We revised the variable planing costs of two mills to include 
freight expenses incurred on inter-company sales.
    5) Weldwood allocated certain wood chip revenue to one location. We 
reallocated this revenue to the sawmills that produced the wood chips.
    See Memorandum from Mark Todd to Neal Halper regarding Weldwood's 
Cost of Production and Constructed Value Calculation Adjustments for 
the Preliminary Results (May 31, 2005).
     (G) West Fraser
    1) Because West Fraser reported net financing income, we included 
zero financing costs.
    2) We excluded the gain on the sale of a sawmill unit from the G&A 
expense rate calculation.
    See Memorandum from James Balog to Neal Halper regarding West 
Fraser's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
     (H) Weyerhaeuser
    1) We revised the Weyerhaeuser's reported wood costs for the 
British Columbia Coastal timberland units to reflect a value-based cost 
allocation for logs transferred to the sawmills. We used the cost 
database which Weyerhaeuser provided at our request that reflects the 
alternative value-based log costing methodology.
    2) We adjusted Weyerhaeuser's byproduct offset for wood chip 
revenue in British Columbia to reflect the average market price it 
obtained from unaffiliated purchasers.
    3) We excluded from the G&A expense rate calculation the costs 
related to closure of the company's production facilities.
    4) We disallowed certain offsets to G&A expenses, the identity of 
which is proprietary. We discuss these items more fully in the 
calculation memo cited below.
    See Memorandum from Ernest Gziryan to Neal Halper regarding 
Weyerhaeuser's Cost of Production and Constructed Value Calculation 
Adjustments for the Preliminary Results (May 31, 2005).
    4. Test of Home-Market Sales Prices
    We compared the adjusted weighted-average COP for each respondent 
to its home-market sales of the foreign like product, as required under 
section 773(b) of the Act, to determine whether these sales had been 
made at prices below the COP within an extended period of time (i.e., a 
period of one year) in substantial quantities and whether such prices 
were sufficient to permit the recovery of all costs within a reasonable 
period of time. On a model-specific basis, we compared the revised COP 
to the home-market prices, less any applicable movement charges, export 
taxes, discounts and rebates.
    5. Results of the COP Test
    Pursuant to section 773(b)(2)(C) of the Act, where less than 20 
percent of a respondent's sales of a given product were at prices less 
than the COP, we did not disregard any below-cost sales of that product 
because we determined that the below-cost sales were not made in 
substantial quantities. Where 20 percent or more of a respondent's 
sales of a given product during the POR were at prices less than the 
COP, we determined such sales to have been made in substantial 
quantities within an extended period of time in accordance with section 
773(b)(2)(B) of the Act. Because we compared prices to the POR average 
COP, we also determined that such sales were not made at prices which 
would permit recovery of all costs within a reasonable period of time, 
in accordance with section 773(b)(2)(D) of the Act. Therefore, we 
disregarded the below-cost sales. For all respondents, we found that 
more than 20 percent of the home-market sales of certain softwood 
lumber products

[[Page 33072]]

within an extended period of time were made at prices less than the 
COP. Further, the prices did not provide for the recovery of costs 
within a reasonable period of time. We therefore disregar