67 FR 15539, April 2, 2002 A-122-838 Investigation Public Document G2O5 MEMORANDUM TO: Faryar Shirzad Assistant Secretary for Import Administration FROM: Bernard T. Carreau Deputy Assistant Secretary for Group II, Import Administration DATE: March 21, 2002 SUBJECT: Issues and Decision Memorandum for the Antidumping Duty Investigation of Certain Softwood Lumber Products From Canada Summary This memorandum addresses issues briefed or otherwise commented upon in the above-referenced proceeding. Section I addresses the general issues briefed by interested parties. Section II addresses the company-specific issues briefed by interested parties. Section III addresses the scope issues briefed by the interested parties. General Issues Comment 1: Whether the Department should rescind the initiation and terminate the investigation Comment 2: Whether dumping exists Comment 3: Critical circumstances Comment 4: Value-based cost allocation methodology Comment 5: Fair comparisons in the application of the sales below cost test Comment 6: Constructed value profit Comment 7: Product matching Comment 8: Value-based difference in merchandise (difmer) adjustments Comment 9: Whether Softwood Lumber Agreement (SLA) export taxes should be deducted from U.S. price Comment 10: Treatment of trim ends/trim blocks Comment 11: By-product revenue offset Comment 12: Treatment of negative margins Comment 13: Exclusion of Maritime Provinces Company-Specific Issues Issues Specific to Abitibi Comment 14: Whether Scierie Saguenay Ltee. should be collapsed into the Abitibi Group Comment 15: Financial expense ratio Comment 16: General and administrative (G&A) expense ratio Issues Specific to Canfor Comment 17: Canfor, Lakeland, and The Pas' product reporting Comment 18: Treatment of three U.S. sales Comment 19: G&A expenses for Canfor, Lakeland, and The Pas Comment 20: Canfor's packing cost Issues Specific to Slocan Comment 21: Futures contracts Comment 22: Unreported freight expenses Comment 23: Unreported comparison market freight rebates Comment 24: Overstated freight rebates Comment 25: Donations Comment 26: Cost differences for precision end trimmed products Comment 27: Mackenzie Ospika Division Lathe and Precut Comment 28: Profits on log sales Comment 29: Depreciation expenses at the Plateau Sawmill Comment 30: Unreported foreign exchange losses Comment 31: Timber tenure amortization Comment 32: Startup adjustments Issues Specific to Tembec Comment 33: G&A expense Issues Specific to West Fraser Comment 34: Downstream sales Comment 35: Inventory carrying costs Comment 36: Log sales Comment 37: Prior period stumpage and silviculture Issues Specific to Weyerhaeuser Comment 38: Sales verification Comment 39: The petitioners received inadequate time to examine the Weyerhaeuser sales verification report Comment 40: Warehousing expenses for WBM inventory sales Comment 41: British Columbia Coastal's (BCC) warehousing expenses Comment 42: Early payment discounts Comment 43: CLB's SLA tax amounts Comment 44: CLB's quota-transfer sales Comment 45: Critical circumstances data for Monterra Lumber Comment 46: Log/wood costs Comment 47: Depletion expenses Comment 48: G&A expenses Comment 49: Interest expense Scope Issues Comment 50: Due process Comment 51: Authority to define the scope Comment 52: Class or kind of products Comment 53: Other scope issues Comment 54: Industry support Comment 55: Whether including certain products is harmful to U.S. industry Comment 56: Remanufactured products Comment 57: Scope exclusion requests Background On October 30, 2001, the Department of Commerce (the Department) issued the preliminary determination of the antidumping duty investigation of certain softwood lumber products from Canada.(1) After analyzing allegations of ministerial errors in the preliminary determination by two of the six mandatory respondents,(2) we agreed that certain allegations constituted ministerial errors, but that they did not amount to "significant ministerial errors" within the meaning of the Department's regulations. As such, we did not issue an amended preliminary determination.(3) The corrections are reflected in the final margin calculations. The period of investigation (POI) is April 1, 2000, through March 31, 2001. The respondents in this case are: Abitibi-Consolidated Inc. (Abitibi), Canfor Corporation (Canfor), Slocan Forest Products Ltd. (Slocan), Tembec Inc. (Tembec), West Fraser Timber Co. Ltd. (West Fraser), and Weyerhaeuser Company (Weyerhaeuser). We verified the information submitted on the record by the respondents, and issued the verification reports in January and February 2002. On February 12 and 19, 2002, we received case briefs and/or rebuttal briefs, respectively, from the petitioners,(4) the respondents, and other interested parties.(5) The petitioners and the respondents requested a public hearing, which was held on February 25, 2002. On March 12, 2002, we issued a memorandum detailing our preliminary findings with respect to class or kind and certain scope exclusion issues. Case briefs and rebuttal briefs were filed by a number of interested parties. A public hearing was held on these issues on March 19, 2002. Scope of the Investigations The products covered by these investigations 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 U.S. Customs purposes, the written description of the merchandise under investigation is dispositive. Preliminary scope exclusions and clarifications were published in three separate federal register notices. Final Scope Exclusions On February 11, 2002, we published an amendment to the preliminary antidumping determination which modified the list of products excluded from the scope of the AD and CVD softwood lumber investigations. See Notice of Amendment to Preliminary Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada; Amendment to Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Countervailing Duty Determination with Final Antidumping Determination: Certain Softwood Lumber Products from Canada, 67 FR 6230, 6231 (February 11, 2002) (Amended Preliminary). In our review of the comments received throughout the course of these proceedings, we found that the definitions for some of the excluded products required further clarification and/or elaboration. Based on our analysis of the comments received, we have modified the list of excluded products as follows:(6) Softwood lumber products excluded from the scope only if they meet certain requirements: 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 the investigations 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 Customs' satisfaction that the lumber is of U. S. origin. 6. Softwood lumber products contained in single family home packages or kits, regardless of tariff classification, are excluded from the scope of the orders if the following criteria are met: 1. 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; 2. 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; 3. 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; 4. the whole package must be imported under a single consolidated entry when permitted by the U.S. Customs Service, 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; 5. the following documentation must be included with the entry documents: 1. a copy of the appropriate home design, plan, or blueprint matching the entry; 2. a purchase contract from a retailer of home kits or packages signed by a customer not affiliated with the importer; 3. a listing of inventory of all parts of the package or kit being entered that conforms to the home design package being entered; 4. in the case of multiple shipments on the same contract, all items listed in 5(c) 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 these investigations provided the specified conditions are met. See Section C (Scope Issues) and Section D (Scope Exclusion Analysis) of this decision memorandum for further discussion. Lumber products that Customs 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 these investigations and may be classified under HTSUS subheadings 4418.90.40.90, 4421.90.70.40, and 4421.90.98.40. On January 24, 2002, Customs informed the Department of certain changes in the 2002 HTSUS affecting these products. Specifically, subheading 4418.90.40.90 and 4421.90.98.40 were changed to 4418.90.45.90 and 4421.90.97.40, respectively. Therefore, we are adding these subheadings as well. DISCUSSION OF ISSUES General Issues Comment 1: Whether the Department should rescind the initiation and terminate the investigation Abitibi, Tembec, the Government of Canada, the British Columbia Lumber Trade Council (BCLTC) and its Constituent Associations (the Cariboo Lumber Manufacturers' Association, the Coast Forest & Lumber Association, the Interior Lumber Manufacturers' Association, and the Northern Forest Products Association), and the Ontario Forest Industries Association and Ontario Lumber Manufacturers Association (OFIA/OLMA) note that, despite ample time to do so, the Department failed to respond to the July 19, 2001, submission of the Government of Canada and other Canadian parties (referred to as "Joint Submission" within this comment) regarding deficiencies in the petition. Had the Department adequately examined the petition and the Joint Submission, these parties contend that an investigation would not have been initiated.(7) As argued in the Joint Submission, the parties claim that the petition did not meet the standards described in section 732(b)(1) of the Tariff Act of 1930, as amended (the Act), specifically because the petitioners did not provide company-specific information. According to the parties, this information was reasonably available to the petitioners because International Paper Inc., one of the members of the Coalition for Fair Lumber Imports Executive Committee, wholly owns the seventh largest Canadian producer. Accordingly, these parties assert that the petitioners could have based the alleged margins on company-specific information, but did not do so because such information would have undermined the contention of dumping. The parties also argue that the Department should reexamine the petition before making a final determination in this investigation. Citing Gilmore Steel Corp. v. United States, 585 F. Supp. 670, 674 (Ct. Int'l Trade 1984)(Gilmore) and Article 5.8 of the Antidumping Agreement, the BCLTC contends that the Department can terminate an investigation, based on a finding of inaccuracies in the petition or a lack of sufficient evidence of dumping or injury, even after the initial 20-day initiation period.(8) As a result, the BCLTC argues that the Department should reexamine the petition and rescind the initiation. In their response, the petitioners point out that the Department's regulations only require that the petition contain information "to the extent reasonably available to the petitioner."(9) If the Department's analysis of the petition indicates that an investigation is justified, the petitioners note that section 732(a)(1) of the Act unambiguously states that the Department "shall" initiate an investigation. According to the petitioners, the parties' arguments both ignore and fail to provide alternatives to the Department's long-standing initiation standards and practices and that, absent alternative standards, the Department has no reason to reconsider its initiation of the investigation. In addition, the petitioners argue that there is no legal support for the parties' suggestion that the Department engage in continual evaluation of the petition throughout the investigation. The petitioners further argue that Canadian Law has the same standards for initiation of an investigation, and that the Canadian Government has initiated antidumping investigations where the petitioner could only provide estimates or other reasonably available information.(10) The petitioners insist that, as is the case with the Department, the Canadian Government is required to initiate an investigation when it receives a properly documented petition. With respect to the petition itself, the petitioners argue that they provided ample information in the form of "affidavits, proprietary pricing/sales information, industry data, and evidence from Canadian sources,"(11) that Canadian softwood lumber was being dumped in the United States. They note that the Act does not require them to provide separate allegations for "each individual product, grade, species, division, category or type of the subject merchandise,"(12) yet they provided pricing data for approximately 80 percent of the subject merchandise. In addition, the fact that one of the petitioning companies is affiliated with a Canadian respondent does not prove that the information regarding the company was reasonably available to the petitioners. In fact, according to the petitioners, it was not available. Furthermore, the petitioners claim that the evidence of dumping was sufficient without any further proprietary information. Finally, the petitioners argue that the Department thoroughly analyzed the petition and supplemental information the Department requested regarding certain parts of the petition. According to the petitioners, the Department's deficiency comments demonstrated that it had painstakingly reviewed the petition. As a result, because the petition contains the necessary information for initiation and the Department exhaustively reviewed the petition prior to initiation, there is no merit to the parties' suggestions that the Department should rescind the investigation. Department's Position: We agree with the petitioners. After careful consideration of the petition, including a request for supplemental information, the Department determined that the petition included reasonably available information indicating an investigation was warranted; therefore, the Department was obligated to initiate an investigation.(13) We also note that, since the Gilmore decision cited by the respondents was made prior to the implementation of the Uruguay Round Agreements Act (URAA),(14) the issue of standing remained open until the final determination in that case. Effective January 1, 1995, the Act was changed, in accordance with the URAA, to comply with international obligations. Section 732(c)(4)(E) of the Act clearly states that the Department's determination regarding industry support will not be reconsidered after initiation. According to the Statement of Administrative Action (SAA), "arguments regarding industry support should not be made to either Commerce or the Commission following initiation."(15) Thus, by law, policy, and practice the Department does not revisit the issue of industry support during an investigation.(16) Accordingly, the Department continues to find the petition sufficient for the purposes of initiation. Comment 2: Whether dumping exists The six respondent companies and ACAH argue that the record evidence proves the Canadian producers/exporters were not dumping but, rather, that the Department's "flawed" methodologies generated dumping.(17) The parties note that, during the POI, Canadian softwood lumber prices (either on average or as charged by the respondent companies) were higher in the United States than in Canada. The six respondent companies also argue that they were profitable during the POI and, therefore, were not selling below the cost of production. ACAH contends that it is counterintuitive to find dumping in a period during which the SLA was in effect, as the SLA limited supply (except where a high fee was paid), thereby keeping U.S. prices high. Tembec argues that, because the POI coincides with the last year of the SLA, the Department is analyzing a distorted market situation and inappropriately applying a trade law that is designed for "normal" times. As a result, the parties commenting on this issue conclude that the dumping margins found by the Department in the preliminary determination were the result of the illogical and unfair methodology employed by the Department. According to Canfor, this methodology is a violation of Article 2.4 of the WTO Antidumping Agreement, which directs the Department to make a fair comparison between export price and normal value.(18) Tembec and the OFIA/OLMA also argue that it is illogical to find dumping in a free trade area. Both parties contend that, in a free trade area, if goods were being sold across the border at less than fair value, the goods would simply cross back over the border for resale. As a result, it is only appropriate to apply the antidumping law when a home market is closed and not, as in this case, when countries share an open border. According to the OFIA/OLMA case brief, which cites several publications on the matter, the antidumping law and a free trade area are mutually exclusive. Imposing antidumping duties in this case contradicts NAFTA and injures the North American economy. The brief also urges the Department to consider the free trade policy objectives of NAFTA and the WTO in its final determination, and to use the antidumping law, which restrains trade, "wisely and sparingly."(19) According to the petitioners, the policies of the federal and provincial governments in Canada distort the Canadian market,(20) thereby causing excess production and distorted input prices. These market distortions lead to dumping of Canadian softwood lumber in the United States. Furthermore, the petitioners contend that, during the POI, the Canadian press, many respondent companies, and government reports, readily admitted that, due to government policies, the industry was selling below the cost of production and losing money.(21) As a result, the petitioners argue that the Canadian producers know they are dumping softwood lumber in the United States - the Department only needs to measure the amount of dumping. In their rebuttal briefs, all six respondents and the BCLTC argue that the Department does not determine whether dumping is occurring by an examination of articles in newspapers and other sources. Furthermore, the parties point out that the majority of articles cited by the petitioners concern government subsidies, but evidence of subsidies neither suggests nor proves dumping.(22) Instead, the parties contend, in an antidumping investigation, the Department must examine the company-specific, verified data the respondents placed on the record. According to the parties, the petitioners resort to newspaper articles because the data on the record in this investigation do not support a contention of dumping.(23) The BCLTC and Tembec also contend that the petitioners have never addressed the distortions caused by the SLA during the POI. According to both parties, the SLA restricted the exports of Canadian softwood lumber to the United States, thereby forcing Canadian prices lower than the prices for the same products in the United States. Even though prices were higher in the United States than in Canada during the POI, the parties all argue that the Department's flawed cost test caused home market sales of mid-level products to fail the cost test and thus to be compared to constructed value. As a result of this methodology (and the Department's skewed methodologies regarding comparisons to sales of similar products, CV profit, etc.), the parties argue that the Department did not find dumping as much as it generated it. Department's Position: The Department conducts a dumping analysis based on data supplied by respondent companies. Accordingly, in this investigation, the Department has not considered the petitioners' claims that newspaper articles prove dumping, the respondent companies' assertions that they are not dumping, the theoretical arguments regarding dumping in a free trade area, or the SLA's affect on pricing. Rather, despite the respondents' arguments to the contrary (addressed below), the Department considered the respondents' own sales and cost data for the preliminary and final determinations and made those determinations in accordance with U.S. law. Arguments about the Department's methodology, with respect to the cost test, product comparisons, and CV profit, are addressed in detail elsewhere in this memorandum. Notwithstanding those arguments, the Department's final determination in this investigation is based on a strict adherence to the statute and the Department's regulations, as applied to the respondents' own information, verified by the Department. Likewise, with respect to Canfor's argument vis a vis Article 2.4 of the Antidumping Agreement that the Department's methodology did not allow for a fair comparison of export price or constructed export price to normal value, we make two points. First, in response to parties' comments regarding the preliminary determination, we have made certain revisions to the methodologies used in this final determination. Those revisions are explained elsewhere in this memorandum in response to the relevant comments. Second, we have made our final determination based on a fair comparison of export price and constructed export price to normal value in accordance with section 773 of the Act, the section of the statute which implements our obligations under the Antidumping Agreement. As to whether SLA has distorted Canadian and U.S. timber prices, we find that the likely distortion is at most minimal. Moreover, removing all "distortion" would be nearly impossible. A border measure, such as the SLA, could affect a market-oriented timber industry across North America by driving down stumpage prices in Canada and driving up stumpage prices in the United States. However, we find that this theory is not applicable to the facts of this case. Moreover, throughout the duration of the SLA, Canadian lumber exports to the United States consistently exceeded the specified volume thresholds that triggered the export fees. Therefore, it is unclear to what extent, if any, the SLA actually constrained the quantity of lumber exported to the United States. For all these reasons, the SLA likely did not cause any significant distortion of lumber prices in the United States during the POI. However, even if the SLA had caused a substantive distortion, it is unclear whether, how, and under what circumstances we could account for any distortion. Comment 3: Critical circumstances The petitioners argue that the Department must revisit its preliminary negative critical circumstances determination. In that determination, the Department found that the requisite surge of imports did not take place, based on an analysis of import data for five months after the filing of the case. The petitioners argue that the Department's normal practice is to analyze import data for three months, not five months.(24) Also, the petitioners note that the imports had surged within the three-month time frame until the affirmative critical circumstances determination in the companion countervailing duty (CVD) investigation. Although the Department has used periods of time longer than three months in other investigations, the petitioners assert that this had occurred only where the exporters or producers had reason to believe - prior to the proceeding - that a petition was likely to be filed. Using a five-month period in this case, after finding imports massive over a three-month period in the CVD investigation, penalized the petitioners. The Government of Canada (GOC) argues that the Department's usual practice is to base its analysis of massive imports on the longest period for which data are available. The GOC cites the Department's final determination in Certain Steel Concrete Reinforcing Bars from Turkey for the statement that the period for the analysis of massive imports normally begins "with the month of filing the petition and . . . {ends} with the date of the preliminary determination."(25) In those cases in which the Department limited its analysis of massive imports to a three-month period at the time of the preliminary determination, the Department expanded the period for its final determination to include the longest period for which information was available.(26) The GOC also argues that the petitioners' position that the preliminary determination concerning critical circumstances in the companion CVD investigation of certain softwood lumber products from Canada has some relationship to a critical circumstances determination in the antidumping investigation is wrong as a matter of law. The critical circumstances determination in the antidumping investigation must be based on the factual record of the antidumping investigation. Both the GOC and OFIA/OLMA addressed the Department's critical circumstances determination as it affects the "all others" group, claiming that the Department should base its "all others" critical circumstances determination on its critical circumstances for a majority of the mandatory respondents.(27) These parties note that in its preliminary determination, the Department examined U.S. Bureau of the Census (Census) data for the companies in the "all others" category. In that analysis, however, the parties contend that the Department significantly understated the seasonal adjustment factor. As explained by the GOC in its October 11, 2001, submission, the Department should have accounted for seasonal variation by comparing the period following the filing of the petition with the same months in prior years. Each of the respondents points out that there is no history of dumping(28) and no basis for imputing knowledge of dumping(29) nor of material injury,(30) absent such knowledge or the imputation of such knowledge, the Department cannot make an affirmative critical circumstances determination. Department's Position: We agree with the Government of Canada that the Department's practice is to base its analysis of massive imports on the longest period for which data are available. Section 351.206(i) of the Department's regulations provides that the comparison period must be at least three months. Using import data for a longer period than three months, as data become available to the Department, is consistent with the Department's regulations and practice. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Polyester Staple Fiber from the Republic of Korea, 65 FR 16880 (March 30, 2000). Therefore, for this Final Determination, because data for six months are available to the Department, we have compared import and shipment data during the six- month period immediately after initiation with the six-month period immediately preceding initiation to determine whether there has been at least a 15-percent increase in imports of subject merchandise. On the basis of this comparison, the Department found that there were no massive imports with respect to the mandatory respondents and the companies in the "all others" category. For further details, see the Department's Final Determination of Critical Circumstances memorandum from Gary Taverman to Bernard T. Carreau, (March 21, 2002). Thus, the Department found no basis for determining that critical circumstance exist with respect to the mandatory respondents or the companies in the "all others" category. Comment 4: Value-based cost allocation methodology From the outset of this investigation, a central issue to the case concerned the appropriate method for allocating the joint production costs to the various lumber products produced. All respondents submitted data sets that allocated production costs on a per unit volume (i.e., per thousand board feet (MBF)) basis, which is consistent with their normal books and records. Four of the six respondents submitted an additional data set which allocated production costs using a value-based method. The petitioners have argued throughout the investigation that the joint lumber production costs should be allocated using a volume-based method. For the preliminary determination, the Department based its COP and CV computations on the volume-based cost allocation data sets submitted by each of the respondents. The respondents in this case disagree on the appropriate method for allocating production costs to specific products. According to both Abitibi and Tembec,(31) an approach that allocates costs to individual products based on relative sales value would create more distortions than it would eliminate. Specifically, Abitibi argues that the problem with joint costs is that any allocation method is arbitrary.(32) Abitibi argues that the problem with value-based cost allocations is that they require absolute relative values for products (i.e., stable relationships between prices). However, the company notes that softwood lumber prices fluctuate greatly. Abitibi contends that the value-based method substitutes one problematic method, the comparison of average costs to individual product prices, with another, the comparison of average values to individual prices.(33) Abitibi argues that such allocations ignore the reality of declining values over the course of the POI and replace one distortion, the comparison of average joint-product costs to prices for individual products of widely varying values, with another, the assumption of constant relative values.(34) Therefore, these respondents advocate that the Department should continue to use a volume-based method for allocating production costs, but that it should alter the cost test.(35) See general comment 5, fair comparisons in the application of the sales below cost test. Three of the respondents (Canfor, Slocan, and West Fraser) and an interested party (Idaho Timber(36)) contend that a value-based cost allocation method is not only the appropriate method for calculating product-specific costs, but also that it is consistent with Department precedent. These respondents point out that lumber should be accounted for as a joint product because multiple products are processed simultaneously from the same log, by common manufacturing processes, through the sawmill stage of production.(37) As a result, the conversion of logs into lumber results in a host of products, with some higher in value than others.(38) Therefore, in their view, unless joint costs are allocated among the joint products in a way that recognizes the underlying differences in their revenue-producing power, the cost test will fail to generate meaningful results.(39) In support of their position, they cite the CIT decision in Chemical Products(40) where the court stated "it is not reasonable to allocate factors of production between barium, carbonate and HSG on a quantity basis if the value of one product is significantly greater than the other."(41) In addition, these respondents point to Thai Pineapple(42) and PVA from Taiwan,(43) where the Department rejected a volume-based average cost method used in the normal books and records of the respondents.(44) In Thai Pineapple, they argue, the court upheld the value- based methodology, stating that "although the raw material was purchased as a whole, for a set price per unit of weight, the parts of the pineapple differ in their usefulness and value." Further, consistent with the Thai Pineapple and PVA from Taiwan cases, the respondents in this case recognize the need to avoid circularity in applying a value-based cost allocation method.(45) Therefore, these respondents note that using lumber prices from sources prior to the period of investigation, when prices are not allegedly dumped, avoids the issue of using allegedly dumped prices in the evaluation of whether dumping occurred.(46) These three respondents note that lumber prices vary significantly depending upon the type (dimension, board, stud, etc.), grade, dimension and length of the final product.(47) As such, these respondents maintain that a volume-based allocation of the lumber joint production costs ignores the vastly different revenue-producing powers of the joint products at issue and results in large profits accruing to the higher- value products and significant losses for the lower-value products(48) (See general comment 6, CV profit). Accordingly, these respondents contend that the volume-based allocation methods are only valid when products are physically similar and selling prices of the joint products are approximately the same.(49) In this respect, these respondents maintain that the allocation of costs based on a physical measure fails because the market potential of the various joint products produced from a log are dissimilar and the net realizable value(50) of the various lumber products is substantially different. With respect to the Department's reliance in the preliminary determination on the Court of Appeals for the Federal Circuit (CAFC) IPSCO(51) decision and the normal books and records argument, these respondents contend they are misplaced for two reasons. First, the respondents consider IPSCO to be unrelated to this case because the products in that case were not joint products, but products produced sequentially that yielded two or more grades of a single product and were intended to result in identical products.(52) Accordingly, the IPSCO decision is inapposite to this case both because the issue in that case was the use of selling prices as a value-based allocation method for homogeneous products and the case did not address the use of value-based allocation methods for non-homogeneous joint products.(53) In the instant case, these respondents maintain that different portions of a log have significantly different physical characteristics and are used to produce distinct lumber products, meaning that the raw material input is not homogeneous and the end-products do not have identical physical characteristics.(54) Second, they reject the argument that the respondents' normal books and records, which use a volume-based allocation method, should be relied upon because the aggregated inventory group costs (i.e., average cost per MBF) calculated in the respondents' normal books and records are not representative of the 10-characteristic control number- specific costs required by the Department.(55) Furthermore, these respondents discount the point that they do not use the value-based method in their books and records, stating that the companies do concentrate on relative values for management purposes and that the average cost figures from their accounting systems do not provide economically meaningful numbers.(56) Therefore, these respondents maintain that a value-based cost allocation method is the best alternative because it allocates cost based upon the relative sales value of the end products and eliminates the distortive peaks and valleys in the profits or loss per product created by the use of a volume-based allocation method. The petitioners reject any price-based reallocation of the respondents' costs and argue that the Department should continue to use the submitted volume-based actual costs for the final determination. The petitioners state that section 773(f)(1)(A) of the Act requires the Department to calculate costs based on the costs contained within the respondent's normal books and records provided that those costs (1) "are in accordance with generally accepted accounting principles of the exporting country," and (2) "reasonably reflect the costs associated with the production and sale of the subject merchandise." The petitioners continue that section 773(f)(1)(A) of the Act further requires that the Department not consider an exporter or producer's cost allocations if the allocations were not used historically by the exporter/producer. According to the petitioners, record evidence clearly demonstrates that none of the respondents uses a value-based cost allocation method in its normal books and records. As a result, there is no reason to believe that the volume-based actual costs reported to the Department and contained in the respondents' normal books and records do not accurately and reasonably reflect the cost of production of the subject merchandise. Further, the petitioners differ with the respondents as to the applicability of IPSCO, stating that, in this investigation, the manufacturing and production processes - which employ the same processes, material inputs, labor, and overhead in producing various grades and dimensions of lumber within a given species - are identical. The petitioners note that the lumber products at issue, while distinguishable, are not so different as to be completely distinct categories of products as was the case in PVA from Taiwan and Thai Pineapple. The petitioners hold that it is reasonable to use a volume-based cost allocation because there are virtually no differences in cost per MBF due to grade, length, width, and thickness of lumber produced from a given species. In addition, the petitioners reject the use of pricing data from the POI to allocate costs in this case because of the circularity argument addressed in IPSCO. In that case, the CAFC decided that the price of subject merchandise, which was produced using the identical inputs and production methods, should not become the basis for determining a cost of a product used for measuring the fairness of the selling price of the subject merchandise. To do so, according to the CAFC, could contravene the express requirements of the Act, which set forth the cost of production as an independent standard for fair value. In the instant case, the petitioners also object to using any historical pricing data prior to the POI because they claim the Canadian softwood industry has operated in an environment of distorted prices for many years prior to the investigation. The petitioners conclude that a value-based cost allocation method is not used by the respondents in their normal books and records, does not reasonably reflect the actual costs incurred to produce the subject merchandise and is inconsistent with the Department's past practice, as upheld in IPSCO. Department's Position: Due to the diversity of the industry, the range of wood grades found in any given log, the numerous permutations of physical characteristics, and the fact that lumber production is the result of a joint production process, the cost allocation issues raised by this case are among the most complex the Department has ever considered. The respondents themselves do not agree on the appropriate method to use to allocate costs to lumber products. After careful consideration of these factors, as they relate to the issue at hand, we agree in part with the respondents who have argued for the application of a value-based cost allocation. Specifically, we believe it is appropriate to allocate wood and sawmill costs to particular grades of lumber using a value-based measure. A volume-based allocation does not recognize the fact that there are separately identifiable grades of wood within a given log and that the producer factors their presence into the cost it is willing to incur to obtain those logs. We have included sawmill cost in our value-based allocation because the sawmill essentially represents the split-off point(57) in the process where the grades are, in effect, carved out.(58) However, we consider it inappropriate to allocate the "downstream" processing costs (e.g., planing, kiln drying) to products based on value since these costs are reasonably identifiable and are closely associated with the volume of production. The downstream processing also marks the point where management makes decisions on what further processing steps to undertake, moving the issue outside of a joint- product scenario. In determining the appropriate cost methods to use, the statute directs the Department to look first to the books and records of a respondent. Section 773(f)(1)(A) of the Act states that costs shall normally be calculated based on the records of the exporter or producer of the merchandise, if such records are kept in accordance with generally accepted accounting principles (GAAP) of the exporting country and reasonably reflect the costs associated with the production and sale of the merchandise. While the respondents in this case have generally argued that they do not maintain formal cost accounting systems, wherein individual product costs are derived, to the extent that records are maintained by each respondent they all calculate lumber costs per MBF (i.e., using a volume-based cost allocation methodology), for either costing or financial reporting purposes.(59) It was largely for this reason that we applied a volume-based cost method at the preliminary determination. In evaluating the reasonableness of the reported costs, and a respondent's normal books and records, we analyzed the costs by component and by process (e.g., wood costs, sawmill costs, kiln drying costs, planing costs, etc). As stated above, we believe that a volume-based cost allocation for wood and sawmill costs distorts the actual cost of individual products, because it does not account for the various grades of wood in the logs and the resulting products produced by the sawmill. In coming to our conclusion, we considered several factors, such as, that grade differences pre-exist in the raw material and do not result from the production process, and that the differences are so significant that the end uses of the products differ considerably. As discussed below, we concluded that it is reasonable to assume that a lumber producer considers these factors when deciding on how much cost to incur to acquire the raw material, logs. Therefore, we have determined that it is appropriate to depart from the books and records (i.e., MBF measure) of the respondents in this case. We recognize that a value-based cost allocation method can be problematic in an antidumping context. The most obvious problem is the potential circularity of the analysis, whereby prices are used to determine the product-specific costs which in turn are either compared to those same product-specific prices or are used to determine prices (i.e., through the sales-below-cost test and constructed value). In an antidumping context, the POI prices of subject merchandise to the United States are alleged to be at unfair levels and, therefore, may not capture the appropriate value differences between subject and non-subject products. Other market factors may also create problems with using prices as a basis of allocation, such as volatile market prices (as alleged here by Abitibi), temporary surges in supply and demand, and specific market preferences for specific products. In addition, the statute directs the Department to determine the actual cost to produce the merchandise under consideration and establishes that cost as a floor for the comparison prices. Thus, we believe that the use of a value-based cost allocation method is appropriate in an antidumping context in only very limited instances. However, we believe that the facts of this case, as discussed in more detail below, support the use of a value-based allocation method for certain cost elements. The decision on whether to allocate wood costs between lumber products using a value- or volume-based cost allocation method comes down to whether one believes wood is or is not homogeneous. To say wood is homogeneous means that wood is wood regardless of the grade. If wood is homogeneous, then all wood of a given species of log is the same and costs the same amount per MBF. To say wood is not homogeneous means wood grades occur within given logs, in reasonably well known quantities, which the producer de-constructs into its component lumber products, much as a slaughterhouse would de-construct a cow into its various meats. If wood is not homogeneous, then portions of a log are inherently different, like a steak is different from a hamburger or a pork roast differs from pork ribs. The cost of the log would then be appropriately distributed to its parts. We believe that the facts of this case support the conclusion that the various wood grades within a log constitute different recognizable cost elements, much like the slaughterhouse example, and that a value- based cost allocation method is appropriate for log costs and sawmill costs. As noted above, the differing wood grades within a log occur in reasonably well known quantities which the producer disassembles into its component parts. These differences pre-exist in the raw material and are reflected in the cost of that material. The producer cannot saw a log without obtaining each of the various grades of wood therein. Also, as noted, different wood grades have significantly different end uses and values. We note that the lumber industry recognizes the different grades within a log through extensive books on lumber grading standards which are published by lumber associations. Sawmill costs pose a unique situation in costing lumber. While the output from the sawmill operation represents the split-off point, the cost incurred in the sawmill to produce various dimensions does not vary. Since the sawing process does not vary between dimensions or grades, it can be argued that volume of production is the most directly related cost driver for the sawmill, which means that a cost per MBF would be used. Indeed, as Tembec states in its case brief at page 48, "the sawmill makes no extra cuts to make smaller pieces and the costs in the sawmill do not vary by dimension." However, as stated above, we have determined that it is appropriate to include the sawmill costs with the wood costs in performing our value-based allocation because, as the split-off point, it is the stage where the grades first become separated. However, our goal is to identify only the cost differences in wood grades. We have therefore weight-averaged the lumber prices used in our allocation, without regard to dimension or the characteristics that result from the downstream processing (e.g., drying, planing, etc.). We adopted this method in order to limit the value-based allocation to the factor for which it is being applied, grade differences that exist in the wood.(60) The other processes (and characteristics they create) are directly associated with the volume of production input to the given process and hence those directly identifiable costs are reasonably allocated over the volume of production in MBF. We reviewed each of the respondents' value-based cost allocation methods to evaluate their reasonableness and consistency of approach. West Fraser's value-based method considered costs through the sawmill as joint costs and, to allocate the joint costs, used three year average price data from prior to the POI from the publication Random Lengths.(61) We noted that West Fraser identified the identical or most similar Random Lengths product with each West Fraser product. This resulted in a situation where, in most cases, multiple West Fraser products were associated with one Random Lengths product because of the limited number of products that are reported by Random Lengths. Weyerhaeuser's value-based method considered all costs through to the finished product stage as joint costs and, to allocate costs, used its own historical market prices of finished products. Slocan's value-based method considered all costs through to the finished product stage as joint costs and, to allocate costs, used its own average sales prices of individual products over a three-year period. Canfor's value-based method considered all costs through to the finished product stage as joint costs and used Random Lengths three-year average data prior to the POI to allocate costs. We noted that Canfor identified the identical or most similar Random Lengths product with each Canfor product. In most cases, this resulted in multiple Canfor products being associated with one Random Lengths product because of the limited number of products that are reported by Random Lengths. Abitibi and Tembec did not submit value-based allocations. We have declined to use the submitted alternative methods provided by respondents because of specific problems with each of their methods. We have also decided that, in adopting a value-based allocation for the final determination, it should be applied consistently and for all respondents. Specifically, West Fraser's and Canfor's methods relied on Random Lengths prices which do not include all the grades of merchandise reported. This deficiency required using surrogate grades for those not listed in the publication, which defeats the intended purpose of using prices to establish differences between grades. Canfor's and Slocan's methods treat all production costs as joint costs, which we reject, since we have found that for those processes occurring after the split-off point, it is more appropriate to allocate them based on the volume of production, as explained above. Weyerhaeuser's and Slocan's methods used historical sale prices of individual end products to allocate costs, which in our opinion creates artificial distinctions between products for physical characteristics beyond wood grades. We note also that this method involves allocation of certain costs which are not joint costs (e.g., kiln and planer processes). For the final determination, we developed a value-based cost allocation methodology for joint wood and sawmill costs using the best data we had reasonably available. We have used each respondent's reported home market net sales prices, adjusted for freight and selling expenses, as the basis for developing net realizable value allocation factors. This allocation method first determines the NRVs of all sales reported for each CONNUM by subtracting costs of production other than wood and sawmill costs (i.e., costs downstream from split-off point) from the net home market sales prices. Second, the resulting positive NRVs are then weight-averaged, by species and grade across CONNUMs using sales quantities. We note that, for sales where the post split-off processing costs were greater than the net price, we set the NRV to zero, rather than allowing a negative NRV. Third, the species-grade specific NRVs are extended by the corresponding production quantities and a total for each species is calculated. The percentage of the relative value of each species-grade NRV to the total for the species is determined. Fourth, the wood costs, sawmill costs and by-product revenue fields reported on the cost database are extended by production quantity and the totals by species are derived. The totals by species are then allocated based on the relative value percentages of each species-grade NRV. Finally, the resulting species-grade specific pools of cost are then divided by the corresponding species-grade production quantities to obtain species-grade specific per-unit costs. In addressing the circularity issue of using the same home market sales prices to allocate costs which in turn are then compared to those same prices, we believe that for purposes of this investigation, an individual respondent's reported home market sale prices provide a reasonable basis from which to calculate a cost allocation factor. First, we are only relying on the average prices of different wood grades, weighted by the total quantity produced of each grade, to allocate the joint pool of costs and are not using the total value of the home market sales prices to allocate between merchandise under consideration and that not under consideration. We note that there is no evidence on the record to suggest that the relationship between the varying grades of softwood lumber products is tainted, only the allegation that overall prices of lumber in the United States are at below fair value levels and those in the home market are below cost. Second, we are only using the prices in this case to differentiate costs for one physical characteristic, i.e., grade, not for all characteristics making up a control number. Third, we are only allocating costs up through the split-off point, not costs in total. Fourth, as a check on the appropriateness of the relationship of prices across grades, we have compared prices published in Random Lengths for a period prior to the POI to comparable prices for a sample of identical grades on the record, and found no significant changes to the relationships over time.(62) Finally, although respondents allege that prices have declined over the POI, we note that we are using POI weighted-average prices only to establish relative values between grades. Since the adjustment factors rely on relative NRVs, a decline in prices for all lumber products does not distort the resulting calculations. Finally, we believe our adopted method for the final is consistent with past cases involving joint product allocation issues. We believe that the facts in this case are similar to Thai Pineapple, in that pineapple is disassembled into various parts (e.g., cylinder, core, shells, etc.) having significant differences in composition. Just as the pineapple is composed of various parts with significantly different uses (e.g., cylinder for canned fruit, shells and core for juice) and values, logs are comprised of various parts (e.g., sapwood, heartwood, etc.) which result in lumber of differing grades with significantly different uses and values. We disagree with the petitioners' arguments that the CAFC ruling in IPSCO precludes us in this case from applying a value-based cost method. IPSCO involved the Department's use of an appropriate method for allocating costs between two grades of steel pipe. There were no physical differences between the inputs of the two grades of pipe, only quality differences in the end product that resulted from the production process. We believe that our adopted method in this case is in line with the reasoning in IPSCO; that is, we have chosen not to allocate costs between minor quality or dimensional differences where the processing costs are essentially identical and differences result from processing errors. Moreover, we have limited the application of the value-based allocation only to the wood costs and sawmill costs to isolate differences pre-existing in the log. In IPSCO, the differences in quality related to flaws in the production process creating a non-prime product. Furthermore, in IPSCO, the same materials, labor and overhead went into the manufacturing lot that yielded both grades of pipe. We are being consistent in the instant case by allocating costs of processes (i.e., drying, planing, etc.) with similar fact patterns in a manner consistent with IPSCO. While we do not believe the facts in the instant case are analogous to those presented in PVA from Taiwan in terms of the production process involved, we disagree that this case differs because the joint products are not sufficiently distinct. In this case, as in PVA from Taiwan, the joint products differ significantly in nature and value. That the joint products are within one class or kind of merchandise is immaterial. We find that this case is also distinguishable from past agricultural cases such as mushrooms, salmon, and tomatoes. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Preserved Mushrooms from India 63 FR 72246, 72248, 72254 (December 31, 1998); Notice of Final Determination of Sales at Less Than Fair Value: Fresh Atlantic Salmon From Chile 63 FR, 31411, 31413 (June 9, 1998); Notice of Final Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes from Canada 67 FR, 8781, referencing "Issues and Decision Memorandum" from Richard W. Moreland, Deputy Assistant Secretary, Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, dated February 26, 2002, comments 5 and 6. Each of these cases involved production processes utilizing identical and homogeneous raw material inputs and identical processing, resulting in finished products of differing sizes, grades and quality. The Department calculated an average cost for all similar products, regardless of the resulting size, grade, and quality differences identified at the end of the process. The differences in the size, grade, and quality of those products were due to the processing. They did not involve the disassembly of a greater whole into its parts. The only differences in the resulting end products were size, grade, and quality differences found through a quality inspection.(63) Comment 5: Fair comparisons in the application of the sales below cost test In the preliminary determination, the Department calculated a cost, on a thousand board foot basis, for each element of lumber production (e.g., wood, sawmill, drying, planning). Our calculations reflected the cost methodology found in the respondents' normal books and records. The individual product costs were differentiated only to the extent they passed through given processes; all products received the same cost for wood (by species), sawmill, drying, planing, etc., provided they went through the particular process. The Department chose not to use the alternative value-based cost allocation methods submitted by four of the six respondents.(64) The respondents' comments concerning the application of the sales-below- cost test are basically split between two opinions: a suggestion to compare one weighted-average cost to one weighted-average price, or to perform the normal sales-below-cost test, but allocate the costs proportionally between products based on value. Abitibi, Slocan, Weyerhaeuser and Tembec are of the opinion that the sales-below-cost test should be performed on an overall weight-averaged basis. West Fraser and Canfor believe that the costs should be re-allocated based on prices. Specifically, the respondents in agreement with Abitibi assert that average joint costs should be compared to average prices for all joint products included in those costs. They maintain that for the preliminary determination the Department compared weighted-average joint costs (for groups of jointly produced lumber products that differed in grade and dimensions) to the individual prices for each of these different products. They argue that the sales-below-cost test for the preliminary determination failed to fulfill its intended purpose - that of measuring whether prices permit the recovery of all costs - because the prices and costs did not match. These respondents argue further that the costs of any joint product are incurred for the resulting joint products as a whole and, therefore, the recovery of all such costs can be tested only at the level of the joint product. Thus, they contend that a single total average cost for all joint products must be compared to the weighted-average price of all the sales of products within that joint product category. Slocan points out that, in a joint product situation, where "below-average" products are inevitably produced as a consequence of common inputs and manufacturing processes, there are obvious reasons for considering sales of low-quality products to have been sold in the ordinary course of trade when they are sold below average cost. In the same line of reasoning, Tembec argues that a determination as to whether costs are being recovered must be made on the basis of whether the average price obtained for all products sharing all of the same production processes exceeds the average cost of those products. Tembec maintains there is no other way to achieve the goal of consistency, nor to make fair comparisons. Specifically, these respondents argue that the Department should compare each average joint cost for each grouping of joint products to the average price of all joint products, using its broad statutory authority to use averaging where necessary, per section 777A(a)(1) of the Act, and use weighted-average prices for comparison under section 773(b)(2)(C)(ii) of the Act. They suggest that if the average price is above the average joint cost, prices recover costs, the substantial quantities test is met and all home market sales of those products should be included in fair value comparisons. Conversely, they suggest that if the average price is less than the average joint cost, then substantial quantities of below cost sales exist, and the Department should disregard all the individual below cost sales.(65) Similarly, Weyerhaeuser argues that the SAA at 832 does not limit the sales-below-cost test using weighted-average-price-to-costs only to cases involving highly perishable agricultural products. Weyerhaeuser and the BCLTC assert that softwood lumber producers are forced, due to the varied nature of the raw material input, to sell a full range of products (some below cost and some above cost) in an effort to recover total costs. They contend it is the nature of the product to make a certain level of below-cost sales a normal and necessary business practice and, likewise, make the 20-percent substantial quantities test inapplicable. In addition, Abitibi argues that the 20-percent test should not be applied in this case because it is typical for more than 20 percent of the products produced (i.e., those sales consisting of low end merchandise) to be sold below cost in the ordinary course of business in the lumber industry.(66) Finally, Weyerhaeuser does not believe the Department is required to eliminate below-cost sales in the calculation of normal value. Weyerhaeuser cites section 773(b)(1)(B) and the Department's regulations at section 351.406(a) as support. Weyerhaeuser states that the language of these provisions clearly establishes that the Department need not disregard such sales if doing so would yield unfair comparisons or irrational results. Advocating an alternative approach, West Fraser and Canfor argue that to correct the parties' concerns about the results of the cost test, the Department must allocate cost to products using the prices of the products. They argue that the Department's use of average costs in the sales-below-cost test distorted the results of the test by causing nearly all of home market sales of low-end lumber to be below-cost sales. They contend that the Department's cost test in the preliminary determination led to the unrealistic conclusion that no Canadian producer subject to this investigation regularly sold lower grade lumber in the ordinary course of trade during the POI. West Fraser and Canfor argue for a complete reallocation of production costs to individual products based on a measure of the value of individual products. The petitioners advise the Department to continue to perform the sales- below-cost test in the exact same manner as was done for the preliminary determination, rejecting the respondents' arguments to the contrary. They reject respondent claims that they did not report control number- specific costs with which to compare control number-specific net prices for purposes of the sales-below-cost test. The petitioners maintain that costs reported by the respondents are the actual costs incurred by the companies to produce the products under the volume-based method, the costs reported in the normal course of business, consistent with GAAP, and have been verified. According to the petitioners, the nature of the softwood lumber industry is such that control numbers having the same actual cost is not unusual because actual processing costs associated with various different products do not differ. The petitioners characterize the respondents' interpretation of the substantial quantities provision of the sales-below-cost test as being without merit and in direct contradiction to the statute. The petitioners state that the plain language of the statute requires that only when the volume of below-cost sales represents less than 20-percent of the volume of sales under consideration for the determination of normal value can a finding be made that sales below cost were not made in substantial quantities, citing section 773(b)(2)(C) of the Act. The petitioners state that the weighted-average alternative, even when relevant, does not provide support for a comparison of an average cost to an average of prices for multiple products. The petitioners argue that the respondents' pleas to compare average prices to average costs are inappropriate for several reasons. The petitioners argue that the Department has rarely compared average prices to average costs of production and, when it has done so, it was only when examining highly perishable products.(67) The petitioners quote the SAA at 832, which states, "the cost test generally will be performed on no wider than a model-specific basis." The petitioners hold that the cost test is designed to determine if individual sales of a product were made below the actual cost of that product, not to determine whether, on average and over time, the average costs were recovered. The petitioners respond that comparing weighted-average prices to average costs would mask dumping through overly broad averages. The petitioners state that the weight- averaging provision of section 773(b)(2)(C) only applies to highly perishable agricultural products, where products must be sold before spoilage. In these cases, according to the petitioners, the Department averaged prices over time and not across products. The petitioners state that lumber is not a highly perishable product and that lumber producers are not compelled to sell their lumber because of rapid spoilage.(68) Finally, the petitioners argue that, even if the Department were to agree with the respondents, it could only apply an accurate "average-to-average" cost test if it were to weight-average the prices of all products that share the same production costs. Given that the Department limited the reporting requirements, this method would not be possible based on the current record. The petitioners state that there is no legal or logical requirement that the prices compared by the Department to submitted costs be at the same level of specificity as those costs. The petitioners continue that, in fact, the Department's normal cost test routinely compares each and every individual sales price within a given control number to the weighted- average cost reported for that control number. Additionally, the petitioners argue that it would be inappropriate for the Department to define control numbers one way for the sales-below-cost test and another way for the margin calculation. The petitioners state that control numbers must be defined consistently (i.e., identically) for the sales-below-cost test and the price-to-price comparison process, respectively. The petitioners urge the Department to reject the respondents' suggestion that sales-below-cost be treated as sales made in the ordinary course of trade and that they be included in the universe of sales available for price-to-price comparisons. The petitioners state that the discretion afforded by the statute in disregarding sales which fail the sales-below- cost test has never been exercised and no compelling reason exists to do so in this case. The petitioners disavow the respondents' claim that Canadian softwood lumber producers are compelled to sell below cost, suggesting that allowing the respondents' request would provide the respondents with a license to dump. Department's Position: For the final determination, we believe it is appropriate to continue to compare the product-specific cost for each product represented by a control number to the individual sales that belong to that control number. Thus, we performed the sales-below-cost test in the same manner as in the preliminary determination. The Department's standard practice with respect to determining whether to disregard home-market sales made at less than their COP is to examine, in accordance with sections 773(b)(1)(A) and (B) of the Act, whether such sales were made (1) within an extended period of time in substantial quantities, and (2) at prices which did not permit the recovery of all costs within a reasonable period of time. Pursuant to section 773(b)(1), where less than 20 percent of the respondent's sales of a given product are at prices less than the COP, we do not disregard any below-cost sales of that product, because we determine that in such instances the below- cost sales were not made in "substantial quantities." Where 20 percent or more of a respondent's sales of a given product are at prices less than the COP, we regard those below-cost sales of that product as being made in "substantial quantities," in accordance with section 773(b)(1)(A) of the Act. In such cases, we also determine whether such sales were made at prices which would not permit recovery of all costs within a reasonable period of time in accordance with section 773(b)(1)(B) of the Act.(69) If this criterion is also met, we disregard the below-cost sales. The Department has only applied section 773(b)(2)(C)(ii) of the Act, where we compare a respondent's weighted-average per-unit price of a given product to the respective weighted-average COP, in cases involving highly perishable products.(70) Even then, we did not average prices or COPs across products. Lumber is not highly perishable like flowers, where product may be sold below cost because of spoilage concerns. Concerning the respondents' comments that the costs and prices used in the preliminary determination were not comparable because average joint costs were compared to product-specific prices, we believe that our adopted cost method for the final determination results in costs that accurately reflect the actual cost of producing the lumber products in a given control number.(71) Therefore, we agree, in part, with West Fraser and Canfor that, to the extent there were any problems with the results of the cost test at the preliminary determination, the proper way to address them was through an accurate calculation of the costs. However, while we take the model match (product definition) criteria into account in determining the appropriate method for reporting cost, this does not mean that in every case we can or must calculate a unique cost for every unique product (i.e., CONNUM) identified by our product definition criteria. Nor does it mean that if we accept or adopt a cost method that yields the same cost for two products, we must consider those two products to be a single product (i.e., CONNUM).(72) We disagree that the cost test should be performed on a basis other than a model-specific basis, in accordance with section 773(b)(2)(C) of the Act and the SAA. The SAA directs that "the cost test will generally be performed on a no wider than model specific basis."(73) We note that the model match criteria developed at the outset of a proceeding directs the model specificity, not the level of detail in which cost differences can be captured.(74) We note that in the preamble to its regulations,(75) the Department stated that its practice is "to calculate costs consistent with the model matching criteria it develops at the outset of an investigation or review, after having received the views of the interested parties. The product categories developed in such fashion generally account for significant differences in actual costs affecting price. The Department intends to continue this practice because it prevents any manipulation of the cost analysis through changes in internal product classifications." Furthermore, the Department stated in the preamble that, "where a particular model is sold at prices below the cost of production during one month of the period of investigation or review (and where such sales are in substantial quantities and are not at prices that would permit cost recovery), the Department may disregard these sales in its determination of normal value."(76) In past cases, the Department has routinely performed the cost test on a model-specific basis.(77) The theory espoused by the respondents, that for a joint product such as lumber, as long as total sales revenue exceeds total costs, costs are being recovered, fails to satisfy the model specificity requirement. We disagree with the respondents' suggestion that it would be appropriate to conduct the sales-below-cost test on a basis of comparing total weighted- average prices across products to total weighted-average costs across products. The fact that lumber results from a joint production process does not mean that it would be appropriate to deviate from our normal cost test methodology. The method suggested has never been the Department's practice because of the substantial risk of masking potential dumping margins through averaging product groups and losing any type of specificity in our comparisons. Moreover, this analysis, even if performed, would not result in meaningful data for the recovery of cost provision of section 773(b)(1)(B) because it would be limited to home market prices and would not include the effect of sales of products made to other countries. The only way to determine whether total sales revenue recover total joint costs is to look in total at all production and sales activity, for all products, for all markets world-wide. As such, the respondents' proposed method would be meaningless in determining whether sales in only one market, for only a subset of all products produced from the joint production process, recovered costs. The respondents argue that the nature of the lumber business compels Canadian lumber companies to sell their lower grade products at less than the cost of production and, therefore, these sales should be exempt from the substantial quantities provision. Likewise, Weyerhaeuser argues that its alternative approach to the cost test recognizes that softwood lumber producers inherently have sales both below and above cost, and would appropriately disregard only those sales that represent a net below-cost recovery for the company. We disagree with this approach, and we also disagree with Weyerhaeuser's argument that if the Department continues to disregard below-cost sales in the calculation of normal value, it should similarly disregard above-cost sales. We find no legal basis or logical reason to abandon our normal practice of applying the substantial quantities test in this case. The SAA at 833 states that "{t}he Administration intends that Commerce will disregard sales when the conditions of the law are met. However, in some cases, below-cost sales may be used to determine normal value if those sales are of obsolete or end-of-model year merchandise." We have not found circumstances in this case which would lead us to conclude that there are specific factors which would justify including below-cost sales in the universe of sales used for normal value. First, as noted above, lumber does not have any of the same characteristics as the categories of merchandise that the SAA contemplates as exceptions to the general rule (i.e., obsolete or highly perishable). Second, our revised cost method directly addresses the issue of low grade wood products. Moreover, given that our cost approach in this case results in the actual cost of the lumber products, it is reasonable to expect lumber producers to sell their products above these actual costs. We therefore disagree with respondents that the facts and circumstances of this case warrant deviation from our normal practice. Accordingly, we have continued to apply the cost test on a model-specific basis. Therefore, for the foregoing reasons, we have followed our normal practice in determining when to disregard sales-below-cost in the calculation of normal value because they are outside the ordinary course of trade. See section 771(15) of the Act. Comment 6: Constructed value profit The respondents take issue with the Department's calculation of CV profit. Specifically, they contend that (1) the inclusion in the CV profit calculation of only "above-cost" sales resulted in a methodology that ensured that dumping margins would be found on lower-value products, and (2) the Department's methodology is contrary to the recent CAFC decision in SKF USA, Inc. v. United States, 263 F.3d 1369 (Fed. Cir. 2001)(SKF II), where the CAFC rejected the Department's multiple definitions of "foreign like product." The respondents have suggested alternative methodologies for calculating CV profit. Their arguments and suggested alternative methodologies are discussed below, along with the views expressed by the petitioners. (1) Use of "above-cost" sales in the calculation of CV profit Slocan, Tembec, Weyerhaeuser, and the BCLTC contend that, by calculating an average CV profit based only on sales determined to be "above-cost," the Department applied an unreasonably high profit to all products. This, according to the parties, unfairly generated dumping margins.(78) According to these parties, low value products are necessarily sold below cost and do not often generate profits. By omitting sales of low-value products from the profit calculation, the Department calculated a profit based on the sales of only high-value products, but then applied this profit rate as a component of constructed value for low-value products, as well. As a result, the U.S. sales prices for all products must be as profitable as the high value products sold in the home market in order to avoid a dumping margin. (2) The Department's methodology is contrary to the CAFC's decision in SKF II Abitibi, Slocan, Tembec, West Fraser, Weyerhaeuser, and BCLTC also argue that the Department defined "foreign like product" differently when calculating CV profit than it did when making price-to-price comparisons, and that the different definitions constitute a violation of the law. The parties insist that in SKF II the CAFC recently rejected the Department's multiple definitions of "foreign like product." In the instant investigation, these parties point out that, for the purpose of making price-to-price comparisons between the subject merchandise and the foreign like product, the Department restricted its comparisons to merchandise that was identical in terms of grade, thickness, width, and length. In other words, the parties claim that for purposes of price-to-price comparisons, the Department defined the foreign like product on a more narrow, control number (CONNUM) specific, basis. However, when calculating CV profit, the parties say that the Department defined the foreign like product as all above-cost home market sales, regardless of CONNUM, and on that basis calculated a single CV profit. The parties argue that in SKF II the Court rejected a similar methodology employed by the Department in the Antifriction Bearings case. The parties state that section 771(16) of the Act specifically defines "foreign like product" to govern all references to the term in the antidumping law. West Fraser argues that nothing in the definition indicates that the term may have different meanings in different subsections, or that it may have multiple definitions based on context. According to West Fraser, the Supreme Court has established that the repeated use of a technical term in a statute implies that it carries the same definition.(79) As a result, West Fraser argues, the Department does not have the authority to use multiple definitions of the same term in its determination. In Antifriction Bearings, the Department treated "families" of bearings as the foreign like product when determining normal value, but aggregated the families into larger groups when defining the foreign like product for the CV profit calculation. The parties contend that, in its decision, the Court stated that section 771(16) of the Act was obviously designed to require that the Department use the same definition in calculating normal value when based on home market sales as well as, when based on constructed value. The parties argue that, according to the Court, it was clear that Congress intended the term "foreign like product" to have the same meaning in each section or subsection of the Act, and intended that the Department would define the term consistently.(80) Because the Department did not provide reasons for its inconsistency in Antifriction Bearings, the CAFC remanded the case to the Department to justify the multiple definitions. The commenting parties in this case argue that for the final determination the Department follow the SKF II ruling and consistently define the foreign like product to ensure a fair calculation. Proposed alternative methodologies Several parties argue that, to be consistent with SKF II, the Department should redefine the foreign like product for purposes of calculating CV profit, and should define "foreign like product" in the same manner as was done for price-to-price comparisons, i.e., the Department would have to calculate CV profit on a CONNUM-specific basis. Alternatively, Slocan contends that if the Department decides it is appropriate to compare sales of subject merchandise to home market sales of similar products, it should then define the foreign like product as all sales of the foreign like product that are comparable (as similars) to a given CONNUM of the subject merchandise. Slocan states that this methodology would provide the Department with a larger set of sales with which to compute CV profit.(81) Slocan, Weyerhaeuser, and the BCLTC argue that, as an option, the Department could use the same aggregate CV profit calculation from the preliminary determination, but incorporate below cost sales, because those sales were made in the ordinary course of trade and, as such, those sales must be included to calculate a representative and fair CV profit. Section 773(b)(1) gives the Department the discretion to include below-cost sales by stating that the Department may disregard sales below the cost of production, not that the Department must disregard below-cost sales.(82) The parties insist that, given the nature of their industry, including below-cost sales would be appropriate. The BCLTC explains that, since sales of lower quality products are "ordinarily" made at prices below average cost, they are, therefore, made in the "ordinary course of trade."(83) On the other hand, should the Department choose to disregard sales below cost, the parties argue that the Department should calculate CV profit under either of the two methodologies outlined in section 773(e)(2)(B)(i) and (iii) of the Act. Abitibi, Slocan, West Fraser and the BCLTC claim that section 773(e)(2)(B)(i) allows the Department to base CV profit on merchandise sold in the home market that is in the same general category of products as the subject merchandise without regard to whether that merchandise was sold in the ordinary course of trade. Although the Act does not define "in the same general category of products" as the subject merchandise, the parties note that the SAA states that the "same general category . . . encompasses a category of merchandise broader than the foreign like product."(84) The parties argue that in this case, where the foreign like product should be redefined as the specific CONNUM, the same general category of merchandise as envisioned by the SAA would be broader than the CONNUM. In order to apply that rationale, the parties argue that the Department should use their entire home market sales databases for purposes of calculating CV profit. According to the parties, this is the best alternative, because aggregating the CONNUM-specific data allows the Department to use verified information as the basis for the category of merchandise that is broader than the foreign like product. As another consideration, Abitibi and Slocan suggest that, rather than calculating one CV profit for all products in the home market database, the Department could define the "same general category of merchandise" as all products in the same grade, same species or species mix, or all products sharing the same average cost of production, and calculate a separate CV profit for each. Slocan argues that a narrower definition of the "same general category of merchandise" will achieve more accurate results. Another proposal offered by Slocan, Tembec, and Weyerhaeuser is that the Department could determine profit under section 773(e)(2)(B)(i) by using the consolidated financial statements of the individual companies, which would represent profits in the same general category of products as the subject merchandise.(85) Weyerhaeuser and Tembec also argue that the Department could use published publicly available data, such as data from Statistics Canada or PricewaterhouseCoopers, regarding the financial results for the Canadian lumber industry. If the Department decides to calculate CV profit "based on any other reasonable method," as described in section 773(e)(2)(B), Tembec and West Fraser assert that the Department must remember that the "amount allowed for profit may not exceed the amount normally realized by exporters or producers . . . in connection with the sale, for consumption in the foreign country, of merchandise that is in the same general category of products as the subject merchandise." West Fraser argues that the Department should calculate a profit cap based on other respondents' home market sales data. Finally, Abitibi, Slocan, Tembec, West Fraser, and the BCLTC note that, in Floral Trade Council v. United States, the CIT found that the term "profits" does not imply that the Department must calculate a positive CV profit.(86) As a result, the parties argue that if the Department finds that individual companies, CONNUMs, grades, species, etc., had losses (i.e., negative profits), the Department must include a profit rate of zero in its profit calculation. By doing so, the Department can calculate a profit rate that reflects the full range of a lumber producer/exporter's products, not just the high- value products. West Fraser disagreed with certain parties' suggestion that the Department use financial statements or other industry profit information to calculate CV profit. Instead, West Fraser argues that the Department should rely on the respondents' actual verified home market sales of products within the same general category as the subject merchandise.(87) West Fraser reiterates the arguments set forth in its case brief that the Department must calculate CV profit under section 773(e)(2)(B)(i) and (iii) of the Act, as well as the need to calculate a profit cap based on other respondents' home market sales data. The petitioners' response The petitioners argue that, in accordance with section 773(e)(2)(A) of the Act, the Department's normal practice for calculating CV profit is to use the aggregate home market sales, because the term "foreign like product" does not require that the products are identical or similar. The petitioners interpret section 771 of the Act as providing the Department discretion in determining which of the definitions of "foreign like product" is most appropriate given the circumstances of each case. Thus, in cases where CV is used, the Department may aggregate sales of products that are of the same general class or kind as the subject merchandise. The petitioners contend that aggregation is necessary in order to maintain the statute's preference for determining CV on the basis of actual data from the respondents in a case. In furtherance of this objective, if the definition of "foreign like product" required an identical product, then only in rare cases could the Department apply section 773(b)(2)(A). However, as the petitioners note, to address peculiar or odd circumstances, the Department has maintained this practice through numerous revisions of its regulations. The petitioners also note that the CIT has upheld the Department's practice of aggregation of home market sales for calculating CV profit. The CIT has also upheld the Department's broad definition of "foreign like product" under section 771(16) based on the circumstances of each case, as a "reasonable interpretation of the statute that was not in conflict with the legislative history of the URAA." See RHP Bearing Ltd. v. United States, 83 F.Supp. 2d 1322 (Ct. Int'l Trade 1999)(RHP); and SKF USA v. United States, 188 F. Supp 2d 1315 (Ct. Int'l Trade 2000). Although the CIT upheld the Department's practice of calculating CV profit based on an aggregate of home market sales, the petitioners cite a recent decision in which the CAFC does not overturn the Department's standard practice with regard to CV profit, either in its reasoning or its result.(88) According to the petitioners' interpretation of SKF II, the decision does not address the substantive merits of the Department's practice, nor does it consider arguments put forward by the Department in numerous determinations which the lower courts have endorsed.(89) The petitioners also state that the CAFC rejected a series of arguments that questioned the Department's authority to use aggregates. The petitioners state that the CAFC has recognized that the Department can provide clarification of its rationale for defining "foreign like product" differently, as it did in SKF II. The petitioners also contend that the CAFC notes that the Supreme Court permits construing the same term differently in the same statute. Similarly, the petitioners argue that the CIT has recognized that a statutory provision need not be interpreted in the same way in two different contexts.(90) The petitioners contend that the decision in SFK II does not require the Department to deviate from its practice of calculating CV profit and price-based NV using the same definition of "foreign like product." Department's Position: We agree with the petitioners and have continued to calculate CV profit based on an aggregate of home market sales of the foreign like product made in the ordinary course of trade. This method is consistent with past Department practice, is in accordance with the antidumping law, and is in accordance with past court decisions. Section 773(e)(2)(A) of the Act directs us to include in our CV calculation the actual amounts incurred and realized by the specific exporter or producer being examined in the investigation for selling, general and administrative expenses, and profits, in connection with the production and sale of a foreign like product, in the ordinary course of trade, for consumption in the foreign country. Thus, the preferred method for computing CV profit is to use actual profit and selling, general and administrative expenses incurred on sales of the foreign like product.(91) We calculated CV profit by first calculating the total revenue and expenses for all home market sales of the merchandise made within the ordinary course of trade based on the results of the sales-below-cost test for each respondent. Next, we calculated the profit percentage based on the total revenue less total expenses. Finally, we calculated the CV profit by multiplying the applicable profit rate by the per-unit COP. This calculation reflects the actual experience of each respondent for home market sales of the foreign like product made in the ordinary course of trade. We have only used in our profit calculation the sales revenue and expenses from those sales that are within the ordinary course of trade (i.e., after excluding certain below-cost sales as outside of the ordinary course of trade).(92) We disagree with the respondents' argument to include in the CV profit computation home market sales made below the cost of production. We disagree that the lumber industry warrants special treatment in this regard because, by the nature of the industry, those sales are still made in the ordinary course of trade. We calculated CONNUM-specific costs and compared them to CONNUM-specific home market sales prices. Sales found to have been made below their respective costs of production in substantial quantities within an extended period of time and at prices insufficient to recover costs within a reasonable period of time are outside the ordinary course of trade. The URAA amended the definition of sales outside the "ordinary course of trade" to include sales below cost.(93) See, also, Antifriction Bearings.(94) We disagree with the respondents' interpretation of the term "foreign like product." In accordance with the definition under section 771(16) of the Act, "foreign like product" is not limited to the product which is identical in physical characteristics to the subject merchandise or even to the products that are similar to the subject merchandise. Merchandise of the "same general class or kind" as the subject merchandise will qualify as the "foreign like product" (section 771(16)(C) of the Act) in cases where either the identical or similar merchandise is not available.(95) There is no indication that, by referring to "a foreign like product" in section 773(e)(2)(A) of the Act, Congress intended that profit be calculated only upon the basis of merchandise that was used in price-to-price comparisons.(96) Accordingly, we disagree with the parties arguing that the Department must define foreign like product for CV profit calculation purposes as something narrower than all home market sales of the "foreign like product," made in the ordinary course of trade. The SAA establishes a general rule or preferred methodology for calculating the amounts for SG&A and profits in the CV calculation.(97) For the preferred methodology to be applicable, there must be sales of a foreign like product in the ordinary course of trade (i.e., sales made at prices above cost). However, the statute and SAA also establish when normal value is to be based upon CV, stating that "{o}nly if there are no above cost sales in the ordinary course of trade in the foreign market under consideration will Commerce resort to constructed value."(98) Thus, if the Department were required to interpret and apply the term "foreign like product" in precisely the same manner in the CV profit context as in the price context, there would be no sales of the foreign like product upon which to base the CV profit calculation. Accordingly, the preferred method of calculating CV profit established by Congress would become an inoperative provision of the statute. In our view, the price-to-price and CV profit determinations are not made in isolation. The need to resort to CV arises in limited and specific circumstances, such as where there are no sales of the foreign like product in the ordinary course of trade. Thus, in each case for each producer or exporter, the Department has already gone through the hierarchy established in section 771(16) by attempting to identify sales of identical merchandise and similar merchandise. Where the Department must use CV to represent normal value, the Department either found no sales of identical or similar products for price comparisons, or found such sales to be outside the ordinary course of trade (i.e., below the cost of production) under section 773(b). Furthermore, as the petitioners have noted, in RHP the CIT affirmed the Department's calculation of CV profit using the profit of the class or kind of merchandise, which encompassed all foreign like products under consideration, because the use of such data matched the criteria of section 771(16)(C) of the Act (i.e., the same general class or kind of merchandise).(99) We believe a method based on varied groupings of foreign like products, each defined by a minimum set of matching criteria shared with a particular model of the subject merchandise, would add an additional layer of complexity and uncertainty to antidumping proceedings without generating more accurate results. Thus, for the final determination, we have calculated CV profit using the methodology as that used in the preliminary determination in accordance with section 773(e)(2)(A) of the Act. Comment 7: Product Matching In its preliminary determination, the Department attempted to match to sales of similar merchandise when identical products were disregarded as below-cost before resorting to constructed value, consistent with the ruling by the U.S. Court of Appeals for the Federal Circuit in Cemex S.A. v. United States, 133 F.3d 897 (Fed. Cir. 1998) (Cemex). The six respondents and the BCLTC all argued in their case briefs that the Department should amend the methodology used in its preliminary determination and revise the criteria used for calculating the difference in merchandise (difmer) adjustment. Specifically, these parties argue that, because "the Department permitted similar comparisons only where 1) it could compute a cost-based difmer between the U.S. product and similar home market product, and 2) the cost difference related to matching characteristics toward the end of the product matching hierarchy," comparisons to similar products were incorrectly made to only a very small portion of any company's sales.(100) In other words, even where the Department was provided with, for example, cost differences for moisture content, because this characteristic was several steps higher in the matching hierarchy many sales were compared to constructed value (CV) when the Department could have matched to sales of a similar product had it skipped certain characteristics (i.e., in this case: thickness, width and length) to find a match.(101) The parties contend that, under section 771(16)(B) and (C) of the Act, the Department "does not have the discretion to skip similar products and use constructed value" when a similar home market product can be identified as "either 'approximately equal in commercial value to,' or may be 'reasonably compared' with the U.S. product.(102) Therefore, the Department should revise its methodology and expand its use of similar products for the final determination. Additionally, the parties contend that even though section 771(16) of the Act permits identical/similar comparisons, and mandates that similar comparisons are permissible only when a difmer adjustment is made, there is no requisite that a difmer adjustment be made on the basis of cost. Therefore, the Department's requirement to make similar comparisons before comparisons to CV is not overridden by a lack of cost-based difmers.(103) Weyerhaeuser argued that "{t}he antidumping statute directs the Department to calculate normal value based on 'the price at which the foreign like product is first sold' in the exporting country in usual commercial quantities and in the ordinary course of trade."(104) Therefore, Weyerhaeuser argues that "there is no reason . . . why lumber of the same grade and species, but of somewhat different dimension (e.g., width and length), should not be regarded as 'similar' and a logical choice for matching purposes, if matched and appropriately adjusted for differences."(105) Moreover, some of the parties state that the Department cannot avoid its statutory obligation to use similar comparisons merely because doing so is complex. On the contrary, these parties argue that the WTO has recently stated that an adjustment is required to maintain price comparability and ensure a fair comparison between normal value and export price, and the WTO does "not agree with Argentina's view that Article 2.4. . . . {sic} permits an investigating authority to adjust only for the most important of the physical differences that affect price compatibility, even if making the remaining adjustments would have been, as the parties agree, complex."(106) The petitioners argue the Department should find that it is not obliged, either legally or factually, to match to similar products as was decided in Cemex, and should instead calculate normal value on the basis of constructed value whenever an identical match does not exist in a home market database. Because all of the parties involved in the investigation agreed to limit the sales and cost information reported to the Department, the petitioners insist that the Department does not have access to the universe of information it would have in a "typical" investigation. Furthermore, the petitioners argue that the Department determined in its investigation of Greenhouse Tomatoes from Canada that Cemex does not mandate the reporting of similars if sufficient difmer information is unavailable.(107) The petitioners argue further that the Department has previously determined in its investigation of Antifriction Bearings from the Federal Republic of Germany, in which it limited the number of reportable sales, that the Department has the authority to calculate normal value based on constructed value where identical product comparisons are not available. The petitioners maintain that the "{r}espondents acquiesced to the use of constructed value in place of similar product comparisons in return for the substantial easing of the onerous burden of reporting all products, which the Department otherwise would have had to analyze to determine the most similar matches."(108) Because the "analysis of the most similar matches requires a highly-detailed, rational and fact-based approach if margins are to be calculated accurately" in the limited amount of time available, the Department "should compare only identical products and use constructed value where no home market sales of a given foreign like product remain after application of the cost test."(109) The six respondents and the BCLTC responded to the petitioners' argument by stating that Antifriction Bearings from the Federal Republic of Germany does not eclipse Cemex as it occurred several years beforehand. The parties reiterated that "{n}o discussion of somehow waiving the statutory requirement of going to similars before constructed value ever occurred during discussions of limiting the reporting requirements" and, therefore, matching to similars before constructed value is required.(110) West Fraser notes that "the Department has used similar comparisons in streamlined reporting cases in the past," in such proceedings as Hot- Rolled Steel from France.(111) Furthermore, Abitibi argues that the agreement to limit the reporting requirements was accepted "at the urging of the Petitioner among others, {seeking} to eliminate from reporting a few insignificant product categories and species high in the product hierarchy. No agreement to limit production comparisons to identicals was even discussed, and none can reasonably be inferred."(112) Although the petitioners argue that matching to similars would be extraordinarily complicated, the respondents state that the Department had already established a hierarchical list of product characteristics for use in the preliminary determination, rendering this argument moot. The parties argue that "the degree of complexity or difficulty involved in product matching is irrelevant as a matter of law, which explains why petitioner's argument is devoid of any reference to the statute, or for that matter, any legal authority at all."(113) Additionally, Weyerhaeuser restated its argument that the Federal Circuit affirmed in Koyo Seiko Co. v. United States that it is satisfactory for the Department to choose a 'reasonable' selection as the foreign like product. Abitibi also argued that "{i}t defies rationality in this industry to determine, as the Department effectively did {in its preliminary determination}, that the 'normal value' of each different grade, thickness, width and length lumber product should be the same, or that if a single average joint cost is used for all products, that each different grade, dimension and length product should be expected to earn the same profit."(114) Because, according to Abitibi, the Department's constructed value methodology is ultimately distortive and unfair, resulting in high margins, the petitioners hope to match non-identicals to CV rather than to similars. Abitibi and West Fraser argue that they have reported sales of all of their subject merchandise, regardless of whether they met the Department's reporting requirements, and maintain that the Department has available to it adequate information to make similar product comparisons.(115) Abitibi also refutes the petitioners' argument that "similar comparisons cannot be used if adequate DIFMER data are unavailable."(116) Abitibi argues that the petitioners' argument is rendered null and void by virtue of the fact that the Department has already demonstrated that record information is useable for comparison purposes, given that the Department made similar product comparisons in the preliminary determination. In their rebuttal brief, the petitioners again make the argument that "{t}he CAFC's Cemex decision is not universally binding, and the Department need not follow that decision in the Final Determination here."(117) They argue that where all sales of a certain product were found to have been made below cost, the CAFC's decision does not require the Department to make similar comparisons. Specifically, the petitioners argue that because the Department does not have available to it a complete list of sales to consider, it should not feel compelled to follow the Cemex decision. The petitioners contend that the respondents have sought special treatment in this investigation by requesting that the Department limit the reporting requirements, while still taking into consideration similar matches. The petitioners argue that the facts of Cemex differ significantly enough that its application is no longer required in this investigation. However, in the alternative, the petitioners argue that should the Department decide to match to similars, it should do so consistently with the "fair comparison" analysis used in the preliminary determination. Department's Position: As we explained in the Preliminary Determination, all parties to this proceeding agreed at the outset of the investigation that the sheer number of different products sold by the respondents would significantly complicate the investigation. With a view to easing this administrative burden, the Department's questionnaire initially instructed respondents to limit the reporting of U.S. and home market sales to identical products sold in both markets. In defining identical products, the Department instructed respondents to consider the following physical characteristics, which were identified after consideration of comments from interested parties: (1) product category (e.g., dimensional lumber, timbers, boards); (2) species (e.g., Western SPF, Western Red Cedar), (3) grade, (4) moisture content, (5) thickness, (6) width, (7) length, (8) surface finish, (9) end trimming, (10) further processing (e.g., edged, drilled, notched). Subsequently, the six mandatory respondents jointly submitted a letter proposing further narrowing of product reporting requirements. Specifically, the proposal was to limit reporting to dimension lumber of certain species (Western SPF, Eastern SPF, Douglas Fir/Western Larch, Western Hemlock/Amabilis Fir, and Western Red Cedar); the sole exception to this rule was that decking and timber would be reported for Western Red Cedar products. The petitioners endorsed the joint proposal and it was adopted by the Department. Although the Department established limited reporting requirements for this investigation, this did not preclude comparisons of U.S. sales to similar home market sales where possible, before relying on CV as the basis for normal value. This is consistent with the practice implemented under Policy Bulletin 98.1, Basis for Normal Value When Foreign Market Sales Are Below Cost (February 23, 1998), where the Department stated that it "will use constructed value as the basis for normal value only when there are no above-cost sales that are otherwise suitable for comparison." Therefore, consistent with the Cemex decision, the Department did not automatically resort to constructed value, in lieu of comparison market sales, as the basis for normal value, where sales of merchandise identical to that sold in the United States were disregarded as below cost. Because all six of the mandatory respondents had stated that the Department must attempt to compare U.S. sales to home market sales of similar products before resorting to constructed value we requested for the preliminary determination that each respondent submit a complete home market sales list, including products that might be used as similar comparison models, subject to the reporting limitations outlined in the Department's June 26, 2001 letter.(118) On September 14, 2001, we received timely responses from all six companies, and developed a product hierarchy taking into account the expressed views of the interested parties. While some exceptions are noted, all parties state that they generally agree with the Department's model match hierarchy. For instance, West Fraser states that "West Fraser agrees that the model matching criteria in the Department's questionnaire are the appropriate criteria for identifying most similar merchandise. West Fraser also agrees that the model match criteria are in the appropriate order of importance." See West Fraser's August 16, 2001 letter to the Department. Canfor stated that it believes "that the current model matching criteria set forth in the Department's questionnaire are generally appropriate as a model match hierarchy, and are listed in the appropriate order of importance." See Canfor's August 16, 2001 letter to the Department. The petitioners stated that they "generally agree with the order in which the matching criteria appear in the Questionnaire." See the petitioners' August 16, 2001 letter to the Department. On August 16, 2001, all six respondents and the petitioner submitted responses regarding species. The petitioner, as well as five of the respondents, excluding Abitibi, stated that the Department should not match products across species. Abitibi stated that "while significant physical and value differences exist among species," it was not in a position to comment because it does not produce any species except SPF." See Abitibi's August 16, 2001 letter to the Department. With regard to grade, five of the six respondents believe that grades should be grouped into categories. (Canfor did not comment.) Abitibi, Slocan, Tembec, and West Fraser all offer company-specific model match hierarchies. All rely on the NLGA grading handbook to derive the groups. For instance, Tembec states, "NLGA groups the lumber products that the Department has asked respondents to report into several general classifications. See NLGA, Standard Grading Rules for Canadian Lumber (2000). Within each classification are several grades that indicate the quality of the product graded." See Tembec's August 16, 2001 letter to the Department. Weyerhaeuser did not provide a model match hierarchy, but stated that "absent value-based merchandise adjustments, it would not be appropriate to make similar comparisons between fundamentally dissimilar types, such as ordinary dimension lumber, studs, stress rated (MSR or MEL) lumber, and factory lumber." See Weyerhaeuser's August 16, 2001 letter to the Department. In addition, all of the five respondents who commented stated that matching across grade codes would be inappropriate. For example, Tembec stated that "the Department should compare products primarily within grade classifications." See Tembec's August 16, 2001 letter to the Department. The petitioners stated that matching within categories, as well as across categories, would be inappropriate. Within the moisture content category, three of the respondents -- Abitibi, Slocan, and West Fraser - offered model match hierarchies. The other three respondents -- Tembec, Weyerhaeuser and Canfor -- did not offer a model match hierarchy for moisture content. Abitibi, Slocan and West Fraser all suggested matching kiln-wet lumber to green lumber before dry lumber. Abitibi stated that "because {green lumber} does not meet the dry lumber specification, kiln-wet is most commercially priced and comparable to green lumber." Abitibi goes on to state that "green and dried lumber can be compared with a cost-based difmer, as the physical difference -- drying -- is captured in the reported cost of drying. There is, however, no cost difference reflecting the physical difference at issue {comparing kiln-wet and green lumber}, so a value-based difmer would have to be made." See Abitibi's August 16, 2001 letter to the Department. Tembec did not suggest a matching hierarchy; however, it, as well, stated that a value-based difmer would be needed to compare kiln-wet and green products. With regard to dimensional differences, four of the six respondents suggested that length be placed into bands and compared to other lengths within the band before being compared to lengths in other bands. Three of those companies, Abitibi, Slocan and West Fraser, suggested the following bands: less than 16', 16 - less than 22', 22' and above. Canfor suggested the following bands: 8' - 12', 14' - 20', greater than 20'. Furthermore, West Fraser states that "there tend to be significant breaks in the commercial value of softwood lumber products of different lengths at two points: 16-foot lengths and 22-foot lengths." See West Fraser's August 16, 2001 letter to the Department. Meanwhile, Canfor stated that "dimension lumber is sold in lengths ranging from 8 to 26 feet, or even higher in some instances. Given the significant differences in application, cost, and value, among the different lengths sold, Canfor believes it is appropriate to establish groups, or families, of lengths for matching purposes." See Canfor's August 16, 2001 letter to the Department. There was less agreement with regard to other dimensional differences. The Department asked on August 9, 2001 that parties "explain whether the thickness and width criteria should be combined into a single criterion, rather than considered separately." Canfor and Weyerhaeuser made no comments to this question, while Slocan stated that these categories should be separated. West Fraser and Tembec stated that these categories "could" be combined, whereas Abitibi stated that thickness and width "should" be combined. In the case of surface finish and end trim, there are only two categories. Therefore, it is not necessary to create a matching hierarchy. For example, Slocan did not comment on these issues, stating that "Slocan notes that surface finish and end trim have only two characteristics each, so there is no need to consider weighting criteria for these products." See Slocan's August 16, 2001 letter to the Department. In reference to further processing, five of the respondents offered no matching hierarchy: in the case of Slocan, further processing is not applicable; Tembec has only one category of further processing; and Abitibi and West Fraser have only two categories of further processing. While Abitibi and West Fraser believe that the Department should match across these two categories, it is not necessary for these companies to create a matching hierarchy. Weyerhaeuser did not comment on the issue. Canfor has four categories of further processing and stated the following in this regard: "the two types of fascia products should be matched first to one another and then to regular dimension lumber." See Canfor's August 16, 2001 letter to the Department. For the final determination, based upon our analysis of the parties' comments, we concluded that is was not appropriate to match across species or product category. With regard to grades, we assigned each NLGA-grade equivalent a numeric code as well as a group number. Group numbers were determined using the NLGA grading book, e.g., for example, studs are categorized as an NLGA grouping and, therefore, given a specific group number. See the company-specific analysis memoranda for the NLGA- equivalent grades and groups for each company. We then attempted to match within each grade group but did not match across grade groups. For moisture content, we first attempted to match kiln-wet lumber to green lumber, as suggested by those respondents who offered opinions. In addition, based upon these submissions, as well as the Department's analysis, width and thickness were numbered sequentially and matched to similar products. Length was classified into the following length bands: less than 16', 16 - less than 22', 22' and above. We first attempted to match within each length band, and matched across length bands when a similar match was not available within the band. For the dimension categories, when two equal matches were available, both matches were selected and averaged, e.g., an 8' board would be compared to the weighted average of a 6' and a 10' board, which are identical in every other respect. Finally, we have not changed the matching methodology used in the preliminary determination with regard to surface finishing, end trim and further processing. Comment 8: Value-based difference in merchandise adjustments The six respondents and the BCLTC argue that the Department should amend its methodology and revise the criteria used in the preliminary determination for calculating the difmer adjustment. For example, Abitibi argues that where "it is not possible to compute a cost-based difmer because the Department has only average joint costs for groups of joint products, then the statute and regulations require the calculation and application of value based difmers."(119) The respondents argue that the CAFC addressed this issue in U.H.F.C. Co. v. United States (U.H.F.C.)(120) and that this ruling similarly requires the use of value-based difmers in the instant investigation. In U.H.F.C., the CAFC rejected the Department's decision to use difmers valued at zero and not to calculate value-based difmers. Weyerhaeuser also cites to the Department's investigations of Nepheline Syenite from Canada and Polyvinyl Alcohol from Taiwan as instances in which the Department acknowledged that it is appropriate to calculate difmers based on value.(121) Abitibi asserted that the Department reasoned that various sources for creating value-based difmers ". . . could not be used, because for some sources, it {the Department} contended it could not apply an ordinary course of trade test, and for other sources, because it contended the pricing data could be tainted by dumping."(122) The respondents argue that the Department had not examined all of the potential sources for value data and cannot use its failure to do so as an excuse for refusing to apply a value-based difmer.(123) The respondents also argue that the ordinary course of trade test has no relevance in this context because the Department's objective is to quantify the differences in value, and not to determine if sales were made below COP.(124) The respondents argue that it is the Department's responsibility to inform them of the data needed to calculate value-based difmers. The respondents assert that ". . . Random Lengths data are available for many product comparisons, and the Department's Preliminary Determination provided no reason why such data cannot be used in computing at least some difmers."(125) The respondents also assert that the Department should reject all U.S. pricing data and should consider using "overall, non- market specific pricing data," allowing the Department to compare prices between markets.(126) Finally, the respondents argue that similar comparisons with a difmer will result in a more accurate determination. Abitibi suggests that the Department use Abitibi's ". . . submitted annual average historical prices for 1999 across all markets, by CONNUM" and ". . . develop a product matching hierarchy and concordance."(127) Furthermore, the Department should utilize its concordance package to match to the most similar product and calculate a percentage difmer based on net price differentials. In conclusion, the Department should apply "this percentage DIFMER to the home market sales price net of all movement charges . . . in computing the amount of DIFMER to add to the home market price for similar merchandise in order to arrive at normal value" and "not compare products where the value based DIFMER is greater that {sic} 20 percent."(128) Weyerhaeuser argues that the Department should "calculate average prices on a CONNUM-specific basis based upon home market price data already on the record."(129) By calculating an adjustment based solely on home market prices, the Department could prevent the results from being skewed by potentially dumped merchandise in the U.S. market. Weyerhaeuser argues that this methodology is "similar to that used by the Department in the level-of-trade analysis, which neither the Department nor reviewing courts have found to be distortive."(130) Finally, certain parties assert that the Department must compare to similar products even in the absence of a difmer adjustment. Specifically, West Fraser argues that if the Department continues to use cost-based difmers in the final determination, it must compare to sales of similar products, even if the difmer is zero, claiming that there is nothing in the statute or regulations that requires the Department to adjust for price effects caused by differences in merchandise if those differences do not exist.(131) West Fraser notes that in a review of Certain Cut-to- Length Steel from Finland, 62 FR 18468, 18473 (April 15, 1997), the Department assigned a difmer of zero to merchandise with the same cost as that of the U.S. product to compare similar products and the company argues that the Department should do the same here. Likewise, Slocan argues that a difmer adjustment can be zero. The company believes that a zero difmer only means that the comparison is simpler than usual, not requiring the additional step of adding or subtracting the difmer. Slocan suggests that as the difmer approaches zero, the chance for distortion diminishes, resulting in a more appropriate comparison, and argues that "it is not unusual for statutorily mandated adjustment{s} to be zero."(132) For example, Slocan asserts that the Department frequently averages selling expenses which are captured in the circumstance-of-sale adjustment and, as a result of the averaging, there is no adjustment between markets. Additionally, it argues that, while it is rare for sales quantities to be identical between the U.S. and the comparison markets, it is even more rare that the Department would make an adjustment for those differences. Slocan states that because "{t}imber is sold on an average basis and producers have no feasible way to account for fiber moving through their mills but on an average, volume basis,"(133) this does not mean these "average costs are 'not real,' or that there should be some hard-and-fast rule against using them for a difference-in-merchandise adjustment."(134) While Slocan would prefer that the Department allocate costs according to value, or make value-based difmer calculations in order to account for the average costs, Slocan argues that the Department must either make a value- based difmer adjustment or apply a cost-based zero difmer. Finally, Slocan argues that U.H.F.C. Co. v. United States does not prohibit the employment of zero difmers. Rather, Slocan claims, the "propriety of a zero difmer will depend on the facts and circumstances of a particular case; . . . when products differ from each other greatly in value and there are not small incremental gradations from product to product, application of a zero difmer is likely to be improper."(135) However, in the instant investigation, Slocan believes that the ability to make a "more fine-tuned" similars search, due to incrementally increasing lengths, widths and thicknesses, means that the chance of an inappropriate comparison between products with matching costs is greatly reduced. Slocan believes that the zero difmer will result in a more fair comparison than comparing CONNUMs without home-market above-cost sales to CV, as was done in the preliminary determination.(136) Abitibi objects to a zero difmer. It contends that each of the interested parties agreed that the product matching characteristics concern physical differences that affect the sales price of softwood lumber.(137) Given that the product characteristics each affect the price, there is no factual basis for assigning a value of zero to the difmer.(138) If there are no cost differences, the Department must calculate a value-based difmer. The petitioners submit that the Department should continue to calculate difmers using volume-based costs. The petitioners deem "compelling" the Department's reasons for rejecting a value-based difmer adjustment for the preliminary determination, wherein the Department had stated that the use of a value-based difmer adjustment was inappropriate because the record lacked comprehensive, reliable price information, the price information available would not permit the exclusion of sales outside the ordinary course of trade, and it would be inappropriate to use U.S. prices when the fairness of these prices is the subject of the antidumping investigation.(139) The petitioners also argue that the Department's practice demonstrates a clear preference for difmers calculated from volume-based costs. They assert that the only time the Department calculated a value-based difmer, in Nepheline Syenite from Canada, it did so because "it did not have sufficient time to gather cost information and because the difmer adjustment had a small impact on the overall margin."(140) Moreover, the petitioners state, in the instant investigation "{t}he costs on the record are the actual, product-specific costs recorded in the companies' books and records, and should not be disregarded. As a practical matter, such information . . . was verified in this case."(141) The petitioners again make their argument that ". . . the Department {correctly} concluded that, because it was not appropriate to match products that do not have identical grade, thickness, width, and length, it would match non- identical merchandise only where it was able to quantify a cost-based difmer for processes such as end-trimming."(142) The petitioners argue that the only way to calculate a value-based difmer would be to remove "all circumstance of sale differences between the prices being used to derive the value-based difmer,"(143) but that such a methodology would not work in this case because the information placed on the record for calculating value-based difmers is not usable for that purpose. According to the petitioners, the record information is either "based on the same U.S. pricing data at issue in the investigation," is "not comprehensive enough to identify all of the differences among the entire range of products," or raises the concern that "the Department cannot be certain that all of the sales covered by the data were made in the ordinary course of trade."(144) The petitioners assert that "{a}t the most basic level, it is circular and illogical to adjust for the difference between the prices of two products in trying to determine the difference between the prices of the two products."(145) The petitioners further assert that prices in Random Lengths ". . . are based on prices for Canadian products, which are distorted due to dumping and subsidization."(146) Finally, even if the Department used non-POI prices to calculate a difmer, the petitioners reassert their argument that "{u}nless one removes all circumstance of sale differences between the prices being used to derive the 'value-based' difmer (as the Department is required to do for margin calculation purposes), one is necessarily faced with a price difference which is based, at least in part, if not entirely, on differences in those circumstances of sale."(147) Therefore, the petitioners argue, it would be inappropriate for the Department to calculate value-based difmers in the final determination. In its rebuttal brief, Slocan argues that ". . . {t}he fact that no cost- based DIFMER can be computed using average joint costs means only that value-based DIFMERS must be used."(148) Likewise, Canfor argues that "the absence of meaningful differences in variable costs for products of different grades, dimensions, and lengths is solely due to the Department's failure to allocate joint costs to individual lumber products using an appropriate methodology."(149) Using value-based difmers would, according to Canfor, prevent the Department from making unreasonable matches which might skew the Department's margin analysis. Department's Position: As the parties have noted, this case involves among the most complex product comparisons the Department has faced. Where we do not have identical home market sales within the ordinary course of trade, we have attempted to base normal value on sales of the most similar product and we have attempted to adjust for such physical differences where we have adequate information to do so. Section 773(a)(6)(C)(ii) of the Act provides for an adjustment to normal value for differences in the physical characteristics of the products being compared. The statute grants the Department discretion to determine a suitable method to calculate a difmer adjustment and does not restrict the Department's selection of an appropriate methodology to any particular approach. See, e.g., NTN Bearing Corp. of Am. v. United States, Slip Op. 2002-07 (CIT, January 24, 2002) at 130. As explained in the Preliminary Determination and in Policy Bulletin 92.2: Differences in Merchandise; 20% Rule (July 29, 1992), the Department has "rarely been able to determine the direct price effect of a difference in merchandise." As a result, difmer "adjustments are based almost exclusively on the cost of the physical difference." The Department ordinarily calculates its difmer adjustment on the basis of differences in the variable costs of manufacturing between products given that, in the typical antidumping investigation, the Department has found that such data approximates the effect that differences in physical characteristics have on product prices.(150) Nevertheless, in addressing comments to its proposed regulations in 1997, the Department specifically retained language preserving, as an option, the use of market value in measuring a difmer.(151) We acknowledge that there may be circumstances in which a difmer based on market value may be appropriate. Specifically in this case, where products have differences in dimension (i.e., length, width or thickness) we recognize that these physical differences could result in differences in market value. However, we have concluded in this case that there is no information on the record by which we can calculate a difmer adjustment to account for differences in dimension based either on cost or value. We disagree with certain respondents' suggestions on how to quantify a value-based difmer adjustment in this case. First, we note that the Random Lengths data do not cover all of the products for which an adjustment would be required. Second, as we stated in the Preliminary Determination, we do not believe it would be appropriate to use the respondents' prices as a basis for calculating a difmer adjustment where there were home market sales outside the ordinary course of trade during the POI for certain products involved here. To do so would adjust normal values back to prices already determined to be outside the ordinary course of trade, the whole reason why we would be disregarding such prices and comparing to a similar product. Therefore, no value-based difmer adjustment could be calculated for many of the comparisons based on POI sales. In the Preliminary Determination, the Department did not calculate difmer adjustments for grade or dimension differences because there were no cost- based difmers for these differences. This had the effect of limiting our use of difmers to similar matches among the surface finishing, end trim and further processing characteristics. Although the Department could have calculated cost-based difmers for moisture content, it did not skip across the dimensional characteristics of thickness, width and length in the hierarchy of matching characteristics to reach it. In the Final Determination, as a consequence of our having made a value- based cost allocation for wood and sawmill costs (see Comment 4), the Department is now able to make a difmer adjustment for differences in grade. As a result, the only physical differences remaining for which a difmer adjustment was potentially necessary were differences in dimension.(152) Regarding dimensions, however, we have determined that no difmer adjustment is appropriate, given that there is no basis for calculating a difmer for dimensions based on value or cost. There are no cost-based differences with which to calculate a difmer for dimensional differences. Also, for the reasons discussed above, we have not used a value-based difmer. However, in this case, to the extent that we compared products having different dimensions, those differences were generally small. Furthermore, as Abitibi argued, the record shows that lumber prices for different products fluctuated in relation to each other over the course of the POI.(153) Consequently, there appears to be little, if any, difference in home market prices that is attributable to differences in dimensions of the products compared, especially where those dimensional differences were minor. As a result of the Department's revised methodology, we have made many more comparisons to similar products than in the Preliminary Determination. In an effort to match sales of similar merchandise before resorting to constructed value, and consistent with Cemex, the Department has made no adjustment for differences in dimension among similar products. We agree with West Fraser and Slocan that such an approach is appropriate in these circumstances.(154) Further, this investigation is distinguishable from the circumstances of the U.H.F.C. case, where there was only a single difference, i.e., glue strength, between the products. In the instant investigation, there are several differences in physical characteristics, such as grade, width, length, thickness, and moisture content, and we would be unable to quantify how much of the difference in value between products is attributable to any one of these physical characteristics. As a result, we have determined that we have no comparable basis on which to adjust for physical differences between products based upon market value, as suggested by the respondents. This investigation is also distinguishable from the facts in Nepheline Syenite. In that case, there was evidence on the record, submitted by the domestic party and the respondent, that physical differences existed and that the market value of each grade could vary based on these differences. However, in that case, unlike in this investigation, there was "sufficient evidence to support the appropriateness of using market value."(155) Therefore, for all the reasons discussed above, we have not made a value- based difmer adjustment for the final determination. Comment 9: Whether SLA export taxes should be deducted from U.S. price In calculating EP and CEP for the preliminary determination, the Department deducted from the U.S. price export taxes levied by the Government of Canada pursuant to the SLA on respondents' exports of softwood lumber to the United States. Abitibi, Tembec, West Fraser, and Weyerhaeuser argue that the antidumping statute clearly dictates that such taxes, intended to offset a perceived countervailable subsidy, should not be deducted from U.S. price. For support, the four parties cite to section 772(c)(2)(B) of the Act, which exempts export taxes, duties, or other charges described in section 771(6)(C) from being deducted from U.S. price. Section 771(6)(C) further explains that the exemption applies to "export taxes, duties, or other charges levied on the export of merchandise to the United States specifically intended to offset the countervailable subsidy received." According to the four parties, this exemption applies to the SLA tax because the United States has repeatedly recognized that the SLA was intended to offset "perceived" countervailable subsidies on softwood lumber. Abitibi and West Fraser note that the United States Trade Representative (USTR), the negotiator of the SLA, stated that the agreement was intended to provide a "satisfactory resolution" to Canadian Government policies regarding softwood lumber exports to the United States.(156) Abitibi and Weyerhaeuser further argue that the United States indicated that the SLA was implemented to address Canadian imports of softwood lumber, "previously found to be subsidized."(157) Both West Fraser and Abitibi also note that the United States specifically stated that "{t}he Lumber Agreement is designed to offset in part provincial government timber pricing practices through a tariff-rate quota system that slows the flow of exports to the United States."(158) Although the SLA tax offsets the impact of Canadian programs rather than a quantified amount of benefit, Abitibi and West Fraser argue that the Act itself does not limit the export tax exemption to taxes offsetting the amount of benefit received rather than the effects of government programs. Furthermore, both parties contend that if Congress intended to limit the exemption, it would have done so. Citing section 704(b) and (c) of the Act, Abitibi and West Fraser note that Congress distinguished between types of offsets in the sections regarding suspension agreements. However, because the export tax exemption is not restrictive, the two parties argue, it clearly covers both types of offsets. In addition, Abitibi, Tembec, and Weyerhaeuser note that the SLA tax applies only to exports of one product to the United States. It is clearly not a user fee or general government tax that would not qualify for the exemption. Abitibi observes that, in the parallel CVD investigation, the Department preliminarily determined that the policies of the Government of Canada constitute countervailable subsidies.(159) Thus, by the United States' own admission, the SLA tax is an export tax intended to offset countervailable subsidies. Weyerhaeuser notes that in Certain Cotton Yarn Products from Brazil, the Department offset the net countervailable subsidy rate by Industrial Products Tax payments (which were intended to offset subsidies) to the extent that the tax payments equaled countervailable subsidy amounts for imports during the period of review.(160) According to Weyerhaeuser, the SLA tax is similar to a tax imposed by a suspension agreement for the explicit purpose of countervailing an alleged subsidy and, as a result, the Department should not deduct the SLA tax in calculating EP or CEP. Finally, both Abitibi and Tembec argue that, by deducting the SLA tax from U.S. price, the Department is not giving the Canadian producers/exporters credit for increases to U.S. price made to decrease dumping or offset countervailable subsidies. Both parties note that neither AD nor CVD duties are treated as costs in calculating EP or CEP. Furthermore, Abitibi notes that by deducting the SLA tax, the Department is admitting that the SLA taxes are included in the U.S. price because section 772(c)(2)(B) of the Act only permits the Department to deduct export taxes if the taxes are included in the U.S. price. Therefore, Abitibi contends that the Department's methodology proves that it agrees that the SLA tax caused respondent companies to increase prices. According to Abitibi, those companies should not be penalized for attempting to decrease dumping or offset countervailable subsidies in the sense that, by deducting the increase to U.S. prices (in the form of the SLA tax), the Department is, in effect, forcing the respondents to pay the tax again in the form of dumping duties. The petitioners argue that in the preliminary determination the Department appropriately deducted the SLA export fees from U.S. price because the fees do not fall under the exemption described in section 771(6)(C) of the Act; therefore, the Department should keep the same methodology for the final determination. The petitioners note that the SLA export fees were not imposed under the countervailing duty statute; therefore, as a legal matter, there was no countervailable subsidy under consideration for the export fees to offset. In addition, the petitioners argue that, according to its own language, the SLA was specifically intended to discourage shipments to the United States above a certain threshold in order to prevent material injury to the U.S. lumber industry(161) and, as such, the export fees are not an ad valorem tax, but a tax on sales above a certain volume. As a result, the language and mechanism of the SLA make it clear that the export fees were intended to discourage shipments above a certain threshold and not "specifically intended to offset the countervailable subsidy received," as is required in section 771(6)(C) of the Act. Finally, the petitioners point out that the SLA was not negotiated under section 704(b) or (c) of the Act. Therefore, it is not a suspension agreement, and the Department need not treat the SLA export fees as it would treat taxes levied under a suspension agreement. Department's Position: We agree with the petitioners. Section 771(6)(C) stipulates that, in order to qualify for the export tax exemption, the tax must be "specifically intended to offset the countervailable subsidy received." According to the language of the SLA, the agreement was "intended to ensure that there is no material injury or threat thereof to an industry in the United States from imports of softwood lumber from Canada."(162) The SLA does not mention a countervailable subsidy, nor was it negotiated under the countervailing duty or suspension agreement sections of the Act. Furthermore, we agree with the petitioners that the SLA tax is not comparable to a countervailing duty because, unlike a countervailing duty, it was only applied to exports above a certain threshold.(163) The SLA limited, to 14.7 billion board feet,(164) the amount of softwood lumber that could enter the United States fee-free. Canadian lumber exports to the United States in excess of 14.7 billion board feet were subjected to a graduated export fee that was collected by the Canadian Government. Therefore, no tax at all was imposed on the majority of subject merchandise. That being the case, the export taxes imposed by the SLA do not meet the definition in section 771(6)(C) of the Act; thus, they are ineligible for the exemption described in section 772(c)(2)(B) of the Act. For the final determination we continue to deduct SLA taxes from the starting price in order to calculate EP and CEP. Comment 10: Treatment of trim blocks/trim ends The petitioners argue that, because trim blocks are subject merchandise, as identified in the scope of this investigation, and are not by-products of lumber production, the revenue from the sales of trim blocks should not be included in Abitibi's or Slocan's cost of production as a by-product offset. According to the petitioners, the sales of trim blocks should have been reported in the respondents' sales databases. The petitioners contend that the Department should apply facts available to account for the missing sales and exclude all revenues earned on sales of trim blocks from Abitibi's and Slocan's by-product revenues. The respondents claim that, in a letter to the Department dated October 1, 2001, the petitioners stated that trim blocks were not subject merchandise and now it is too late in the proceeding for the petitioners to change their stance on the treatment of trim blocks. Abitibi and Slocan point out that they treat sales of trim blocks as by-product revenue in their normal books and records. Abitibi, in its rebuttal to the petitioner's comments, asserts that there is no basis for the use of facts available because Abitibi complied with the Department's reporting instructions regarding trim blocks. Abitibi notes that the petitioners did not suggest, prior to the issuance of supplemental questionnaires, that such reporting was deficient. Contrarily, the petitioners, in comments submitted to the Department regarding Canfor's treatment of trim ends, suggested that Canfor follow Abitibi's treatment of revenues generated from the sale of trim ends. If the Department's instructions to Abitibi were erroneous, Abitibi argues that the Department must open the administrative record to permit Abitibi to correct its data.(165) Furthermore, Slocan argues that since no trim blocks were sold in the United States, and it believes that all home market sales of trim ends would be below the cost of production, all of its sales of trim ends would be potentially immaterial in the Department's price-to-price analysis. Slocan speculates that including trim ends in the sales database will only serve to reduce the cost for prime merchandise in this investigation in the home market. The respondents point out that its treatment of the revenues generated by trim blocks as by-products rather than subject merchandise for reporting purposes causes production costs to be overstated because no costs have been allocated to trim blocks. Department's Position: We agree with Abitibi and Slocan that, in this instance, it is appropriate to treat the sales of trim ends as by-product revenue. Section 773(f)(1)(A) of the Act requires the Department to use the producer's normal accounting records if they are kept in accordance with GAAP of the producing country and they reasonably reflect the cost to produce the merchandise under consideration. In the current case, because trim blocks are treated as by-products in the respondents' normal books and records and because such treatment does not appear unreasonable, we found that no adjustment was necessary for the final determination. Furthermore, in their original questionnaire responses, both Abitibi and Slocan treated trim blocks as by-products rather than sales of subject merchandise. This treatment is in accordance with both the respondents' normal books and records. In supplemental questionnaires issued to the respondents, the Department never requested that the respondents include the sales and costs of trim ends in the reported databases, and, as the respondents point out, the petitioners reversal of its position regarding trim ends from its October 1, 2001 letter occurred too late in this proceeding to allow the Department time to consider different treatment. Since the Department did not request either respondent to change its reporting for trim ends in our supplemental questionnaires as is required by section 782(d) of the Act, we cannot utilize facts available since it not possible to characterize respondents' actions as any of those under section 776(a) of the Act. Comment 11: By-product revenue offset Canfor, Tembec, and West Fraser argue that the Department incorrectly decreased its reported by-product revenue offset at the preliminary determination. Both Canfor and West Fraser assert that the record demonstrates that the prices received on wood chip sales from affiliated parties in British Colombia (B.C.) were at arm's-length prices, when compared to unaffiliated wood chip prices, and no adjustment should be made for the final determination. Tembec argues that its by-product revenue offset related to affiliated parities should be based on Tembec's arm's-length market transactions with unaffiliated third parties. In Canfor's view, for the preliminary determination, the Department improperly compared the net revenue recorded by Canfor's Alberta mills to net revenues recorded by its B.C. mills. According to Canfor, this comparison was not appropriate due to the effect of certain intra-company transactions between its two Alberta mills and the nature of a proprietary contractual relationship. Canfor notes, however, that an accurate comparison is possible between the revenue received at the B.C. and Alberta mills after the elimination of the effect of the Alberta mills intra-company transactions. Canfor claims that after the eliminations, the base price of wood chips sold by the B.C. and Alberta mills are in the same range. Accordingly, this demonstrates that Canfor's affiliated wood chip sales were arm's-length transactions. In addition, Canfor contends that the record evidence shows that wood chip sales by Canfor's B.C. mills, Lakeland and The Pas, to its affiliated B.C. pulp mills were made at arm's-length prices, when compared to prices the affiliated pulp mills paid to unaffiliated suppliers. According to West Fraser, it demonstrated at verification that the prices it obtained from its affiliated pulp mills for sales of wood chips, sawdust and shavings during the POI were at market values. West Fraser asserts that verified information shows that it did not enlarge its by- product offset by inflating the prices it received for sales of residual by-products above market values. Further, West Fraser maintains that chip prices vary significantly by region and that any comparison in the aggregate is meaningless. West Fraser contends that it explained at verification that chip prices vary significantly between British Columbia and Alberta and that they therefore should not be compared directly. According to Tembec, its wood chips were sold to other divisions within the company for a price that was not equal to the market price of wood chips and that the sales revenue should be adjusted to the market price of wood chips. Tembec advocates the use of purchase prices from the pulp and paper mills for wood chips as the market value because its eastern sawmills do not have transactions with unaffiliated buyers. In the west, Tembec advocates using the sales price of wood chips to unaffiliates by the western sawmills. Tembec cites Pure Magnesium as a case where the Department used prices received from unaffiliated parties to establish market prices.(166) Further, Tembec objects to the petitioners' characterization of its minor correction to woodchip sales revenue and volume submitted at verification. Tembec claims that the petitioners base their criticism on the mistaken assumption that the correction to the reported value of Tembec's external chip sales is related to the correction to the reported volume. Tembec reports that the two corrections are independent of each other and are not interrelated. Thus Tembec maintains that the minor correction to the reported value of Tembec's unaffiliated chip sales in British Columbia was occasioned solely by the need to report the full amount paid for chips, whose volume was already reported. The petitioners argue that the Department must continue to adjust Canfor, Tembec and West Fraser's by-product revenue offset for the final determination. It is the Department's practice, according to the petitioners, to consider affiliated party transactions to be unreliable as the nature of affiliation allows for price manipulation. In that regard, the petitioners assert, it is the Department's practice to ensure that affiliated revenue amounts included in by-product offsets are stated at arm's-length terms. Further, the petitioners assert that section 773(f)(2) of the Act authorizes the Department to disregard transactions between affiliates in the "market under consideration." In the petitioners' view, these respondents attempt to divide its analysis of prices between affiliated and unaffiliated prices along provincial boundaries (i.e., B.C. and Alberta). However, the Department's practice is to evaluate these types of transaction on a countrywide basis. Thus, the petitioners assert, the Department should reject mill-specific or regional arguments. The petitioners further contend that it is the Department's preference when evaluating affiliated party transactions to first base the analysis of the transactions between affiliated and unaffiliated parties by focusing on the transactions between the entity or division producing merchandise under investigation. Thus, in this case, the Department should not resort to evaluating purchases of wood chips by respondents' pulp mills from affiliated and unaffiliated parties because the respondents' have information available to enable a valid comparison between their wood chip sales to both affiliated and unaffiliated parties from their sawmills. The petitioners contend that the Department stated in Pure Magnesium from Israel that when considering inputs, focusing on purchases would be preferred.(167) Specifically, with respect to Canfor, the petitioners contend that they have not provided any evidence suggesting that the market value of wood chips is understated at its Alberta mills. According to the petitioners, the Department should rely upon the company's books and records and reject Canfor's arguments that due to intra-company transactions and contractual agreements the market value of wood chips is understated at its Alberta mills. The petitioners assert that although the agreements do effect both Alberta mills, due to the nature of the transactions, combining the revenues and quantities of both mills results in weighted-average per-unit unaffiliated wood chip sales that were reflective of a fair market value. Accordingly, the petitioners assert that for the final results, the Department should adjust Canfor's by-product revenue consistent with the preliminary determination. With regard to West Fraser, the petitioners disagree with its claim that it demonstrated and supported the arm's-length nature of its prices. The petitioners maintain that the Department verified that West Fraser's sales of by-products to affiliated parties were not made at arm's-length prices. According to the petitioners, West Fraser points to only pieces of the whole picture to divert attention from the fact that overall the prices paid for wood chips by affiliated parties did not approximate market values. Further, the petitioners maintain that West Fraser's chip sales revenues appear to include certain expenses that should not be part of the by-product revenue offset. Accordingly, the petitioners assert, the Department should make an additional downward adjustment to West Fraser's reported chip revenues to exclude these expenses. Concerning Tembec, the petitioners argue that the Department should reject its attempt to significantly overstate the company's by-product revenue for sales of chips to affiliated parties and base the revenue amount on actual sales prices between mills. The petitioners argue that a single by-product offset adjustment should be used for all control numbers since Tembec has offered no logical rationale for reporting separate adjustments for Ontario, Quebec and B.C. The petitioners continue that if the Department incorrectly calculates Ontario, Quebec and B.C. specific by- product revenue offsets, the Department should not rely on the purchases of wood chips by Tembec pulp and paper mills in Ontario and Quebec because it does not reflect the value of wood chips only (i.e., freight is included.). The petitioners advocate the use of facts available since they conclude no valid market price exists on the record for Ontario and Quebec. Further, the petitioners state that the "minor revision" of Tembec's British B.C. wood chip revenue presented at verification was not minor, nor reasonable, and should be rejected by the Department because, when analyzed together, these corrections result in an unreasonable per unit sales price for chips when compared with Tembec's data on the record prior to verification. Department's Position: We agree with the petitioners that, under section 773(f)(2) of the Act, the Department may disregard transactions between affiliated parties if they do not fairly reflect the amount usually charged in the market under consideration. When a respondent sells the same by-product to affiliated and unaffiliated parties at different prices, the Department considers the prices received from unaffiliated parties by the respondent to be at arm's-length and to represent market prices. See Pure Magnesium from Israel. We disagree with the petitioners' claims that it is the Department's practice to evaluate affiliated party transactions only on a country-wide basis. In this case, record evidence shows that chip prices vary significantly by certain regions in Canada and that a comparison in the aggregate is not reflective of the inherent realities of the market under consideration. At each companies' verification, we obtained information that demonstrated that wood costs vary significantly by region due to different stumpage and harvesting costs, and that the wood chip market logically tends to follow the log market. In addition, the existence of local pulp mills also effect the price of wood chips. Supply and demand factors also tend to cause wide variances in regional wood chip markets, whereby one region could be a net importer of chips and another region a net exporter due to oversupply. Consequently, a meaningful comparison that recognizes these differences must be done on a regionally consistent basis. Specific to Canfor, the verified information shows that the fair market value that Canfor's mills obtain for sales of wood chips to unaffiliated purchasers is clearly distorted due to its contractual agreements.(168) Since Canfor did not have any sales of wood chips to unaffiliated parties in B.C., we have compared Canfor's sales of wood chips to affiliated parties in B.C. to the weighted-average market price of the other respondents' wood chip sales in B.C. Based on this comparison we find that Canfor's sales of wood chips to affiliated parties in B.C. during the POI were made at arm's-length prices and no adjustment is necessary for the final determination. With respect to West Fraser, for purposes of the final determination, we have compared West Fraser's sales of wood chips to affiliated and unaffiliated parties separately for Alberta and British Columbia. Based on this comparison we find that West Fraser's sales of wood chips to affiliated parties in Alberta during the POI were made at arm's-length prices. We also find, however, that West Fraser's sales of wood chips to affiliated parties in British Columbia during the POI were not made at arm's-length prices. Thus, for sales of wood chips in British Columbia, we used the average sales price for wood chips received from unaffiliated parties to value the sales to affiliated parties and adjusted West Fraser's by-product offset for the final determination. In addition, we disagree with the petitioners' assertion that West Fraser's chip sales revenues included certain expenses that should not be part of the by-product offset amount. At verification, we obtained information that demonstrated that these expenses were in fact not included in West Fraser's chip sales revenue. Therefore, for purposes of the final determination, we find no basis on which to conclude that West Fraser's chip sales revenues warrant further adjustment. With respect to Tembec, the facts of this case differ slightly in that the wood chip transactions are between divisions of the same legal entity. Our practice with regards to transactions between divisions within the same legal entity is to use the actual cost of the input.(169) Due the fact that wood chips are a by-product of the production of softwood lumber, there is no separately identifiable cost associated with the wood chips that are transferred between Tembec divisions. Therefore, we analyzed the wood chip sales transactions between Tembec's sawmills and its internal divisions to evaluate whether the internally set transfer prices are reasonable. Based on the comparison of Tembec's B.C. sawmills' internally set transfer prices for wood chips to the B.C. sawmills' chip sales to unaffiliated purchasers, we concluded that the internally set transfer prices are not preferential. Accordingly, we relied on the B.C. transfer prices for the final determination. For Tembec's Quebec and Ontario wood chip sales we do not have usable market price data for Tembec. However, since we have determined that its B.C. mills do not sell wood chips to other Tembec divisions at preferential prices, we deem it reasonable to conclude that their Ontario and Quebec saw mills did not receive preferential prices for its internally transferred wood chips. Thus, we relied on their internal transfer prices for the final determination. We disagree with the petitioners claim that the minor corrections presented at verification for Tembec's B.C. quantity and value of sales of wood chips were neither minor nor reasonable. The petitioners base their criticism on the mistaken assumption that the correction to the reported value of Tembec's external chip sales is related to the correction to the reported volume. When the petitioners divided the correction to the wood chip value by the correction to the wood chip quantity, the result was aberrant. The two corrections, however, are independent of each other and are not interrelated. The value correction related to an accounting misclassification error where the reported original amount did not include an amount from another facility. The quantity correction was related to a clerical transcription error. The minor corrections to both the volume and value of B.C. wood chip sales were verified by the Department.(170) Finally, we disagree with Canfor that the documentation provided at verification demonstrated that the prices it received from its affiliates for sales of wood chips reflected market prices. While we acknowledge that the submitted documentation showed that affiliated pulp mills paid similar prices to Canfor and to unaffiliated parties for purchases of wood chips, we note that the comparisons were made on base prices (i.e., the price does not include chip quality index and bonus adjustments) which are not reflective of the actual price paid by Canfor pulp mills. For West Fraser and Tembec we also disagree that the documentation presented at verification demonstrated that the prices it received from its affiliates for sales of wood chips reflected market prices. While we acknowledge that the documentation submitted at verification showed that certain affiliated pulp mills selected by these respondents paid similar prices to their sawmills and to unaffiliated parties for purchases of wood chips, we note that the comparisons provided by each respondent were selectively provided by the companies and not based on a sample chosen by the Department. These comparisons represented only a portion of the total wood chip purchases by both Tembec and West Fraser's pulp mills and there is no record evidence to determine what the results might be if all mills were included. Comment 12: Treatment of negative margins The six respondents, as well as the American Consumers for Affordable Homes (ACAH), the BCLTC, OFIA/OLMA, argue that the Department should discontinue its practice of "zeroing out" negative dumping margins in the calculation of the overall weighted-average dumping margin. First, these parties allege that in calculating the respondents' preliminary dumping margins the Department inappropriately disregarded negative margin sales, and that this unfairly and inaccurately inflated the calculated margins. The respondents argue that the CIT has ruled that antidumping laws do not mandate that the Department zero negative margins.(171) Several parties cite to Bowe Passat Reinigungs-Und Waschereitechnik GMBH v. United States, 926 F. Supp. 1138, 1149-50 (1996) (Bowe Passat). In this decision, the CIT stated that zeroing introduces a "statistical bias" in the calculation of dumping margins and may preclude a "fair comparison."(172) Although the CIT actually upheld the Department's zeroing practice in Bowe Passat, the parties argue that the CIT "observed that the practice conflicts with the principles of fair comparison and was permissible only because it came within the range of the Department's discretion."(173) The parties also argue that because the statute "was silent on the issue of zeroing,"(174) the CIT deferred to the Department's application of the statute. The parties also argue that the Department's practice of zeroing violates U.S. and international laws and regulations.(175) The parties contend that when the CIT ruled in Bowe Passat that antidumping laws do not require zeroing, the Department's regulations contained almost identical language to that now stated at sections 771(35)(A) and (B) of the Act. The parties argue that "if the court or, for that matter, the Department, had thought that this language mandated the use of zeroing, they would have so stated."(176) According to the parties, sections 771(35)(A) and (B) of the Act do not state that the "aggregate dumping margin should not include negative margins, nor does the language direct the Department to assign a zero margin to products sold where the U.S. price exceeds normal value."(177) Furthermore, the parties assert that, while the Department has employed zeroing in past cases, it has the discretion to change its methodology in a particular investigation, without taking the additional step of deciding to eliminate the practice in all future investigations, as long as it provides a reasoned analysis.(178) Rather, the parties contend, sections 771(35)(A) and (B) of the Act explicitly direct the Department to ensure that a "fair comparison" will be made between export price and normal value,(179) and while the statute does not specifically address the issue of zeroing, the parties state that "the WTO has found the practice violates Articles 2.4 and 2.4.2 of the Antidumping Agreement, provisions incorporated in U.S. law, and the CIT found that it is contrary to making fair comparisons, now also a provision of U.S. law."(180) In particular, the parties note that the World Trade Organization (WTO) Appellate Body (Appellate Body) has ruled in a case involving the European Community (E.C.)(181) that the practice of zeroing in determining dumping margins does not allow a "fair comparison" to be made between the export price and normal value in accordance with Articles 2.4 and 2.4.2 of the Antidumping Agreement, and is inconsistent with the international obligations of WTO Members. See the Appellate Body's report, Antidumping Duties on Imports of Cotton-Type Bed Linens from India, WT/DS141/AB/R (March 1, 2001), (Bed Linens).(182) According to the parties, the zeroing methodology used by the Department in the preliminary determination was identical to the E.C.'s zeroing methodology as rejected by the Appellate Body in Bed Linens.(183) Although the parties concede that the WTO precedent in Bed Linens is not in itself binding, they argue that "it is an authoritative interpretation of the Antidumping Agreement language"(184) and that the Department has "a legal obligation, based on U.S. law, to interpret the antidumping statute so as not to violate U.S. international legal obligations under article 2.4.2 of the WTO Antidumping Agreement."(185) The parties also argue that the Department must adhere to the "Charming Betsy Doctrine," which requires that U.S. laws must be interpreted so as to avoid conflict or violation of existing international obligations.(186) Therefore, the parties argue that the Department must "abandon the zeroing practice, meet its statutory obligation for fair comparison, and bring the United States into conformity with its international trade obligations under the WTO."(187) The petitioners argue that the Department must not deviate from its practice of zeroing out sales with negative dumping margins, claiming that zeroing is required by the statute and that WTO decisions such as Bed Linens are not binding on the Department and, therefore, have no effect on U.S. law or practice.(188) The petitioners also argue that the application of the Bed Linens decision would be contrary to U.S. law and, therefore, cannot be applied by the Department in this investigation. The petitioners contend that the SAA "specifically prohibits the use of Dispute Settlement Body and Appellate Body reports as legal precedent on which the Department may rely to change its practices and procedures."(189) In addition, the petitioners argue that the Department has stated in several cases that Bed Linens applies only to the European Communities, not to the United States. According to the petitioners, Bed Linens is also inapplicable to this investigation because the European Community and the United States antidumping systems are dissimilar. The petitioners contend that "since WTO decisions that involve the United States are not binding in U.S. law, it is nonsensical to suggest that a decision that does not involve the United States . . . is binding on the Department."(190) The petitioners argue that the Act requires that the Department use zeroing in calculating weighted-average dumping margins. The petitioners argue that the Department: is bound by law to aggregate those dumping margins where normal value exceeds the U.S. price. Because the dumping margin must reflect the amount by which normal value exceeds U.S. price, it may not reflect the amount by which normal value is less than U.S. price. Hence, the Department is prohibited by the statute from considering a negative dumping margin.(191) The petitioners also contend that the Department confirmed in a recent investigation that zeroing is required by U.S. law.(192) With regard to U.S. international legal obligations, the petitioners contend that the parties' citations to the Charming Betsy Doctrine are misplaced because "the doctrine cannot apply when there is a clear contradiction between a U.S. statute and an international legal obligation. In such a case, the U.S. law always prevails."(193) The petitioners further argue that the parties' citations to Charming Betsy are "incorrect because opinions of international tribunals are not international legal obligations binding in U.S. courts."(194) Furthermore, the petitioners contend that Charming Betsy was decided under a theory of federal common law that was eliminated by the Supreme Court.(195) The petitioners argue that the Department has determined that it cannot change its practice based on Bed Linens, and has stated that "statutory requirements (mandating zeroing) take precedence over any potentially conflicting obligations under the Uruguay Round Agreements."(196) Department's Position: We disagree with the respondents and have not changed our methodology with respect to the calculation of the weighted- average dumping margin for the final determination. As we have discussed in prior cases, our methodology is consistent with our statutory obligations under the Act for two reasons. See, e.g., Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from the Netherlands, 66 FR 50408 (October 3, 2001), and accompanying Issues and Decision Memorandum, at Comment 1. First, sales that did not fall below normal value are included in the weighted-average margin calculation as sales with no dumping margin. The value of such sales was included in the denominator of the weighted- average margin calculation along with the value of dumped sales. We did not, however, allow sales that did not fall below normal value to cancel out dumping found on other sales. Second, the Act requires that the Department employ this methodology. Section 771(35)(A) of the Act defines "dumping margin" as "the amount by which the normal value exceeds the export price or constructed export price of the subject merchandise." Section 771(35)(B) of the Act defines "weighted-average dumping margin" as "the percentage determined by dividing the aggregate dumping margins determined for a specific exporter or producer by the aggregate export prices and constructed export prices of such exporter or producer." These sections, taken together, direct the Department to aggregate all individual dumping margins, each of which is determined by the amount by which normal value exceeds export price or constructed export price, and to divide this amount by the value of all sales. The directive to determine the "aggregate dumping margins" in section 771(35)(B) makes clear that the singular "dumping margin" in section 771(35)(A) applies on a comparison-specific level, and does not itself apply on an aggregate basis. At no stage in this process is the amount by which EP or CEP exceeds normal value on certain sales permitted to cancel out the dumping margins found on other sales. This does not mean, however, that sales that did not fall below normal value are ignored in calculating the weighted- average rate. It is important to note that the weighted-average margin reflects any "non-dumped" merchandise examined during the investigation; the value of such sales was included in the denominator used to calculate the dumping rate, while no dumping amount for "non-dumped" merchandise was included in the numerator. Thus, a greater amount of "non-dumped" merchandise results in a lower weighted-average margin. This is, furthermore, a reasonable means of establishing duty deposits in investigations and assessing duties in reviews. In an investigation, such as the present case, the deposit rate calculated must reflect the fact that the Customs Service is not in a position to know which entries of merchandise entered after the imposition of a dumping order are dumped, and which are not. By spreading the estimated liability for dumped sales across all investigated sales, the weighted-average dumping margin allows the Customs Service to apply this rate to all merchandise entered after an order goes into effect. Notwithstanding the parties' references to the CIT's comments in Bowe Passat that zeroing may preclude a "fair comparison," we note that the CIT upheld the Department's zeroing practice as being within the Department's statutory discretion in calculating dumping margins.(197) Although the CIT ruling in Bowe Passat was made in conjunction with a pre-URAA case, the Department has consistently applied its zeroing practice since the URAA amendments to the Act, and will continue to do so for the final determination in this case.(198) Finally, with respect to the parties' WTO-specific arguments, we believe U.S. law is consistent with our WTO obligations. Moreover, the Bed Lines decision concerned a dispute between the European Union and India. We have no obligation under U.S. law to act on this decision. Comment 13: Exclusion of Maritime Provinces The governments of the Canadian provinces of New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland, as well as the Maritime Lumber Bureau of Canada and the softwood lumber producers situated in these provinces (collectively, the Maritimes) request that the Department exclude softwood lumber produced in the Maritime provinces from its final determination in this proceeding. They argue "{t}he unique circumstances of the Maritime provinces . . . clearly {distinguish} Maritime producers from the lumber producers in the rest of Canada."(199) The Maritimes cite to the Department's concurrent countervailing duty investigation, in which it exempted the Maritime provinces. The Department found that the position of the Maritime provinces has not changed over the course of history and determined that "the circumstances behind the original exemption of the Maritimes from the 1986 Memorandum of Understanding have not changed over the last 15 years."(200) The Maritimes argue that there has been no evidence placed on the record supporting the position of the petitioners that dumping, as related to softwood lumber produced in the Maritime provinces, may occur. In addition, the Maritimes argue that the Department should not postulate a dumping finding on the basis that it is investigating a commodity product, as the petitioners have suggested. In fact, the Maritimes state that the petitioners' contentions of subsidization and minimum cut obligations have not been directed at the Maritime provinces in this investigation. Additionally, they argue that the petitioners' public comments regarding the Department's preliminary determination "constitute legally binding admissions that the Department's dumping finding has no applicability to the Maritime provinces."(201) The Maritimes argue that this situation is analogous to that of the antidumping and countervailing duty investigations of Certain Pasta from Italy. In those investigations, the Department excluded organic pasta from the investigation because the cultivation practices for this product were unique when compared to the cultivation practices associated with other subject merchandise and because the merchandise was accompanied by a certificate issued by a credible authority.(202) The Maritimes argue that because "the forest regimes of the Maritime Provinces differ so significantly from those of its sister Provinces that no subsidy allegations were lodged against the Maritime lumber producers," and because "imports must be accompanied by a duly issued Certificate of Origin issued by the Maritime Lumber Bureau," the Department should accord "the same special consideration as was provided to organic pasta producers in the Pasta from Italy cases."(203) The petitioners counter that the request by the Maritimes to be excluded from the investigation (and any resulting order) should be rejected by the Department. The petitioners argue that the only way a party can be excluded from an investigation is if there is "either a finding of no dumping on the part of the investigated exporter or producer, or a finding that the product is not covered by the scope of the investigation or order."(204) Because the Maritimes satisfy neither caveat, their request ultimately becomes a request to be excluded based on geographical location. The petitioners add in their rebuttal comments that this proceeding is not analogous to that of Pasta from Italy because, in that investigation, the petitioners agreed to the exclusion of organic pasta from the scope of the investigation, a situation which does not exist in this proceeding. Furthermore, the petitioners state that "{t}he Department has no authority to exclude an exporter or producer operating in an exporting country from antidumping liability until after that exporter or producer has been investigated and found to have a zero or de minimis dumping margin."(205) Additionally, the petitioners argue that a lack of a subsidy allegation in the concurrent investigation is not a basis to exclude a producer in an antidumping investigation. Therefore, the petitioners believe, for the reasons referenced above, lumber produced by the Maritimes should continue to be included in the Department's determination. Abitibi argues that the Maritime producers provide no legal basis for their reasoning that they should be excluded from the antidumping duty investigation, and none exists. Accordingly, "Abitibi also joins in the rebuttal comments being filed by the Government of Quebec, contending that all provinces should be treated equally in this proceeding."(206) Department's Position: We determined that the Maritime provinces must be included in this investigation for the following three reasons. First, the purpose of the present investigation is not to determine whether subsidies exist, but rather to ascertain if subject merchandise is being sold below fair market value or cost of production.(207) Second, the subject investigation is an antidumping investigation and considers all subject merchandise from the country under investigation, which, in the present investigation, is certain softwood lumber products from Canada.(208) Third, because the subject merchandise of this investigation is certain softwood lumber products from Canada, this definition includes all subject merchandise, regardless of source, as long as it originates from the subject country. Thus, the investigation considers all subject merchandise exported from Canada to the United States. Any subject products, regardless of the Canadian province from which they originate, are subject merchandise originating in Canada and are subject to our investigation. Furthermore, we note that the Maritime Provinces' reliance on the argument that their exclusion from the accompanying CVD investigation should prevail in the AD investigation is misplaced. Although the Maritimes cite to Certain Pasta from Italy as precedent for excluding them from the current investigation, that case does not provide such a precedent. In Pasta, the Department excluded organic pasta, a type of pasta, from the scope of the investigation because all parties agreed that the merchandise was required to meet unique standards for cultivation, processing, storage and transportation and were accompanied with a certificate issued by an inspection and certification authority insuring compliance with organic farming techniques.(209) In the instant investigation, Maritimes producers are requesting exclusion by reason of their exclusion from the parallel CVD investigation, not because softwood lumber produced in the Maritimes is outside the scope of the antidumping investigation. Because there is no basis to exclude the Maritimes producers from this investigation, we continue to include the Maritimes producers in the "all others" rate for the final determination. Company-Specific Issues Issues Specific to Abitibi Comment 14: Whether Scierie Saguenay Ltee. should be collapsed into the Abitibi Group Abitibi argues that the Department should not have collapsed Scierie Saguenay Ltee. (SSL) into the Abitibi Group because such a collapse is not supported by federal common law, the antidumping statute, or the Department's own collapse standards. According to Abitibi, federal law "recognizes the separate legal existence of distinct legal entities, provided those entities themselves do so."(210) For support, Abitibi cites two cases where the courts have determined that actual domination over a subsidiary, rather than the ability to exercise control, must be shown in order to recognize a parent and a subsidiary as one entity.(211) Furthermore, Abitibi argues that "Bestfoods establishes that the Department must determine that it is appropriate under federal common law to pierce the corporate veil, i.e., disregard the corporate form, before it can subject SSL to Abitibi's deposit rate."(212) Though the Department has justified overriding federal common law in the past by arguing that the Department must defend the purposes of the antidumping law, Abitibi contends that the D.C. Circuit has ruled that it is a "'fundamental principle that federal agencies must obey all federal laws, not just those they administer . . . .'"(213) According to Abitibi, in its collapse decision the Department failed to demonstrate that Abitibi and SSL did not act as separate legal entities, nor did it show that activities underlying Abitibi's dumping margin were in any way relevant to SSL. Abitibi contends that, "as in Nextwave and Bestfoods, absent express statutory authority, or the consent of the companies, the Department may not override federal law regarding the separate legal existence of companies."(214) Furthermore, Abitibi notes that, insomuch as the collapsing regulation does not reflect federal common law principles regarding the separate legal existence of distinct corporations, the Department's regulation is invalid. Abitibi goes on to argue that the Department's own antidumping statute prevents collapsing companies in this situation. Abitibi notes that the Act requires the Department to examine actual data and practices during a period of investigation. Accordingly, before collapsing the two companies, the Department must also consider whether a parent corporation actually influenced a subsidiary.(215) For support, Abitibi cites two cases(216) where the Department collapsed related companies, but the CIT found that, despite ownership interests, shared board members, and intertwined operations, the potential influence of the parent over the subsidiary was not enough to find that there was a strong possibility of price manipulation. Abitibi argues that the Department did not have any evidence that Abitibi exerted actual influence over SSL during the POI. The Department's decision was based entirely on the potential for future manipulation of prices or production; however, the Act does not permit the Department to calculate current margins based on future behavior. In certain cases the Act and regulations do require the Department to consider future behavior(217) but, Abitibi notes, in these cases they also warn against a determination based entirely on supposition.(218) Furthermore, section 771(28) of the Act does not explicitly allow the Department to examine future behavior when defining "producer or exporter." As a result, Abitibi contends that the Department may not punish SSL by collapsing Abitibi and SSL based only on the ambiguous possibility that the two may manipulate prices or production at some future time. Abitibi notes that, if the two companies were to manipulate their relationship in the future, the Department could collapse the two in an administrative review. Citing Bomont Industry v. United States, 718 F. Supp. 958, 962 (Ct. Int'l Trade 1989), Abitibi argues that the "statute is remedial not punitive."(219) To determine if there is significant potential for manipulation of prices or production due to an affiliation, in accordance with section 351.401(f)(2) of the Department's regulations, Abitibi argues (as described above) that the Department must consider the actual influence of the parent on the subsidiary. According to Abitibi, the evidence on the record demonstrates that the relationship between the two companies does not establish actual influence over SSL for four reasons. First, Abitibi notes that it does not have control over SSL because its interest is limited to 50 percent. Second, Abitibi's lumber operation is approximately 50 times SSL's, making it very difficult, for example, for Abitibi to shift a significant amount of production to SSL. Third, Abitibi also notes that, on November 15, 2001, Mr. Louis Marie Bouchard, Vice President, Woodlands and Sawmills, for Abitibi resigned as an officer and director of SSL;(220) thus, the Department can no longer conclude that the common board member of the two companies signifies future potential of manipulation. And, fourth, Abitibi notes that the operations of the two companies are not intertwined. They make sales and production decisions separately, sell their own lumber, and hold their own provincial timber licenses. Neither company can transfer its provincial license or logs to the other. Because they are not legally allowed to shift production between themselves, Abitibi contends that there is no significant potential for manipulation.(221) In their rebuttal brief, the petitioners argue that the Department had the legal authority and the necessary evidence to collapse Abitibi and SSL for the preliminary determination and should continue to do so for the final determination. According to the petitioners, under the antidumping law, section 771(33) of the Act and section 351.401(f) of the Department's regulations, the Department has the authority to treat legally separate entities as a single entity. The petitioners argue that the Department is neither restricted by, nor need consider, corporate law when making a decision to collapse two affiliated parties.(222) As a result, the judicial opinions regarding corporate law, cited in Abitibi's case brief, should carry no weight in the Department's analysis of the collapse issue. Furthermore, in response to Abitibi's argument that the CIT prohibits the Department from collapsing two companies based on anything less than actual influence, the petitioners note that the CIT decisions cited by Abitibi were prior to the Department's current regulations concerning collapsing. In the cases cited by Abitibi, the CIT recognized that when the Department uses a standard of "possible manipulation" to collapse two companies, it may need to present evidence of actual manipulation. However, the Department has subsequently rejected the standard of "possible manipulation," in favor of a standard of "potential manipulation." According to the petitioners, the standard of "potential manipulation" was specifically intended to allow the Department to examine the potential for future manipulation.(223) Therefore, the decisions by the CIT and the Department's current regulations do not, in any way, limit the Department's ability to consider the potential for future manipulation of prices and/or production. Finally, the petitioners contend that the Department appropriately analyzed the evidence on the record and correctly determined that there is a significant potential for Abitibi to manipulate SSL's pricing or production decisions. Specifically, the petitioners note that Abitibi and SSL are affiliated under the definition in section 771(33) of the Act because: (1) both companies produce very similar or identical products in facilities that would not require substantial retooling; (2) until November 2001, an Abitibi vice-president was also an officer and director of SSL (although the official no longer retains a position with SSL, the petitioners point out that Abitibi still holds an additional seat on SSL's board of directors); (3) SSL used the planing and packing services of an Abitibi mill during the POI.; and (4) Abitibi is the sole customer for sales of SSL's wood chips. Furthermore, the petitioners argue that, as a 50-percent shareholder in SSL, even absent the other indications of a potential for manipulation, Abitibi has the power to exercise control over SSL in the future because SSL is a "small company dependent upon Abitibi's purchasing power."(224) As a result, the Department should continue to collapse SSL and Abitibi in its final determination. Department's Position: We agree with the petitioners. In the Department's July 18, 2001,(225) memorandum, we determined to collapse SSL with Abitibi because of four findings made for the POI. First, Saguenay and Abitibi produced softwood lumber products falling within the scope of this investigation. Second, Abitibi owned 50 percent of Saguenay's outstanding shares. Third, Saguenay and Abitibi shared common management through Mr. Louis Marie Bouchard, who served as a senior vice-president of Abitibi's Woodlands and Sawmills divisions, and as a vice president and member of the board of directors at Saguenay, and fourth, Saguenay's operations are intertwined with those of Abitibi. Based on these factors, we found that there exists a significant potential for manipulation of Saguenay's prices or production by Abitibi, in accordance with section 351.401(f)(1) of the Department's regulations. Since the Department's determination to collapse Saguenay with Abitibi, the Department received no new information on the record of this investigation, or during the verification of Abitibi's responses, to warrant a change in the Department's position to collapse the two companies. The fact that, after the POI, Mr. Bouchard resigned from his post as a vice president and member of the board of directors at Saguenay does not in itself preclude Abitibi from electing one of its officers to Saguenay's board of directors since Abitibi, by virtue of its 50-percent ownership interest, indeed appoints two of the four members on Saguenay's board of directors. Therefore, for the reasons outlined in the Department's July 18, 2001, memorandum, and the fact that no new evidence was presented on the record to warrant a change in the Department's position, the Department continues, for purposes of this final determination, to find that there exists a significant potential for manipulation of Saguenay's prices and production by Abitibi, in accordance with section 351.401(f)(1) of the Department's regulations.(226) Comment 15: Financial expense ratio Abitibi asserts that for the purposes of the final determination the Department should rely on its corrected financial expense data submitted prior to verification. Abitibi corrected its financial expense data to include the actual interest expenses incurred rather than the interest expenses reflected on its pro-forma financial statements. According to Abitibi, the pro-forma financial statements were intended to reflect the position of Donohue Inc. and Abitibi as if they had combined on January 1, 2000, rather than on April 18, 2000, the date of their actual combination. As a result, the interest expense on the funds borrowed by Abitibi related to the acquisition of Donohue shown on the pro-forma financial statements was increased to reflect the expense that would have been incurred had the acquisition taken place on January 1 rather than reflecting the actual interest expense incurred from April 18 when the funds were, in fact, borrowed. Abitibi asserts that because the interest expenses shown on the pro-forma financial statements are not the actual interest expenses incurred, they should not be used by the Department to compute COP and CV. Instead, the actual interest expenses incurred and verified by the Department should be used.(227) In addition, Abitibi argues that because it submitted this corrected data prior to verification, it should not be rejected as new factual information. Abitibi contends that the Department should also correct the denominator used to calculate its financial expense ratio to include depreciation expenses. Because this correction, presented as a minor error at verification, was verified by the Department, is minor in nature, and did not involve the submission of new factual information because it is taken directly from Abitibi's pro-forma financial statements, Abitibi argues that it should be accepted by the Department.(228) Abitibi points out that the cost of goods sold amount shown on its pro-forma financial statement reflects only the actual cost of goods sold by Donohue and Abitibi during the calender year 2000. Abitibi contends that, unlike interest expenses, the cost of goods sold was not adjusted for the pro-forma financial statements because there were no new production expenses directly related to the acquisition. Finally, Abitibi asserts that the Department's traditional methodology of allocating financial expenses in proportion to cost of goods sold is distortive to Abitibi in the instant case. Therefore, the Department should allocate Abitibi's financial expenses to its lumber products relative to the assets used in lumber production or, alternatively, to the depreciation expenses of those lumber assets. Abitibi asserts that because neither the antidumping statute nor the Department's regulations specifies a methodology by which the Department is to allocate financial expenses, the Department must use a methodology of allocating financial expenses that is reasonable and is based on the facts in the case.(229) As such, the Department must consider other factors, other than cost of goods sold, in allocating financial expenses in cases where the financing requirements of different business segments within a respondent company are not proportionate to the cost of sales. In the instant case, Abitibi argues that, unlike the other respondents in the case, its dominant pulp, paper, and newsprint segments have heavy capital requirements in comparison to its lumber segment. However, the lumber segment, as compared to the pulp, paper, and newsprint segments, is a high turnover, low value-added operation. As a result, the allocation of financial expenses based on cost of goods sold is distortive. The petitioners contend that the Department should not rely on Abitibi's revised financial expense ratio, presented at verification, for purposes of the final determination for the following reasons. First, Abitibi's revised financial expense ratio is based on new factual information(230) and the change cannot be considered minor. Second, the revised financial expense ratio is not consistent with Abitibi's normal books and records in that Abitibi relied upon the pro-forma financial statements in preparing its response, but does not rely on the pro-forma financial statements to calculate its financial expense ratio.(231) In response to Abitibi's comments, the petitioners argue that Abitibi wrongly assumed that it could revise its financial expense ratio calculation by removing imputed interest expense from the numerator without revising the corresponding cost of goods sold, the denominator used to calculate the ratio. The petitioners allege that a number of items, including depreciation, would cause the pro-forma cost of goods sold amount to change if the Donohue acquisition date changed from January 1 to April 18. Presuming that Donohue's assets were restated to fair market value upon acquisition, the petitioners assert that the pro-forma financial statements would have reflected the revalued assets as of January 1, 2000 and the resulting imputed depreciation expense on those assets. As a result, the depreciation expenses as shown on the pro-forma financial statements would have been greater than the actual amount of depreciation expenses incurred. Because Abitibi did not include a corresponding adjustment to its cost of goods sold, the petitioners claim that Abitibi's revised financial expense ratio is unreliable. Therefore, the Department should reject the revised ratio for purposes of the final determination. The petitioners also address Abitibi's arguments regarding the allocation of financial expenses based on total cost of goods sold. The Department's long standing practice, assert the petitioners, is based on the fungibility of money principle. Finance costs are linked to the entire expenses of a company, not just assets, and cost of goods sold is the most accurate measure of where money has been applied. The petitioners contend that the Department has in the past rejected numerous allocation schemes for attributing financial expenses.(232) Therefore, the Department should follow its approach used in the preliminary determination of allocating Abitibi's financial expenses over its cost of goods sold. Department's Position: We agree with Abitibi that the Department should rely on the corrected financial expense data submitted prior to verification. Under section 773(b)(3)(B) and section 773(e)(2)(A) of the Act, the Department is directed to calculate selling, general and administrative costs, including financial expenses, based upon the actual experience of the company. At verification, we determined that the interest expenses included in the revised ratio calculation were the actual amounts incurred and recorded in the company's December 31 2000, audited financial statements. In contrast, the amounts included in the financial expense ratio calculation prior to the revision were based on Abitibi's December 31, 2000, unaudited pro-forma financial statements. As noted in the cost verification report,(233) Abitibi's pro-forma financial statements(234) assume that the acquisition of Donohue occurred as of January 1, 2000, rather than the actual acquisition date of April 18, 2000. During verification we found that the pro-forma statements included imputed interest expenses that were not actually incurred by Abitibi. Therefore, in accordance with the statute and the Department's practice of excluding imputed interest expenses from the financial expense ratio calculation, we have calculated a financial expense ratio based on the actual interest expense incurred and recorded in Abitibi's December 31, 2000, audited financial statements.(235) We disagree with the petitioners' assertion that the revised financial expense ratio constituted new information. Abitibi submitted the information prior to verification within the time limits stipulated by 19 CFR 351.301(b)(1) and there is, therefore, no basis on which to conclude that it is untimely new information. Further, we agree with Abitibi that the Department should revise the denominator used to calculate its financial expense ratio to include depreciation. In calculating the financial expense ratio, it is the Department's practice to ensure that the denominator of the ratio approximates as closely as possible the same body of expenses to which it will be applied.(236) As Abitibi has included depreciation expense in its reported total cost of manufacturing, it therefore follows that it must be included in the denominator used to calculate the ratio to ensure that the two amounts are on an equal basis. In addition, we disagree with the petitioners' assertion that Abitibi failed to remove imputed expenses such as depreciation from its cost of goods sold denominator, rendering its revised financial expense ratio unreliable. At verification, we determined that the amount of COGS as presented on the company's pro-forma financial statements were the actual expenses recorded on the company's books and records. Finally, we disagree with Abitibi that the Department should depart from its established practice of calculating the financial expense ratio based on the financial expenses and cost of goods sold from the parent company's audited consolidated financial statements (i.e., based on the concept that money is fungible).(237) Because there is no bright-line definition in the Act of what a financial expense is or how the financial expense rate should be calculated, the Department has developed a consistent and predictable practice for calculating and allocating financial expenses. This method is to calculate the rate as the percentage of net interest expense over cost of sales, based on the consolidated financial statements of the respondent's parent company. Further, the record of this investigation does not support the conclusion that the Department's methodology distorts the allocation of Abitibi's financial expenses. Setting aside Abitibi's assumptions that the debt of the company only relates to assets belonging to the pulp and paper activities, the Department's method addresses Abitibi's concern that those activities are more capital intensive. Specifically, those activities would have a higher depreciation expense on their equipment and assets. Thus, when the consolidated financial expense rate is applied to the cost of manufacturing of lumber products, less interest will be applied because the total cost of manufacturing for lumber products includes a lower depreciation expense. In view of the above factors, we have used the verified cost of goods sold including depreciation submitted as part of Abitibi's revised financial expense ratio calculation to allocate the company's net financial expenses. Comment 16: G&A expense ratio Abitibi argues that the Department should exclude the value of certain stock option redemptions from Abitibi's G&A expenses, the numerator of its G&A expense ratio, for the following reasons. First, the expenses incurred for redeeming the stock options granted prior to the POI are unrelated to the cost of producing merchandise under investigation during the POI. The respondent cites SRAMs from Taiwan,(238) stating that this case is different than SRAMs from Taiwan in that the options granted in the instant case were in connection with the employees' performance prior to the POI, whereas in SRAMs from Taiwan, the stock paid to employees was treated as a product expense in the year the stock was awarded. Abitibi also contends that the redemptions, in accordance with Canadian GAAP, were classified as extraordinary expenses (rather than treated as period expenses) and should therefore not be treated as period expenses for the final determination. In support of its position, Abitibi cites to section 773(f)(1) of the Act. Abitibi asserts that the antidumping statute provides for the use of Canadian GAAP, not U.S. GAAP, and in no prior cases has the Department determined Canadian GAAP to be unreasonable. According to Abitibi, the instant case is also distinguishable from SRAMs from Taiwan in that it involves awards of stock options rather than a distribution of shares. Abitibi asserts that in SRAMs from Taiwan the respondent was providing shares to employees while in the instant case, the company was buying them back and, as the Department has consistently held, company stock repurchases are not production or refinancing costs.(239) Finally, Abitibi argues that the Department is treating Abitibi differently than the other respondents in this case. It is only because Abitibi's shares are registered in the United States that its financial statements disclosed this information. Abitibi asserts that unless the Department gathers the same information from the other respondents, it cannot apply a policy of treating stock redemption options as G&A expense to Abitibi and not the other respondents. With respect to goodwill, Abitibi contends that the Department should not include its amortized portion incurred in the POI as an expense in computing the cost of production. Abitibi asserts that the accounting authorities in both Canada and the United States have recently changed their positions regarding the amortization of goodwill and no longer permit goodwill to be amortized. Abitibi cites Canadian Accounting Standards Board, Accounting Standards, Section 3062.23 (August 2001) and United States Financial Accounting Standards Board Statement No. 142, Accounting for Goodwill and Intangible Assets (June 2001). Abitibi contends that while goodwill amortization was permitted in Canada during the POI, the antidumping statute does not permit the Department to rely on accounting principles determined to be unsound nor is its purpose served by using accounting rules in this investigation that will be inapplicable in any future administrative reviews. Additionally, the statute's language (See sections 773(b)(3)(A) and (B) and 773(e)(1) and (2)(A) of the Act) does not permit the inclusion of goodwill in computing the cost of production because it is not a production cost.(240) Abitibi suggests, as an alternative, that the Department should follow its past practice of including in COP only goodwill pertaining to assets used in the production of subject merchandise. In the preliminary determination, Abitibi contends, the Department erred in treating goodwill amortization as a general expense because goodwill does not benefit the company as a whole.(241) Abitibi states that most of its acquisitions over the years have involved assets related to operations other than lumber; therefore, the goodwill arising from these transactions are not related to producing the merchandise under investigation and do not benefit the company as a whole. Therefore, the Department, in accordance with sections 773(b)(3)(A) and (B) and 773(e)(1) and (2)(A) of the Act, should add only those goodwill expenses allocable to lumber to the cost of production. Abitibi cites Aramid Fiber from the Netherlands,(242) stating that the Department ruled that it was appropriate to isolate those components of goodwill that pertained to assets used in the production of subject merchandise. Abitibi also argues that in the preliminary determination, the Department should not have adjusted its goodwill expenses to reflect a pre-tax amount. Abitibi claims that the pro-forma financial statements on which Abitibi's G&A ratio was based erroneously noted that goodwill amortization was "net of taxes" when it should have read "net of nil taxes." Finally, Abitibi contends that if the Department determines to include Abitibi's entire goodwill amortization as a G&A expense, the actual amount of goodwill amortized should be included, not the imputed goodwill amortization reflected on Abitibi's pro forma financial statements. Finally, Abitibi asserts that, similar to the financial expense ratio, the Department should revise the denominator (i.e., cost of goods sold) in Abitibi's G&A ratio calculation to include depreciation expenses. The petitioners assert that the Department should continue to revise Abitibi's reported G&A expense ratio to include the expenses related to the redemption of stock options. Because these expenses represent additional employee compensation costs related to the POI, the petitioners contend that they should be included in Abitibi's cost of production in accordance with the Department's practice.(243) Further, the petitioners assert that Abitibi wrongly claims that the expenses related to the employee stock options do not relate to the POI since they were granted to employees prior to the POI. The petitioners argue that Abitibi's own accounting policy recognizes these costs at the exercise date rather than at the time stock options are issued. Because the stock options were exercised and recognized by Abitibi during the POI, these costs should be included in Abitibi's G&A expense ratio calculation. The petitioners also refute Abitibi's claim that the instant case is distinguishable from SRAMs from Taiwan in that Abitibi's stock options merely give employees the right to buy stock in the future, have no value at time of issue, and are intended to give the employees an equity stake in the company. Rather, the costs in question relate to compensation costs paid to employees as a result of the early settlement of the options. The petitioners assert that these costs are precisely the type of employee compensation costs the Department includes in the cost of production even though a foreign company's GAAP records these expenses as an adjustment to retained earnings.(244) In fact, the Department, according to the petitioners, has found that following Canadian GAAP in this instance is distortive. Furthermore, argue the petitioners, this stock option benefit is routinely provided to Abitibi's employees, thereby refuting Abitibi's claim that these expenses did not occur in the ordinary course of business. In addition, the instant case is different from Stainless Steel Bar from Japan because the instant case relates to the redemption of Donohue stock options, not treasury stock. Finally, the petitioners agree with Abitibi that the Department is treating Abitibi differently from the other respondents in this case. Therefore, the Department should gather more information regarding the redemption of stock options from all respondents in all cases. The petitioners note that the Department has already gathered such information from all respondents to this investigation as employee stock option costs are reflected in the various companies' financial statements. With respect to G&A expenses, the petitioners contend that the Department should reject Abitibi's revised calculation of its G&A expense ratio. The revised calculation excludes imputed goodwill expenses shown on Abitibi's pro forma financial statements but does not change Abitibi's cost of goods sold (see, comment 15 above for further discussion regarding Abitibi's cost of goods sold). The petitioners allege that the revised calculation is not based on Abitibi's normal books and records (i.e., pro-forma financial statements). See section 773(f)(1)(A) of the Act. Furthermore, petitioners assert that the Department should reject Abitibi's claim that goodwill be removed from its G&A expenses as a result of the changes for accounting of goodwill under U.S. and Canadian GAAP. The petitioners argue that this change occurred well after the POI and that the basis for Abitibi's reported costs were its December 31, 2000 audited financial statements. Additionally, the change in the accounting treatment of goodwill does not mean that goodwill expenses will no longer be recognized on financial statements. The petitioners also argue that the goodwill expenses incurred by Abitibi relate to Abitibi's wholly- integrated operations, not just its lumber operations. The petitioners refute Abitibi's reference to Aramid Fibers from the Netherlands stating that in the instant case goodwill relates to the company's operations as a whole whereas, in Aramid Fibers from the Netherlands, goodwill related primarily to the write-down of fixed assets.(245) In that case, the Court affirmed that information on the goodwill expenses was sufficient to determine that the expenses related to a particular operation and were not only residual goodwill. Department's Position: We agree with the petitioners that the Department should continue to include expenses related to the redemption of stock options in Abitibi's reported G&A expense ratio. We acknowledge that Abitibi's treatment of these costs is in accordance with Canadian GAAP. However, we find that this treatment is contrary to the requirements of section 773(f)(1)(A) of the Act, as it does not reasonably reflect the respondent's cost of production, which includes an amount for G&A. The redemptions in question resulted because of the merger between the two companies. In short, the costs associated with the early exercising of these options was part of the cost of the merger. As such, they related to the operations of the combined company as a whole and are properly recognized as a G&A expense. As a result of Abitibi's acquisition of Donohue, the company settled outstanding stock options during fiscal year 2000. This resulted in Abitibi's recognizing as a current expense the redemption of stock options. In view of these facts, we disagree with Abitibi's assertion that the options were related to a service period prior to the POI and thus have no relation to the production costs for the POI. Thus, for purposes of the final determination, we have continued to include the expenses related to the redemption of stock options in Abitibi's G&A ratio calculation. Finally, we disagree with Abitibi's assertion that the Department should gather information regarding stock options from other respondents in this investigation in order to ensure fair treatment. The record of this investigation does not support the conclusion that any other respondent incurred similar costs during the POI and there is thus no basis on which to conclude that Abitibi has received unfair treatment. With respect to goodwill, we disagree with Abitibi that the Department should not treat its amortization expense as a cost of production. Goodwill is recognized when a company purchases another company for an amount in excess of the acquired company's market value. As the amortization of goodwill in this case reflects the current year's portion of the decrease in value of the acquired assets, we find it reasonable to include this cost in Abitibi's reported costs. Although we acknowledge that accounting authorities in the U.S. and Canada have recently changed their positions in regard to the amortization of goodwill, we note that the Canadian GAAP in effect at the time that Abitibi published its fiscal year 2000 financial statements required the amortization of goodwill. Thus, as this treatment is in accordance with the contemporaneous GAAP of the respondent and reasonably reflects production costs, we find no reason to exclude Abitibi's goodwill amortization from the cost of production. We also disagree with Abitibi's assertion that the Department erred in treating its goodwill amortization as a general expense because it does not benefit the company as a whole, and that the Department should add only those goodwill expenses allocable to lumber to the cost of production. First, we note that this would be an impossible task due to the fact that the goodwill represents the intangible benefit of merging the two companies. It does not relate to specific assets brought to the merger by one of the parties. Second, the Department's general practice is to consider goodwill as related to the general operations of the company as a whole and not specifically identified with a particular division or product line. Moreover, by allocating G&A based on the cost of sales, we are only allocating a portion of the expense to the lumber activities. We find Abitibi's reference to Aramid Fiber from the Netherlands to be misplaced as in that case the goodwill in question actually consisted of several elements including the write-down of fixed assets, the write-off of obsolete inventory, the write-down of beginning inventory and debt forgiveness, expenses that would not normally be allocated over the substantial number of years common to goodwill amortization.(246) We agree with Abitibi's assertion that the Department should not have adjusted its goodwill amortization to reflect a pre-tax amount. At verification, we learned that the actual amount of goodwill amortization shown in the company's financial statements was in fact a before-tax amount (see cost verification report at 31). We also agree with Abitibi that the actual goodwill amortization from the company's audited financial statements, and not the imputed amount of goodwill amortization from the pro-forma financial statements should be included in the G&A expenses. This treatment is in accordance with section 773(b)(3)(B) and section 773(e)(2)(A) of the Act, which direct the Department to calculate selling, general and administrative costs based upon the actual experience of the company. Thus, for purposes of the final determination, we have included the actual goodwill amortization from Abitibi's fiscal year 2000 financial statements in the calculation of the G&A expense ratio. Finally, we agree with Abitibi that the Department should revise the denominator used to calculate its G&A expense ratio to include depreciation. In calculating the G&A expense ratio, it is the Department's practice to ensure that the denominator of the ratio approximates as closely as possible the same body of expenses to which it will be applied. See, e.g., LNPPs from Germany. As Abitibi has included depreciation expense in its reported total cost of manufacturing, it therefore follows that it must be included in the denominator of the G&A expense ratio to ensure that the two amounts are on an equal basis. Issues Specific to Canfor Comment 17: Canfor, Lakeland, and The Pas' product reporting The petitioners argue that Canfor, Lakeland and The Pas failed to report sales of dog-eared fence pickets, trim blocks, fascia, economy stud lumber and spruce, and the failure to properly report these products should result in the use of adverse facts available for the final determination. According to the petitioners, Canfor, Lakeland and The Pas should have reported these products if there were sales of identical products and were of 2x2 or greater dimension lumber. Although Canfor requested that dog- eared fence pickets and combtex fascia be excluded from the scope of the investigation, the Department did not exempt Canfor from reporting these products. The petitioners assert that the total quantity of these unreported sales could be significant, citing the difference between the quantity of sales listed in the database and what was reported in Canfor's submissions.(247) The petitioners further argue that Canfor has not acted to the best of its ability to cooperate with the Department's request for information.(248) According to the petitioners, the Department found at verification that Canfor and Lakeland failed to report a considerable volume of dog-eared studs. Furthermore, the petitioners claim that Canfor had submitted to the Department that it had POI sales to the United States of a certain quantity of reportable fascia and of trim blocks, but that Canfor under- reported sales of these products in its U.S. sales list. Moreover, the petitioners assert that it also appears that Canfor improperly excluded economy stud lumber and spruce dimension lumber from the U.S. database. As adverse facts available, the petitioners propose that the Department assign to the presumed volume of missing products the highest calculated margin of any Canfor sale. Finally, the petitioners contend that Canfor did not report sales of a product called "Clearwood," and that some of this further-manufactured product should have been reported. Canfor argues that it properly reported, as did its affiliates, Lakeland and The Pas, all sales of lumber to the United States as defined in the Department's product reporting criteria and as further specified in the Department's simplified reporting requirements and, therefore, no adverse inferences are warranted.(249) Canfor contends that, rather than comparing the quantity reported in the U.S. database to the quantity reported in Canfor's sales reconciliation submission of October 30, 2001, the petitioners incorrectly compared the quantity in the database to the quantity of U.S. lumber sales from its original section A submission of June 22, 2001.(250) Canfor maintains that it "clearly and properly accounted for the total quantity and value of softwood lumber sold in the United States and Canada during the POI, and the Department was able to reconcile these figures to Canfor's audited financial books and records."(251) Canfor points to the fact that the Department reviewed and tested at verification the quantity of Canfor's U.S. sales as provided in the reconciliation package, and also tested Canfor's reported database for completeness by examining underlying source documents for sales that had not been reported. Canfor argues that it did not report dog-eared fence pickets in accordance with the petitioners May 11 and June 8, 2001, submissions to the Department, which contained express statements that the product was not covered by the antidumping petition.(252) According to Canfor, the fence pickets it sold during the POI meet the criteria identified by the petitioners, and the petitioners' did not specify in either submission that the exclusion of dog-eared fence pickets was based on thickness.(253) Canfor also argues that dog-eared fence pickets, regardless of HTSUS classification, were a subset of two categories of products preliminarily excluded by the Department from the scope of the parallel countervailing duty (CVD) investigation: Group A included "fence pickets" and Group B included dog-eared fence pickets, no more than 1" thick, (nor more than 4" wide), six feet or less in length, with the dog-eared cut measuring at least 3/4 inches.(254) In the preliminary antidumping determination, Canfor contends, the Department revised its treatment of fence pickets by collapsing the two product definitions with regard to fence pickets into a single, expandable definition under product Group B, stating that the product should be one inch or less in actual thickness.(255) Canfor argues that it was not until the publication of the preliminary determination that the Department indicated that dog-eared fence pickets that were greater than one inch in thickness were intended to be included in the scope of the investigation regardless of tariff classification. Although the Department defined dimension lumber as "lumber from nominal 2" or 38mm to, but not including nominal 5" or 114mm, in thickness,"(256) Canfor asserts that the cover letter to the Department's questionnaire clarified that "certain lumber products could meet this broad definition, but also meet the more specific definition of other lumber products."(257) According to Canfor, the petitioners further confuse the issue by referring to Canfor's dog-eared fence pickets as dog-eared studs. Canfor argues that "the fact that the original product was given a stud grade does not demonstrate that the further processed fence pickets should still be considered dimension lumber" and "it appears that the purpose of the six-foot length requirement was to ensure that the merchandise would in fact be fence pickets, not studs."(258) Canfor argues that it fully disclosed in its section A response a complete listing of all lumber products produced by the company, the specifications of the products, and whether or not sales were being reported. Canfor contends that this list indicated that dog-eared fencing of two inches in nominal thickness was not being reported.(259) Canfor argues that at no time did the petitioners object to Canfor's exclusion of dog-eared fence pickets from its databases, and the Department's supplemental questionnaires never requested Canfor to revise its reporting to include these products or to provide further information regarding the nature of its dog-eared fence picket sales. Furthermore, Canfor argues that the quantity of fence pickets at issue is trivial, and would have no impact on the dumping margin calculation by the Department. Canfor further argues that the petitioners' claim that Canfor and The Pas failed to accurately report trim blocks, fascia, economy stud lumber, spruce dimension lumber and Clearwood are not true. First, the company determined that all of its trim blocks in the U.S. were transferred to Canfor U.S.A., which the Department had excused Canfor from reporting for the preliminary determination. In the home market, Canfor contends that Canfor and The Pas transferred to internal finger-jointing operations the majority of trim blocks they produced, and that the small volume of trim blocks sold by Canfor and The Pas to outside purchasers were properly reported in Canfor's home market database when the Department requested that respondents report sales of similar products for possible matching purposes. Second, with respect to the quantity of fascia the petitioners refer to as "missing," Canfor argues that this is actually the difference between a preliminary figure drawn from its sales records that reflected all sales of fascia to the United States, and the finalized figure included in the database. According to Canfor, the finalized figure excludes sales of fascia to Canfor U.S.A. and sales of fascia for which there was no identical product sold in Canada, and that the Department verified as accurate the total quantity and value reported by Canfor. Next, Canfor contends that the spruce referred to by the Department is Nordic Spruce, and was not reported because it was imported. The company also maintains that it did not exclude sales of economy stud lumber, and that all reportable sales of economy stud lumber are included in its U.S. and home market databases. Finally, with regard to why it did not report sales of "Clearwood," Canfor argues that during the POI, its U.S. sales of this product were subsequently exported to China, and that it had no home market sales of this product. Department's Position: We disagree with the petitioners. We note that the petitioners base their argument regarding trim blocks, fascia, economy stud lumber, spruce, and Clearwood, in part, on several statements in the Completeness Section of the Department's January 30, 2002, Sales Verification Report at page 24. In the procedures section, we stated that "we also examined sample invoices of product codes that were excluded from the databases provided to the Department, including dog-eared fence pickets, fascia, treated lumber, spruce, radius end, truss components, bed frame components, and economy stud lumber." What the report did not note, however, was that we conducted this completeness test to ensure that Canfor had properly excluded sales of the above-mentioned products that were either imported, were less than two inches thick, or were outside the Department's simplified reporting criteria. This test was also conducted to ensure that Canfor had properly reported sales of the above-mentioned products that were identical to reported U.S. sales, were 2x2 or greater dimension lumber, and were two inches in thickness or greater. As a result of this test, we verified that Clearwood was an experimental further- manufactured product not sold in the home or U.S. markets, and, therefore not subject to reporting. See the Sales Verification report at page 18 and Exhibit C-24. The only discrepancy we noted was in regard to dog-eared fence pickets of two inches or greater thickness. No other discrepancies were mentioned in the report because none were found. We verified that all of the other products were correctly reported or excluded, as appropriate, from the database. We also verified at great length the quantity and value of sales reported by Canfor, Lakeland, and The Pas, and noted no discrepancies in Canfor's reporting of products other than the aforementioned dog-eared fence pickets. With regard to dog-eared fence pickets, we believe there is a degree of ambiguity regarding whether or not the product was reportable, and therefore find that no adverse inferences are warranted. We furthermore disagree with the petitioners' assertion that Canfor has not acted to the best of its ability to cooperate with the Department's requests for information. Both the petitioners and the respondents have filed numerous submissions with the Department regarding the reportability of certain products, including dog-eared fence pickets. Canfor first raised the issue of whether or not to report dog-eared fence pickets in its submission of May 3, 2001, stating that dog-eared fencing should be excluded from "full reporting."(260) The petitioners stated in their submission of May 11, 2001, that "the Coalition also acknowledges that dog-eared fence pickets (dedicated and used as fencing) are outside of the scope of the investigation, provided that they are no more than six feet in length."(261) With regard to another respondent, the petitioners' submission of June 8, 2001, requests that the Department deny its exclusion request for dog-eared and other fence pickets.(262) In Exhibit A-16 of its section A questionnaire response of June 22, 2001, and also in the revised Exhibit A-16 of November 19, 2001, Canfor listed dog-eared fence pickets as a product not being reported in the databases submitted to the Department. On June 25, 2001, Canfor requested that the Department confirm that it is excused from reporting fascia, furring strips, and trim blocks of dimensional lumber sizes, but made no mention of dog-eared fence pickets.(263) Canfor has accurately characterized the Department's treatment of fence pickets in the scope exclusion of two categories of products in the CVD preliminary determination of August 17, 2001, as well as the subsequent October 30, 2001 memorandum clarifying the scope in the antidumping and countervailing duty investigations, revising the Department's product definitions with regard to fence pickets. Given the lack of clarity surrounding the issue of whether dog-eared fence pickets should have been reported, and the minuscule volume of the product in question, we have determined not to make any adverse inferences regarding the volume of Canfor's unreported dog-eared fence pickets. Comment 18: Treatment of three U.S. sales The petitioners argue that the Department discovered that there were three sales made with a transfer of quota in The Pas' home market database that should have been reported in the U.S. database. If errors are identified in sample transactions at verification, the petitioners argue that it is the Department's practice to presume the untested data are also error-ridden "absent satisfactory explanation and quantification on the part of the respondent."(264) As adverse facts available, the petitioners suggest that the Department assign the highest calculated margin to these three sales. Canfor did not brief this issue. Department's Position: We disagree with the petitioners. It is the Department's practice to correct minor errors found during the course of verification.(265) Morever, the petitioners' reference to Stainless Coils From Germany does not apply in this context because The Pas did explain and quantify the nature of each of the three errors to the Department's satisfaction, as was stated in the verification report. See the January 30, 2002 The Pas Verification Report at page 8; see also Exhibit P-16. The Department's sales verification team thoroughly examined the relevant quota transfer documentation for each of the three sales. For the final determination, we moved the three sales to the U.S. database. Comment 19: G&A expenses for Canfor, Lakeland, and The Pas Canfor's overall G&A expense rate was calculated by weight-averaging the G&A expense rates of the collapsed entities Canfor, Lakeland and The Pas. Canfor argues that its portion of the G&A expense rate should be calculated based on the expenses and cost of sales from its consolidated financial statements rather than the unconsolidated financial statements of its operating company, Canadian Forest Products Ltd. ("CFP"). While acknowledging the Department's normal practice of calculating the G&A expense rate based on a company's unconsolidated audited financial statements, Canfor maintains that the facts of this case warrant the Department to depart from its normal practice and accept a different methodology for calculating the G&A expense rate. Canfor states that there is no single unconsolidated financial statement that contains all the G&A and selling expenses and cost of sales needed to calculate an accurate G&A expense rate for merchandise under investigation. Specifically, Canfor argues that CFP's unaudited internal financial statement, which is prepared only for tax purposes, does not include the total cost of sales for all lumber because of inter-company eliminations between itself and Canfor's marketing company, Canfor Wood Products Marketing Ltd. ("CWPM Ltd."). Canfor notes that although CFP manufactures and sells merchandise under investigation, its U.S. sales are first purchased by CWPM Ltd. and then re-sold to the final customer in the U.S. Therefore, due to inter- company eliminations, the cost of sales for all U.S. sales are only recorded on CWPM Ltd.'s unaudited financial statements. According to Canfor, the facts argued above render the unconsolidated CFP financial statement unsuitable for the calculation of the G&A expense rate. Alternatively, Canfor asserts that if the Department finds it necessary to use a G&A expense rate calculated based on its unconsolidated financial statements the rate should be based on Canfor's suggested method. Canfor argues that the methodology used by the Department to calculate its G&A expense rate for the preliminary determination was flawed. Canfor states that the Department failed to include the cost of sales recorded on CWPM Ltd.'s financial statements in the denominator of the calculation of the rate. In addition, Canfor argues that the G&A expenses were not allocated over the appropriate cost of sales. Canfor contends that these errors resulted in a significant overstatement of its G&A expense rate. Further, Canfor disagrees with the petitioners' arguments that it did not properly identify the amount of G&A expenses incurred by CFP; that Canfor improperly allocated expenses incurred by CFP to the entire consolidated company; and, that Canfor improperly reduced the reported general expenses by certain miscellaneous income items. First, Canfor maintains that record evidence identifies in detail the amount of G&A expenses incurred. Second, to comply with the Department's request to calculate an unconsolidated G&A expense rate for the Wood Products business unit only, Canfor contends that it was necessary to allocate segmented and non-segmented expenses based on unconsolidated and consolidated cost of sales, respectively. The segmented expenses relate to divisions handling the production and sale of wood products and the non-segmented expenses relate to the entire consolidated company. In Canfor's view the names of the divisions (i.e., corporate office, information services, business services, and research and development) classified as non-segmented expenses confirm that the activities are not limited to Wood Products alone. Lastly, Canfor argues that it properly included in the G&A expense rate calculation income earned for miscellaneous items related to proprietary information. Canfor asserts that these income items were related to the general operations of the company, and the associated expenses are included in the calculation. With respect to The Pas' portion of the weighted-average G&A expense rate, Canfor contends that it properly excluded B.C. capital taxes from its G&A expenses. Canfor states that the tax is not an expense related to the production of merchandise under investigation, thus it should not be included in The Pas's G&A expenses. With respect to Lakeland's portion of the weighted-average G&A expense rate, Canfor states that the amount included as an offset does not represent income not permitted by the Canadian Government as suggested by the petitioners. Canfor notes that the amount relates to certain proprietary U.S. sales transactions. The petitioners contend that Canfor's portion of the weighted-average G&A expense rate, which was calculated based on its consolidated audited financial statements, is distortive and inconsistent with the Department's practice. The petitioners argue that including financial information related to entities not involved in the production or sale of merchandise under investigation distorts the amount of G&A expenses related to the products under investigation. Thus, according to the petitioners, the reported G&A expenses should be based on the expenses of CFP and CWPM alone. In addition, the petitioners disagree with Canfor's argument that the unconsolidated financial statements should not be used to calculate the G&A expense because they are not audited. The petitioners state that the amounts presented on the unconsolidated financial statements tie directly to the consolidated audited financial statements. Thus, the internal financial statements are components of the audited consolidated financial statements. Further, the petitioners contend that Canfor's G&A expense rate, which was calculated based on its unconsolidated financial statements, is flawed. The petitioners argue that Canfor's unconsolidated G&A rate calculation did not properly identify the amount of expenses incurred by CFP and it inappropriately allocated CFP's G&A expenses to the entire consolidated entity. According to the petitioners, because the Department traced CFP's expenses to its tax return, those expenses relate solely to CFP and Canfor should not be allowed to allocate those expenses based on Canfor's consolidated COGS. In addition, the petitioners assert that Canfor incorrectly reduced its submitted G&A expenses by income derived from activities unrelated to the production or sales of merchandise under investigation that are proprietary. The petitioners claim that the Department only offsets production costs with income that is related to the production of merchandise under investigation or related to the general operations of the company and disallows reductions in G&A expenses for unusual items.(266) Accordingly, the petitioners state that the Department should disallow these proprietary income items as reductions to G&A expenses. The petitioners contend that Lakeland incorrectly reduced its G&A expenses by an income item related to proprietary information. See proprietary discussion in the Memorandum from Taija Slaughter, Accountant through Michael P. Martin to Neal M. Halper, Director, Office of Accounting, March 21, 2002. Lastly, the petitioners assert that the minor correction presented by The Pas shows that it incorrectly included B.C. corporation taxes in its G&A expenses. According to the petitioners, the only tax that Canfor could be referring to is the B.C. capital tax which relates to the corporate capital, not its income. Accordingly, the petitioners assert that it is the Department's practice to include this type of tax in a company's G&A expense because it relates to the company as a whole. Department's Position: We disagree with Canfor that the facts of the case require us to depart from our general practice of calculating G&A expenses based on a respondent company's unconsolidated financial statements. Our practice is to calculate the general and administrative expense rate based on a respondent company's unconsolidated operations plus a portion of G&A expenses from the parent company. (267) Because there is no definition in the Act of what a G&A expense is or how the G&A expense rate should be calculated, the Department has developed a consistent and predictable practice for calculating and allocating G&A expenses. This consistent and predictable method is to calculate the rate based on the unconsolidated financial statements of the respondent company including an allocated portion of the parent company's G&A expenses, not based on a parent company's consolidated financial statement. As a company's consolidated financial statements often include companies with entirely different corporate structures and in entirely different industries from that of the respondent, we consider it preferable to remain at a company-wide level that more closely represents the company and industry under investigation. The Department's normal and consistent methodology for calculating a respondent's G&A expense ratio is reasonable is predictable and not results-oriented. To allow a respondent to choose between the Department's normal method and an alternative method would encourage respondents to adopt a results-oriented approach. That is, parties will only point out the other methods when it benefits them. Accordingly, we computed Canfor's G&A expense rate in accordance with our normal practice based on CFP's and CWPM Ltd's unconsolidated financial statements. With respect to Canfor's alternative methodology for calculating its G&A expense rate, we agree with the petitioners that it inappropriately allocates G&A expenses incurred by CFP and CWPM Ltd. to the entire consolidated entity. Using Canfor's methodology to calculate the rate based on a segregation of expenses between "segmented" and "non-segmented" expenses results in a divisional G&A expense rate, not the producing company's company-wide rate. However, we do agree with Canfor that the denominator used to calculate the G&A expense rate should include the cost of sales of CWPM Ltd. because verified information demonstrates that the cost to produce the merchandise under investigation that was sold to the U.S. was eliminated from CFP's financial statements. Thus, for the final determination, we revised Canfor's reported G&A expense rate by combining the segmented and non-segmented expenses and dividing that result by the cost of sales of CFP and CWPM Ltd., adjusted for amounts not included in the COM. We note that for certain non-operating costs, we continued to allocate those expenses using Canfor's consolidated cost of sales. Further, we disagree with the petitioners argument that certain income items unrelated to the production or sale of merchandise under investigation should be disallowed as an offset to Canfor's G&A expense rate. Canfor's earned income was related to a gain on the sale of certain fixed assets and certain royalty revenue that was related to its general operations as a whole. In addition, the associated expenses were included in the reported G&A expenses. Therefore, we have continued to allow the income offset in Canfor's G&A expenses. However, we agree with the petitioners that the B.C. capital taxes should be included in The Pas' G&A expenses and an income item related to certain U.S. sales for Lakeland should be disallowed as an offset to G&A expenses. Specifically, The Pas' payment of capital taxes is not an income tax. Corporate services and payments to governments, other than income taxes, are periodic expenses, general in nature, and are related to the company as a whole. Lakeland's income offset is related to sales rather than the production of merchandise under investigation. Thus, for the final determination, we have included The Pas' capital tax expense and excluded Lakeland's income offset. Comment 20: Canfor's packing cost The petitioners argue that Canfor's packing costs were not verified at either the sales or cost verifications, and therefore adverse facts available should be applied to Canfor's packing costs. The petitioners cite the sales verification report, which states that the sales team considered the packing denominator to be unverified, and that Canfor officials stated that they would review the packing denominator calculation with the Department's accounting team during the cost verification.(268) According to the petitioners, the cost verification report did not address the packing denominator, and therefore "it is clear that Canfor's reported packing costs could not be verified."(269) As adverse facts available, the petitioners suggest that the Department should deduct the highest reported packing amount from all U.S. sales, and disallow any deduction for packing on all home market sales. While Canfor concedes that the Department's cost verification report does not specifically discuss packing, Canfor argues that the denominator used in the packing cost calculation was in fact "specifically and separately reviewed and verified" by the cost verification team, as can be seen in the cost verification exhibits.(270) Canfor argues that the Department should reject the petitioner's argument that the packing costs were not verified, and should use Canfor's packing cost in the final determination. Canfor contends there is no requirement that the verification report specifically address each and every expense that was reviewed. Canfor also argues that the total production quantities at the mills and at the remanufacturers were verified extensively during verification, which is an integral part of the verification of per-unit COM. Canfor contends that, even if the cost verification team had not separately reviewed the packing cost calculation, because Canfor used the total production quantities at its mills and at the remanufacturers in the calculation of the per-unit cost of manufacturing, "it is clear that the Department verified the packing denominator as part of the verification of per-unit costs."(271) Department's Position: We disagree with petitioners that the denominator used in the packing cost calculation was not verified. We concede that the cost verification report did not specifically state that the denominator used in the packing cost calculation was verified. However, as noted by Canfor, the denominator used in the packing cost calculation was the total production quantities for all mills plus the quantity remanufactured. We note that cost verification exhibit 3 shows the total quantity used as the denominator in the packing expense calculation and throughout the cost verification report we describe how we examined and tested these production quantities. Therefore, no adjustment is warranted for packing costs. Issues Specific to Slocan Comment 21: Futures contracts Slocan argues that the Department disallowed "an integral part of Slocan's U.S. selling activity" by treating profits earned on futures contracts as investment revenue instead of as a selling adjustment.(272) Specifically, Slocan argues that because the company uses the futures market in an effort to protect itself from future downward price trends, the Department was mistaken in believing that Slocan uses the market for strictly speculative purposes. In support, Slocan stated that "since every futures contract entered into by Slocan with the CME {the Chicago Mercantile Exchange} carries with it the obligation to deliver the actual lumber specified in the contract at the time and place specified, Slocan at all times keeps track of the contracts in relation to its other selling activity, in order to be sure of having the ability to deliver the 'underlying Physical' out of its own inventory." Slocan also cites to the Department's verification report to support its argument. Slocan argues that the futures profits are more appropriately treated as short-term investments and, consistent with the Department's practice, should be treated as an offset to the company's financial expenses. Additionally, Slocan argues that this situation is unique from previous situations in which the Department has disallowed investment income on the grounds that the income is not related to the operations of the company because this income is not generated by investment; rather, this income results from Slocan's regular lumber sales philosophy. The petitioners argue that the information presented on the record regarding Slocan's profits and losses is inaccurate. Specifically, the petitioners argue that Slocan reported selling expenses associated with the futures market for sales identified as "ex-pit settlement of SPF lumber futures positions on the Chicago Mercantile Exchange," but also for a very large number of sales that were not identified as such. The petitioners argue that this is evidence that the information submitted on the record of this proceeding is unreliable. Additionally, the petitioners believe that "{t}he Department was correct in its decision not to make an adjustment for futures profits."(273) The petitioners go on to state that "the Department's regulations stipulate that '{i}n calculating export price, constructed export price, and normal value (where normal value is based on price), the Secretary will use a price that is net of any price adjustment, as defined in §351.102(b), that is reasonably attributable to the subject merchandise or the foreign like product (whichever is applicable).'"(274) The petitioners argue that, since it is not the ultimate customer who pays the futures profit, the Department must examine prices actually charged to and paid by the customer, the Department should not be making an adjustment for futures profits in its final determination. In response to Slocan's argument that the Department should treat the profits earned from futures contracts as an offset to financial expenses, the petitioners argue that "{t}he Department should not offset production costs with adjustments that do not relate to production costs."(275) The petitioners reiterate that these profits relate to the sale of merchandise and not the production and reaffirm that an adjustment for the final determination should not be made. Department's Position: Slocan's sales on the Chicago Mercantile Exchange (CME) can be divided into two categories: those that result in the shipment of subject merchandise, and those that do not. Any sales of subject merchandise that occurred during the POI as a result of a futures contract have been included in Slocan's reported sales list. However, we have not included in our analysis profits on the sale of a futures contracts that did not result in the shipment of subject merchandise. Such profit is realized from Slocan's position on the CME and as a producer of softwood lumber, but not from its actual sale of subject merchandise. We also have not applied these profits as an offset to Slocan's direct selling expenses. Section 773(a)(6)(C)(iii) of the Act directs the Department to make circumstance of sales adjustments only for direct selling expenses and assumed expenses. Section 351.410(c) defines direct selling expenses as "expenses . . . that result from and bear a direct relationship to the particular sale in question." Accordingly, where no sale of subject merchandise occurred, there can be no circumstance of sale adjustment for direct selling expenses. Slocan suggests that as an alternative, the Department apply the profits as an offset to Slocan's financial expenses. In support of this argument, Slocan disputes the Department's statement in its preliminary determination calculation memo that these profits are "investment revenues" by stating that Slocan is engaging in hedging rather then speculative activity, and that sales on the futures market are integral parts of the company's normal sales and distribution process. While we agree that Slocan's lumber futures hedging activity is related to its core business of selling lumber as opposed to speculative investment activity, it is for this very reason that we disagree that the futures contracts are related to Slocan's financing activity. As such, the futures profits should not be used to offset the company's interest expense. Comment 22: Unreported freight expenses The petitioners argue that for a significant portion of its U.S. sales Slocan erred in not reporting freight costs from its mills to its reload centers. According to the petitioners, while Slocan initially argued that these freight expenses were included in the total amount charged by the out-bound freight carrier, Slocan contradicted this statement by not reporting any freight expenses for several sales identified as shipments through a reload center. Additionally, the petitioners argue that "{i}t is clear from the verification report that Slocan made no attempt to explain this contradiction, or to demonstrate to Department verifiers that, for those reload center sales where it did report outbound freight, the freight amount also included inbound freight expenses."(276) The petitioners further argue that Slocan's failure to report these freight expenses was magnified when it presented the Department with a list of invoices related to sales for which Slocan had failed to report freight expenses. The petitioners claim that this information in no way corrects this discrepancy, as even after the presentation of its minor corrections, there are still several invoices for which Slocan has not reported freight expenses, and that the exclusion of these expenses from Slocan's database prevents the Department from capturing all of Slocan's 'U.S. sales at their actual prices' in making its final determination.(277) The petitioners suggest that, to account for these missing data, the Department should apply, as partial adverse facts available, the highest freight expense reported in the respective freight field or, at least, apply partial facts available to reported sales made through a reload center where there is a missing freight value. Slocan argues that the missing freight costs were provided at verification during the presentation of minor corrections and that the petitioners' allegation is simply a misunderstanding. Specifically, Slocan states that a "small number of items in fact had freight that had mistakenly been unreported," but these observations were corrected in a timely manner.(278) Slocan argues that the remaining observations, which the petitioners allege are missing freight, were included in the 'Freight into reloads' correction presented at verification.(279) Slocan stated that these expenses were associated with merchandise that was shipped to a reload center prior to the POI, but ultimately shipped to the customer during the POI. However, Slocan was able to ascertain this information and report the relevant expenses to the Department. Therefore, Slocan believes the Department should reject petitioners' claims, and not apply facts available. Department's Position: The Department is accepting the information correcting the missing freight costs as provided during the presentation of minor corrections at the Slocan verification and incorporating it into its final determination. As was stated in the Department's verification report: For certain U.S. sales, due to misapplied freight payments and payments not made during the POI, some Slocan sales were erroneously reported with zero freight payments. Slocan presented the Department with a table of values to be applied to those sales with missing freight adjustments. During the course of our examination of sales traces, we verified the new freight values to establish their accuracy. See Exhibit 1. The record contains all of the information needed to make our final determination. The Department verified that certain sales identified as delivered to the customer should not have had a freight expense associated with them. The verifiers determined that Slocan's freight carrier never billed Slocan for specific shipments; thus, these sales were delivered, but without cost to Slocan. Therefore, the Department has determined that all of the freight expenses incurred by Slocan for shipments of reportable merchandise have been accounted for in the final determination. Comment 23: Unreported comparison market freight rebates The petitioners argue that the Department should apply facts available to account for certain rebate programs that were not reported in Slocan's questionnaire responses, but were ultimately discovered at verification. The petitioners argue that Slocan's "misleading statements during the course of the investigation" regarding its rail rebate program make it impossible for the Department to reach an accurate determination.(280) Therefore, the petitioners argue that the Department should apply to all applicable sales, as adverse facts available, the highest freight rebate amount reported by Slocan. Slocan states that it overlooked the freight rebate program when responding to the Department's questionnaires because "unlike the larger, reported ones, {the information} is not maintained in Slocan's Lumber Track system, from which the freight data were extracted."(281) Slocan argues that it was against its interest to not report this "minor" rebate program "which was simply overlooked in the massive information-gathering exercise required by the questionnaires."(282) Department's Position: The Department determined at verification that there were home market freight rebates missing from Slocan's sales database. The verifiers obtained all of the information needed to account for the missing rebates and we have incorporated this information into the final determination. Comment 24: Overstated freight rebates The petitioners argue that the Department's verification report clearly notes that Slocan "based {U.S. freight rebates} on accrued amounts {which} differ from the actual amounts of rebates received."(283) Accordingly, the petitioners argue, the Department should reduce by the factor calculated by Slocan at verification the amount reported of all of the overstated rebates.(284) Slocan did not object to the petitioners' argument that U.S. freight rebates should be adjusted from the reported accrued amounts to the actual amounts "if it accords with the Department's standard practice."(285) Department's Position: We agree with the petitioners. For the final determination, we have adjusted the reported accrued amounts for freight rebates to the actual amounts received. Therefore, we have reduced the value reported for the rebates by the factor calculated at verification. Comment 25: Donations Slocan argues that the clerical errors in the preliminary determination, which the Department acknowledged on January 11, 2002, should be corrected in the Department's final determination. Specifically, Slocan argues that the Department verified that Slocan's donations were not sales and should be eliminated from consideration for the final determination. With regard to transactions identified by Slocan as donations, the petitioners argue that the Department should assign as the normal value for that product Slocan's assessed values for tax purposes. Specifically, the petitioners argue that since Slocan must pay a self-assessed tax on donated merchandise, Slocan must first assess the appropriate value of the merchandise. The petitioners argue that this value "must represent what {Slocan} believes to be an accurate measure of their value, and would therefore indicate that non-donations sales of the same products made at other prices were not appropriately valued."(286) The petitioners believe the Department "should draw the same conclusion with respect to the assessed values Slocan had previously reported for other transactions it claims were 'donations,' and for all non-donation sales of those same CONNUMs."(287) Department's Position: First, the Department stated, in a memorandum responding to ministerial errors alleged in the preliminary determination, that "it is our usual practice not to include zero-priced donations in our antidumping analysis."(288) Accordingly, the Department agreed that a ministerial error existed in the preliminary determination whereby it accidentally did not remove all of the donations, but, for purposes of the final determination, we have removed these transactions from our analysis. We do not agree with the petitioners' argument that the value assigned by Slocan to the donated merchandise, for taxation purposes, should be assigned as the actual value of the merchandise sold by Slocan during the POI. Instead, in accordance with section 773(a)(1)(B)(i) of the Act, and the results of our verification, we have continued to base normal value on "the price at which the foreign like product is first sold (or, in the absence of a sale, offered for sale) for consumption in the exporting country, in the usual commercial quantities and in the ordinary course of trade and, to the extent practicable, at the same level of trade as the export price or constructed export price." Comment 26: Cost differences for precision end trimmed products Slocan points out that it was able to identify a cost difference for some of its precision end trimmed (PET) products at the Quesnel sawmill. Slocan argues that the Department should incorporate this cost difference in the difference in merchandise calculation for PET and non-PET products. As a result, Slocan contends that if the Department continues to use the methodology followed in the Preliminary Determination, it will now be able to compare PET and double end trimmed products. Department's Position: We agree with Slocan that it was able to identify and submit the small cost difference associated with producing precision end trimmed and non-precision end trimmed products. We have incorporated this cost difference for the final determination. In addition, we agree with Slocan that we can now match products that are similar except for precision end trimming, if the situation arises. Comment 27: Mackenzie Ospika Division Lathe and Precut Slocan sends a small amount of lumber to its Mackenzie sawmill, Ospika Division (MOS), for further processing. Only a small amount of the lumber sent to the Ospika Division was produced by Slocan in its Mackenzie sawmill. The majority of the lumber was purchased from third parties and cannot be distinguished from the lumber produced by Slocan. These processing operations, which entailed sorting and sometimes trimming the lumber, were managed by and included on the books of Slocan's separate MOS. Slocan argues that the lumber processed by MOS should be treated as lumber purchased from a separate manufacturer and resold by Slocan; therefore, the Department should not include any cost associated with this resold lumber in the COP/CV database. Slocan states that the sales of this processed lumber have been separately identified in the sales database reported to the Department. The petitioners argue that the Department should allocate a portion of MOS's costs, identified in Slocan's supplemental D response, to the specific CONNUMs and include the amounts in the reported costs. Department's Position: We agree with the petitioners and have included MOS' costs in the weighted-average COP/CV database. MOS sold subject merchandise during the POI. Accordingly, we included MOS' sales in our analysis as well as its costs in the COP/CV database for the final determination. Comment 28: Profits on log sales The petitioners state that Slocan understated its wood costs by deducting, from the cost of materials, revenues earned on log sales. The petitioners argue that it is appropriate to exclude from wood costs the costs of the logs not consumed in the production; however, it is not appropriate to deduct the profits earned on the sale of those logs. The petitioners assert that the Department should resort to facts available to adjust Slocan's reported wood costs for the profit on log sales. Slocan argues that the logs sold by its sawmills should be treated as by- product revenue and should not be considered prime products and allocated costs. Slocan states that its sawmills are adapted to a typical wood profile from their timber supply areas and timber licenses. However, there are times when logs from the timber supply do not meet the species or size profile that allows the most efficient sawmill operation and, in those cases, the logs are sold as a by-product of Slocan's general harvesting from its tenures. Slocan asserts that the value of log sales is such a small fraction of the overall cost of production and of the overall sales value that it is clearly incidental to the normal operations of the company. Slocan maintains that its intent is to harvest timber to supply its sawmills, not to harvest timber in order to resell it, and, thus, the treatment of log sales as by-product sales is appropriate. Slocan argues that the petitioners are proposing a double counting of costs which should not be allowed. As an example, Slocan points out under the petitioner's methodology, if Slocan and another respondent in the dumping proceeding sell logs to each other to align their respective log profiles with their mill profiles, the seller's log would be valued at cost, while the same log would be included in the purchaser's cost at the transfer price. Finally, Slocan argues that chips sales are analogous to log sales since they are both wood fiber that cannot be used economically by the sawmills to make lumber, and both are the inevitable result of harvest and milling techniques. Slocan points out that wood chips are a far more important by- product than log sales, and if log sales are considered a prime product and allocated a portion of costs, then wood chips should also be considered a prime product and allocated a portion of the reported costs. Department's Position: We agree with the petitioners that the profits earned on log sales should not be included in the reported wood costs. Logs are the raw material input in the lumber production process. The cost of logs harvested should be used to determine the cost of the raw material input into lumber production and the cost of the logs sold. The fact that the company may sell some logs (or species of logs) for a profit does not mean that the cost for the logs (or species of logs) consumed in the production process is any different. As such, we consider it inappropriate to reduce the cost of the logs input into lumber production by the profit earned on sales of other logs. The sale of the logs is akin to a line of business other than the manufacture and sale of finished lumber. This situation is similar to Mushrooms from Indonesia, where the Department excluded revenues and associated costs from sales of spawned compost and casing soil (an input into mushroom production) from the calculation of reported production cost, thus eliminating the possibility of understating the production cost of the subject merchandise by including any profit made on the sale of spawned compost and casing soil.(289) Furthermore, we disagree with Slocan's claim that the sale of logs is analogous to the sale of wood chips. The logs that were sold are an input into the lumber production process, each with their own identifiable costs. On the other hand, wood chips result from the lumber production process (i.e., cutting the log into its constituent parts), with no identifiable cost since they result from a joint production process. As such, we disagree that the treatment of one drives the treatment of the other. Finally, Slocan's example of two respondents selling logs to each other is simply a hypothetical situation which has nothing to do with the issue at hand. There is no double counting of costs. The issue is simply whether it is appropriate to reduce the cost of an input by profits earned on the sale of other inputs. As noted above, we consider it inappropriate and for the final results, we have excluded the profit and loss on the sale of logs from Slocan's wood cost. Comment 29: Depreciation expenses at the Plateau Sawmill The petitioners state that Slocan failed to accurately report the process- specific depreciation expense for its Plateau sawmill. The petitioners argue that Slocan should have had a detailed itemization of depreciation expense for all assets it owns and should have calculated depreciation expense specific to each asset and each process. The petitioners contend that the Department should not rely on the undocumented estimates of the Plateau sawmill's reported process-specific depreciation expenses and assert that for the final determination, the Department should instead use the per-unit fixed cost as was calculated for the Mackenzie sawmill. In addition, the petitioners point out that depreciation expenses associated with idled assets must be included in Slocan's cost of production. Slocan argues that the Plateau sawmill does record depreciation on all of its depreciable assets. Slocan explained that for the assets acquired subsequent to Slocan's purchase of the Plateau sawmill, the depreciation expenses can be assigned to particular processes; however, for the assets acquired as part of Slocan's purchase of the Plateau sawmill, depreciation expenses are based on the various asset classes and allocated to the different production processes. Slocan asserts that the actual depreciation expense calculated and reported to the Department was not an estimate. Slocan points out that the depreciation issue discussed at verification was in regard to the amount of actual depreciation expense allocated to kiln drying versus the amount of depreciation expense allocated to the sawmill process. The depreciation issue was not in regard to the validity of the total depreciation calculation. Department's Position: We agree with Slocan that depreciation expense should not be adjusted for the final determination. At verification, we discussed with Slocan officials how the Plateau sawmill's total depreciation expenses were allocated to the different production processes (i.e., sawing, planing, and kiln drying). Since we were not able to identify anything unreasonable about its allocation methodology, we are not making any adjustments to the Plateau sawmill's depreciation expenses for the final determination. In addition, we noted no unreported depreciation expense associated with idled assets. Comment 30: Unreported foreign exchange losses The petitioners state that Slocan did not include all of its foreign exchange losses on long-term debt in its financial expense ratio calculation. The petitioners argue that the Department should recalculate Slocan's interest expense ratio to account for the unreported foreign exchange losses. Slocan did not comment on the issue. Department's Position: We disagree with petitioners. At verification, we traced the foreign exchange losses to Slocan's books and records and determined that Slocan had included an appropriate amount in its interest expense ratio calculation. As a result, there is no reason to make an adjustment for Slocan's foreign exchange loss on long-term debt for the final determination. Comment 31: Timber tenure amortization Slocan argues that the Department should not include the amortization of timber tenures in the cost of production of the merchandise under consideration. Slocan asserts that by including the amortization of the tenures in the reported costs, the Department is double counting the subsidy that was measured in the companion countervailing duty investigation on softwood lumber from Canada. Slocan claims that in the countervailing duty investigation the Department has preliminarily determined that subsidies exist, which, Slocan claims, are equivalent to the amortization on timber tenures. Slocan points out that in Tool Steel from Germany and subsequently in the Solid Urea from the Former German Democratic Republic, the Department stated that it was inappropriate to add subsidies to actual expenses recorded in the company's books and records.(290) Furthermore, Slocan points out that the amortization is not an actual expense but rather the excess of purchase price over book value paid for acquisitions, as assigned to woodlands. Petitioners did not comment on this issue. Department's Position: We do not agree with Slocan that the Department is double counting. In the companion countervailing duty investigation of softwood lumber from Canada, the Department determined that the provincial stumpage programs conferred a countervailable benefit on Canadian softwood lumber producers. The amount of the benefit was calculated based on a comparison of stumpage prices between Canada and the United States. Tenure security was not accounted for in this benefit calculation. We would point out, however, that in the countervailing duty case, petitioners have argued that an adjustment should be made to the Canadian price to reflect the value of tenure security, which would have the effect of increasing the subsidy benefit. Slocan acquired the timber tenures when it purchased companies that owned these tenures. When recording the purchase of these companies in its books and records, Slocan allocated the purchase price to the different assets of the acquired companies, including the timber tenures. Slocan is now amortizing the value assigned to the timber tenures. Contrary to Slocan's assertions, the purchase prices paid to acquire the other companies represents an actual cost to Slocan and has been recorded as such in its normal books and records and its audited financial statements. The cases Slocan cites where the Department considered it inappropriate to add subsidies to actual expenses recorded in the company's books and records are not applicable in the instant case. In the cases cited, the Department did not include, in the reported costs, subsidies the respondents received from a government. In this case, the amortization relates to purchase prices allocated to the timber tenures and these purchase prices were actually paid by Slocan to acquire the companies. Comment 32: Startup adjustments Slocan claims that the Department should grant it a start-up adjustment for its new planing and MSR testing facility at the Mackenzie sawmill. Slocan asserts that even though the other processes within the Mackenzie sawmill, such as the log yard, sawmill, or kiln drying, did not undergo replacement, it is irrelevant and should in no way affect the analysis of whether the costs related to the new planing and MSR testing facility are entitled to a start-up adjustment. As an example, Slocan refers to Hot Rolled from The Netherlands where the Department allowed a start-up adjustment for the direct sheet plant (DSP), which was one facility in the respondent's hot rolling steel mill.(291) Slocan points out that the Department's determination in Hot-Rolled from the Netherlands case is consistent with the statute at Section 773 (f)(1)(C)(ii), which uses the term "new facility." Slocan contends that it would be improper to infer that a more extensive requirement of the term "facility" be used, such that an entirely new mill, from (log input to lumber output) be constructed in order to qualify for the adjustment. Slocan points out that the evidence on the record demonstrates that Slocan is using a new facility or producing a new product that required substantial additional investment. Slocan also claims that the evidence on the record shows that the Mackenzie planing and MSR testing facility has undergone a substantially complete retooling of the existing plant which required the replacement of nearly all production machinery or the rebuilding of existing machinery. Slocan points out that the planing and MSR testing facility at the Mackenzie sawmill is a completely separate building with virtually entirely new equipment. Slocan argues that the second statutory requirement, (i.e., production levels were limited by technical factors associated with the initial phase of commercial production) was also satisfied by evidence on the record. Slocan refers to its questionnaire responses where the detailed technical factors were identified and subsequently reviewed at verification. Slocan claims that because of these technical factors, production levels at the Mackenzie planing and MSR testing facility were seriously limited. Slocan states that significant volumes of unplaned lumber had to be shipped to the Plateau sawmill and to an outside services provider for planing due to the start-up problems incurred at the Mackenzie sawmill. Slocan also points out that the planer production per shift dropped dramatically during the installation of the planers and then gradually ramped up over the next several months. The petitioners did not comment on this issue Department's Position: We agree with Slocan in part and have determined that the company's new planing and MSR testing facility at the Mackenzie sawmill is eligible for a start-up adjustment in accordance with section 773(f)(1)(C)(ii) of the Act. As for the appropriate start-up period, we have determined that, for the Mackenzie planing process, the period ended after the third quarter 2000 rather than extending beyond the POI, as claimed by Slocan. Section 773(f)(1)(C)(ii) of the Act states that the Department will make an adjustment for start-up costs where the following two conditions are met: (1) A producer is using new production facilities or producing a new product that requires substantial additional investment, and (2) the production levels are limited by technical factors associated with the initial phase of commercial production. We have examined Slocan's claim and have determined that the criteria for granting a start-up adjustment have been satisfied in this case. During the POI, Slocan completed construction and began operating a new planing and MSR testing facility at its Mackenzie sawmill. The new planing facility entailed a substantial investment and consisted of a new foundation for the new planer building, new planer infeeds, a new basement strip system, new rolling and grading tables, a new sawdust bin and sawdust conveyor, new sorter lines, new walls, new stackers, and new MSR grading equipment. As such, we believe Slocan has satisfied the first condition of the test in that it is using a new production facility. As for meeting the second condition of limited production due to technical factors under section 773(f)(1)(C)(ii) of the Act, we found that Slocan's production levels were indeed limited by technical factors associated with bringing the new facility online. We cannot identify these technical factors here due to their proprietary nature (see exhibit D-8 of Slocan's July 23, 2001 section D response). In evaluating Slocan's start-up adjustment, we focused on when the new planing and MSR facility achieved commercial production levels. We reviewed the volume of lumber processed (i.e., inputs) at the planing and MSR facility from July 2000 through July 2001 and the volume of lumber produced (i.e., outputs) at the planing and MSR facility from July 2000 through November 2001. The SAA directs the Department to examine the units processed in determining when a company has reached commercial production levels. See SAA at 836. In Semiconductors from Taiwan, we stated "our determination of the start-up period was based, in large part, on a review of wafer starts at the new facility during the POI, which represents the best measure of the facility's ability to produce at commercial production levels."(292) Consistent with the SAA and the Department's practice, we continue to apply production starts as the best measure of a facility's capability to produce at commercial production levels. From analyzing Slocan's data, we noted that the volume of lumber input into the planing facility significantly changed in the fourth quarter of 2000 (See the business proprietary information contained in exhibit SD-13 of Slocan's September 7, 2001 supplemental section D response). This change in volume, consistent with the SAA, indicated that the planing process reached commercial production levels at the end of the third quarter 2000. Therefore, for the final determination, we made an adjustment to Slocan's planing costs for the third quarter of 2000. Issues Specific to Tembec Comment 33: G&A expense Tembec argues that the Department should base its G&A expense factor on the Forest Products Group level. Tembec states that the G&A factor calculated from the Forest Products Group closely relates to the production of the subject merchandise. The company asserts that using a G&A factor derived from the company-wide financial statements results in a G&A ratio that reflects mostly industries other than those making the subject merchandise. Tembec contends that the charge for assets removed from service and other costs are extraordinary in that they are unusual in nature and infrequent in occurrence and should not be included in G&A. In addition, Tembec objects to the inclusion of costs from two non-operating facilities in G&A. Tembec notes that one of these facilities had retail sales of non- reportable merchandise which is represented in the cost of sales figure of that facility and the second facility had no costs for the G&A calculation period, fiscal 2000. The petitioners contend that the Department has a long-standing practice of calculating G&A based on company-wide expenses. The petitioners argue that limiting G&A to the Forest Products Group would not capture the relevant expenses by Tembec Inc. The petitioners maintain that the nonoperating items listed in the cost verification report should be included in the G&A calculation for the final determination. The petitioners reject Tembec's claims that these items are unusual and should be excluded from G&A. The petitioners assert that Tembec does not explain how these items are unusual in nature as required by Floral Trade Council of Davis, CA v. United States, 16 CIT 1014, 1016 (Ct. Int'l Trade 1992) aff'd on other grounds, Floral Trade Council of Davis, CA v. United States, 74 F.3d 1200 (Federal Circuit 1995). Department's Position: The statute at sections 773(b)(3)(B) and 773(e)(2)(A) directs the Department to calculate an amount for selling, general and administrative expenses based on actual data pertaining to the production and sale of the merchandise under consideration. The antidumping law does not prescribe a specific method for calculating the G&A expense rate. When a statute is silent or ambiguous, the determination of a reasonable and appropriate method is left to the discretion of the Department. Because there is no definition in the Act of what a G&A expense is or how the G&A expense rate should be calculated, the Department has developed a consistent and predictable practice for calculating and allocating G&A expenses. This consistent and predictable method is to calculate the rate based on the company-wide G&A costs incurred by the producing company allocated over the producing company's company-wide cost of sales and not on a divisional or product-specific basis. This practice is identified in the Department's standard section D questionnaire, which instructs that the G&A expense rate should be calculated as the ratio of total company-wide G&A expenses divided by cost of goods sold. See Section D Questionnaire, page D-14. This approach is consistent with Canadian GAAP's treatment of such period costs and recognizes the general nature of these expenses and the fact that they relate to the activities of the company as a whole rather than to a particular production process. The Department's methodology also avoids any distortions that may result if, for business reasons, greater amounts of company-wide general expenses are allocated disproportionally between divisions. Therefore, we normally calculate the G&A expense rate based on the respondent's unconsolidated operations plus, if applicable, a portion of G&A expenses incurred by affiliated companies on behalf of the respondent.(293) In this instance, Tembec deviated from the Department's normal methodology and calculated its G&A expenses using an internal accounting methodology, under which the company charged some G&A expenses directly to each of its divisions. However, Tembec divisions are not separate entities that require consolidation but merely separate business units that make up a single corporation. Thus, we agree with petitioners that we cannot consider the divisional P&L statements as "unconsolidated financial statements." For the final determination, we have based Tembec's G&A expense rate calculation on Tembec Inc's company-wide income statement. As outlined in Floral Trade Council of Davis, CA v. United States, 16 CIT (1014, 1016) (Dec. 1, 1992), in order for an event to be considered extraordinary it must be "unusual in nature and infrequent in occurrence." An event is "unusual in nature" if it is highly abnormal, and unrelated or incidentally related to the ordinary and typical activities of the entity, in light of the entity's environment. An event is "infrequent in occurrence" if it is not reasonably expected to recur in the foreseeable future.(294) Removing assets from service and miscellaneous costs are not highly abnormal and are clearly related to the company's operations as a whole. Assets are disposed of in the normal course of business and therefore this is not an infrequent activity. We have included the charge for assets removed from service and other costs in the calculation of G&A expenses for the final determination. The loss realized from disposal of the assets and miscellaneous expenses are actual costs to the company and are related to the company's general operations-comprised of all general activities associated with the company's core business, including production of the subject merchandise which are appropriate to include in G&A. Tembec had two non-operating facilities during the POI. One facility had expenses during the POI but none during the calendar year 2000. The second facility sold non-reportable lumber from a retail yard attached to the facility. We have not included any expenses from the first facility because there were no costs incurred during the calendar year 2000, the period from which we have based our G&A rate calculation. The second facility's expenses relate solely to the cost of merchandise sold. The cost of the merchandise sold is more appropriately included as cost of sales, not G&A. Lastly, we note that the cost of sales from the second facility was for non-reportable merchandise. Issues Specific to West Fraser Comment 34: Downstream sales West Fraser argues that the Department correctly determined not to use the downstream sales of its former affiliate, Revy, in the preliminary determination because, as the Department verified, the quantities of Revy's sales were small and its records did not identify the manufacturer of the lumber it sold.(295) In addition, Revy sold lumber at considerably marked up prices.(296) Should the Department decide to include Revy's sales in its final determination, however, West Fraser maintains that the Department would have to calculate a level of trade adjustment to take into account the differences between West Fraser's and Revy's selling activities.(297) The petitioners argue that when West Fraser first asked to be excused from reporting the downstream sales of Revy, it assured the Department that these sales would pass the Department's arm's-length test. When it became clear that these sales would fail the arm's-length test, the Department instructed West Fraser to report them. The petitioners contend that the Department's initial decision to exclude the sales was based on inaccurate information provided by West Fraser and, had West Fraser not delayed the process of collecting the Revy sales, it would have been able to provide a more complete submission. As a result, the petitioners insist that West Fraser should not be put in a better position for having delayed the collection of the data, and the Revy downstream sales that West Fraser did report should be used in the final margin calculation. Department's Position: At verification, we found no evidence that Revy stores recorded either their inventories or their sales of lumber on a manufacturer-specific basis.(298) West Fraser was able to provide partial sales data for some, but not all, of the Revy stores. Many of the sales records that it could retrieve did not identify product characteristics relied upon by the Department for product comparisons in this investigation. We find that including these reported sales would result in distorting our calculation of normal value and, for this reason, we have not included the sales in our calculation. Comment 35: Inventory carrying costs The petitioners state that the Department's verifiers found errors in the calculation of the number of days in inventory for both Canadian and U.S.- located vendor managed inventories (VMI).(299) The petitioners argue that the Department had given West Fraser multiple opportunities to correct these errors and that West Fraser's failure to correct the reported information justifies the Department's resorting to adverse facts available.(300) As adverse facts available, the petitioners argue that the Department should assign the highest reported inventory carrying expense for any U.S. VMI sale to all U.S. VMI sales.(301) West Fraser argues that on the first morning of the sales verification, it notified the Department that it had reported an excessive number of days in inventory at VMI locations. Over the course of the verification, the Department determined the correct number of days in inventory at VMI locations and recorded them in the sales verification report.(302) Department's Position: We agree with West Fraser that, at the verification, the company notified the verifiers that it had reported an excessive number of days in inventory at VMI locations. We also agree that during the course of the verification, West Fraser provided the corrected information. Accordingly, the Department has no basis either to conclude that West Fraser did not cooperate to the best of its ability or to apply an adverse facts available proxy for the days in inventory at VMI locations. Comment 36: Log sales The petitioners argue that West Fraser has understated its log costs by recording its log sales at fair market value. The petitioners point out that they voiced concerns about West Fraser's valuation of the cost of logs sold prior to verification by referencing what they claim were various inconsistent statements made concerning that valuation. According to the petitioners, verification did not clear up the issue as additional statements made at verification regarding the use of fair market value to value logs sold did not correspond to earlier statements. Additionally, the petitioners assert, there is nothing on the record that shows how this fair market value was derived. The petitioners suggest that by using fair market value, West Fraser is deducting the profit earned on log sales in addition to the cost of the logs sold when adjusting wood costs for transfers out of inventory. Accordingly, the petitioners argue, the Department should remove an amount for profit from the log sales value. Unfortunately, the petitioners assert, the information needed to make such an adjustment is not on the record and the Department should therefore use the facts that are available under 19 CFR 351.308(a). Specifically, the petitioners contend, the Department should deny the deduction for the reported amount of log sales from the cost of logs calculation and increase the reported costs to account for West Fraser's incorrect accounting of the cost of logs sold. West Fraser disagrees with the petitioners' contention that it did not properly account for the cost of logs sold and asserts that the petitioners have confused the information provided on log sales with the information provided on log trades. According to West Fraser, its responses have not been inconsistent or misleading, and the petitioners' confusion results from the fact that they have mixed statements concerning two distinct issues. West Fraser argues that the information provided in its responses referred to the valuation of log sales, and that the information obtained by the Department at verification referred to log trades. In regard to log trades, West Fraser notes, the same fair market value was assigned to the logs sold and the logs received in the trade. Thus, West Fraser concludes, there is no inconsistency between the questionnaire responses and the information provided at verification, and there is no profit element included in the verified cost of logs sold that needs to be removed. Department's Position: We disagree with the petitioners' assertion that West Fraser has understated its log costs by recording its log sales at fair market value. As noted by West Fraser, log sales and log trades are two distinct issues. West Fraser explained its methodologies for valuing log sales in its responses and explained its methodologies for valuing log trades at verification. We do not find that West Fraser's statements made during the course of this proceeding were misleading or inconsistent. At verification, we noted that substantially all of West Fraser's log sales transactions were actually log trades. In regard to log trades, the Department verified that the logs traded and the logs received in the trade were recorded as a sale and a purchase, respectively, at the same market value. The only reason that the fair market value is assigned is to allow for a mechanism which facilitates the trading of two different species of logs with different market values. The assignment of a fair market value does not affect the cost of logs delivered as no money changes hands and the two sides of the transaction cancel each other out. The full harvest costs associated with the traded logs remains unchanged and no profit is realized. Therefore, the cost of logs used by West Fraser is unchanged, and total actual harvest costs are spread across the total quantity of logs delivered, which includes the logs received in the trade. While some log sales transactions were not log trades but rather actual log sales, we note that these were an insignificant percentage of the total transactions, and that there is no record evidence to suggest that West Fraser is deducting profits from its log costs when it records these sales. We therefore find that the record of this investigation does not support the petitioners' contention that West Fraser is deducting the profit on log sales in addition to the cost of logs sold and have not adjusted West Fraser's log costs for the final determination. Comment 37: Prior period stumpage and silviculture West Fraser argues that the Department should not adjust the reported silviculture and stumpage expenses for the minor corrections submitted on the first day of verification. West Fraser states that the revised silviculture and stumpage costs in the minor corrections excluded adjustments relating to prior periods that were recognized during the POI and included adjustments relating to the POI that were recognized in the subsequent period. Although it submitted this information to enable the Department to make an adjustment if it was deemed necessary, West Fraser contends that such an adjustment is not appropriate in this case. West Fraser argues that its accrual-based accounting is in accordance with Canadian GAAP and reasonably reflects the costs associated with the company's harvesting and silviculture activities. Thus, West Fraser asserts, there is no need for the Department to depart from its practice as dictated by section 773(f)(1)(A) of the Act. If the Department does decide to make an adjustment, West Fraser maintains, it should adjust both the silviculture costs and the stumpage costs in order to be consistent. The petitioners did not comment on this issue. Department's Position: We agree with West Fraser that the Department should not adjust the reported silviculture and stumpage expenses for the minor corrections submitted on the first day of verification. Under section 773(f)(1)(A) of the Act, the Department adheres to an individual manufacturer or exporter's recording of costs in its books and records if such records are kept in accordance with its home country GAAP and reasonably reflect the costs associated with the production of the merchandise under investigation. West Fraser reported its silviculture and stumpage expenses in accordance with the amounts recorded in its financial statements. Although these amounts included adjustments for stumpage and silviculture related to the period prior to the POI and excluded adjustments related to the POI but booked in the subsequent period, we do not find them to be unreasonable as the net differences were not material in nature. We therefore find no reason to depart from the costs recorded in West Fraser's normal books and records and have not adjusted the reported silviculture and stumpage expenses for the final determination. Issues Specific to Weyerhaeuser Comment 38: Sales verification Weyerhaeuser argues that the Department should accept its submissions and calculations and rely on them for the final determination. According to Weyerhaeuser, the Department was able to verify that Weyerhaeuser's responses were complete and accurate, including the ministerial errors and minor corrections discovered by Weyerhaeuser and presented to the Department prior to verification.(303) Weyerhaeuser asserts that over the course of the investigation, it has demonstrated that is has fully cooperated with the Department, as evidenced by the size of its databases and the systemic process required to generate the databases in the time required. That the verification process took place in four cities and covered 18 producing mills, five sales systems and approximately 100 different inventory and distribution points, is, according to Weyerhaeuser, illustrative of the magnitude and complexity of the task involved in putting together its response. The petitioners allege that the information submitted by Weyerhaeuser after the beginning of the verification involves ". . . wholesale alterations to previously submitted data information."(304) The petitioners point out that the Department's verification agenda for Weyerhaeuser limited the acceptance of new information to the following circumstances: A. the need for . . . {the} information was not evident previously; B. the information makes minor corrections to information already on the record; or C. the information corroborates, supports, or clarifies information already on the record.(305) The petitioners assert that, other than simple corrections to minor data errors that Weyerhaeuser discovered during its verification preparation, the Department must reject all new factual information proffered after the beginning of the Weyerhaeuser verification. Moreover, the petitioners allege that the sales verification demonstrates that Weyerhaeuser did not comply to the best of its ability with the Department's requests for information. Accordingly, the Department should apply adverse facts available in each area where Weyerhaeuser had failed to provide information that could be verified as accurate.(306) Weyerhaeuser maintains that during the course of the investigation, it reported data in the form and within the time requested by the Department.(307) To do this required Weyerhaeuser to extract and harmonize data from five different major accounting systems and more than a dozen other data systems. The company's submissions to the Department required it to review millions of transactions, perform thousands of data- processing jobs, incurring tens of thousands of man-hours of company time and considerable expense for purposes of retaining outside consultants.(308) The specific verification issues are as follows: a. Weyerhaeuser misclassified and failed to report subject merchandise The petitioners state that Weyerhaeuser misclassified and failed to report certain U.S. sales of SPF subject merchandise,(309) and that Weyerhaeuser also failed to assign product code numbers to certain sales of both subject and non-subject merchandise which it coded as "Not Carried on Stock Record" (NCOSR). At verification, the Department found that Weyerhaeuser had made no attempt to examine the invoices of this merchandise to segregate the subject merchandise from the non-subject merchandise.(310) The petitioners argue that the Department should apply, to both groups of unreported U.S. sales, as adverse facts available, the highest margin calculated for any U.S. sale. In addition, the petitioners argue that the Department should apply this adverse facts available margin to the full amount of NCOSR merchandise.(311) Weyerhaeuser insists that the amounts of misclassified and unreported sales at issue are minuscule and could be ignored by the Department without affecting the calculation of a dumping margin.(312) It points out that reporting the sales classified as NCOSR, which were a relatively limited number of Weyerhaeuser's total reported sales, would have required spending hours going through paper invoices. If the Department decides to include these sales in the calculation of a margin, Weyerhaeuser argues that the Department should apply neutral facts available. Specifically, Weyerhaeuser would have the Department assign the company-wide average margin to these quantities.(313) b. U.S. warehouse-to-customer freight expenses for sales made from Weyerhaeuser Building Materials' (WBM) inventory The petitioners state that Weyerhaeuser reported two sets of data for this expense - one based on sales value and the second based on weight, and that at verification, the Department found the weight data to be inaccurate.(314) The petitioners argue that the sales value-based methodology leads to the result that low-valued merchandise can be transported considerable distances at what are reported to be small expenses while higher-valued merchandise transported locally will show high expenses. Accordingly, the value-based methodology should not be used.(315) The petitioners conclude that the Department should employ, as facts available, the highest weight-based expense reported in the freight to the final customer (INLFWCU) field for all "channel 7" sales.(316) Weyerhaeuser argues that, at the time of its questionnaire responses, it had told the Department that it could not report these freight expenses on a quantity basis, resulting in the Department's supplemental questionnaire request to report freight out on a weight basis. Although Weyerhaeuser complied with this request, it also informed the Department that it could not represent that the weight information was accurate.(317) Weyerhaeuser reiterated that allocating freight expense on sales value was the only identifiable way to report freight out expense to the Department. c. Out-bound freight ratio for WBM's Edmonton warehouse sales Weyerhaeuser argues that the Department should apply the correct out- bound freight ratio for WBM's Edmonton warehouse sales. Weyerhaeuser acknowledges that the Department discovered an error in the reporting of the out-bound freight ratio for this location and argues that the Department has now fully verified the submitted data and should use the corrected ratio.(318) The petitioners did not comment on this issue. d. Canadian Lumber Business' (CLB) freight expenses The petitioners argue that Weyerhaeuser failed to provide reliable freight expenses incurred by CLB at Edmonton's JT reload, and that the Department should employ the highest reported freight amount for all U.S. sales that went through that reload. The petitioners state that Weyerhaeuser reported the transfer price paid to its affiliate, the Edmonton CSC, for services involving merchandise which went through Edmonton's JT reload during the POI. However, the petitioners state that at verification Weyerhaeuser (1) was unable to tie reported transfer price amounts; (2) found that labor and other costs were based on statistical information, not the actual amounts paid; and (3) that reported revenue was "at odds" with the amount recorded in the general ledger.(319) To compound matters, the petitioners allege that "verifiers attempted to replace the misreported freight amounts with new factual information taken at the verification," which is "contrary to law, the Department's practice, and the written verification agenda."(320) Moreover, the new information is based upon transfer prices, which the petitioners argue are inherently unreliable.(321) The petitioners propose that the Department deny the freight adjustment for all home market sales that went through the JT reload, and instead apply the highest reported freight amount for all such sales. Weyerhaeuser argues that corrected freight expenses, incurred by CLB at Edmonton's JT reload, were examined during verification, and that, for the final determination, the Department should use the corrected, verified data included in its submission of February 5, 2002. Weyerhaeuser contends that the petitioners are actually confusing two separate issues: the reliability of the freight expense based on transfer price and whether the Department should accept the data for inter-company reload charges from the JT reload to CLB.(322) With regard to whether the reported expense is reliable, Weyerhaeuser contends that it reported the transfer price as the basis of this reload expense throughout the investigation because the transfer price paid by CLB to the Edmonton CSC for warehousing at the Edmonton JT reload exceeded the CSC's cost of operating that reload.(323) Furthermore, Weyerhaeuser argues that officials at the Edmonton CSC had explained at verification that "the costs attributed to the JT reload could be calculated only by making certain assumptions because JT-specific costs were not accounted for in the ordinary course of trade."(324) Weyerhaeuser contends that the Department confirmed at verification that this was an appropriate basis on which to report expenses because the transfer price exceeded the Edmonton CSC's costs. Weyerhaeuser also argues that the Department verified Weyerhaeuser's allocation methodologies, and that "the difference between the revenues reflected in the general ledger and the worksheet are attributable to these allocation methods."(325) Weyerhaeuser argues that because the revenue amounts reflected in its calculation worksheet and the general ledger "are more than the verified costs of operating the JT reload, the small discrepancy between the revenue amounts in the worksheet and the general ledger are not only immaterial, but irrelevant to the issue of whether CLB's transfer price exceeded the Edmonton CSC's actual costs."(326) With regard to whether the Department should accept the data for inter- company reload charges from the JT reload to CLB, Weyerhaeuser argues that a programming error regarding unreported inter-company reload charges was discovered in the course of verification; however, Weyerhaeuser contends that the Department verified the corrected freight information, checked it for completeness, and noted no discrepancies.(327) Weyerhaeuser also contends that because the Department verified the corrected data, it should use it for the final determination and reject the petitioner's argument for using adverse facts available.(328) e. Inventory carrying costs The petitioners argue that Weyerhaeuser failed to properly report inventory carrying costs in the U.S. and Canadian markets. The petitioners state that the Department discovered this issue at verification in the course of reviewing calculation ratios, noting that inventory carrying cost (ICC) factors were incorrectly applied. The petitioners contend that Weyerhaeuser offered no "credible explanation," and the revision of the ICCs does not constitute a minor correction, as it affects five separate ICC fields in the U.S. and home market databases.(329) The petitioners suggest that the Department deny any ICC adjustments for home market sales. For U.S. sales, the petitioners argue that the Department should apply to each of the five ICC fields, the highest ICC charge on the record for a Weyerhaeuser accounting data system that verification exhibits indicate is accurate and complete, as adverse facts available. Weyerhaeuser argues that, although it was discovered during the course of verification, a programming error resulted in the ICCs being misreported for a number of WBM and Trading Group sales, and that the petitioners have "grossly mischaracterized and exaggerated this error."(330) Weyerhaeuser explains that the correct data needed to calculate inventory carrying costs was contained within the exhibits to its submissions, but a database coding error led to the ICCs being incorrectly applied to WBM's and the Trading Group's sales in the database. Weyerhaeuser contends that this error did not impact sales by BCC or CLB, only affected a small portion of quantity and value, and that the impact of the error is negligible. Furthermore, Weyerhaeuser argues that it fully explained at verification why the error occurred, as is reflected in the sales verification report. Weyerhaeuser also contends that since the data were provided previously as exhibits to its submissions, the data patch required to fix the error does not contain new factual information. Because the Department verified the corrected information, Weyerhaeuser argues that, for the final determination, the Department should use the corrected information and disregard the petitioners' argument for using facts available. Department's Position: We disagree with the petitioners' recommendation that we apply adverse facts available in each area where Weyerhaeuser failed to provide information that could be verified as accurate. Section 776(b) of the Act states: If the administering authority or the Commission (as the case may be) finds that an interested party has failed to cooperate by not acting to the best of its ability to comply with a request for information from the administering authority or the Commission, the administering authority or the Commission (as the case may be), in reaching the applicable determination under this title, may use an inference that is adverse to the interests of that party in selecting from among the facts otherwise available. As a general matter, our verification confirmed the effort Weyerhaeuser expended to report its data to the Department. The Department agrees with Weyerhaeuser that the company generally complied with the Department's requests for information and that the Department does not have a basis for concluding that the company did not act to the best of its ability with respect to any of the information at issue. Therefore, we have not applied adverse facts available. We note that Weyerhaeuser lumber sales are made by three separate business units, each of which functions independently. One of those divisions, WBM, consists of a large number of CSCs scattered throughout Canada and the United States, and the Trading Group. In compiling its databases, Weyerhaeuser's information technology specialists were required to integrate a number of different accounting systems, including two that are no longer in use. The information technology specialists, who were not initially familiar with either the accounting systems or the dumping law, had to develop programming language to integrate all the systems and extract the large volume of data the Department required. At verification, we traced any errors we found back to the underlying cause to ensure that the problems were not systemic. In many cases the errors traced back to a line or two of programming. We did not find any systemic errors that led us to believe that Weyerhaeuser's data were too unreliable to be used. Where possible, we requested that Weyerhaeuser provide corrections to the errors discovered at verification, and used the corrected, verified data. There are areas, however, where the company's responses were incorrect. Where this proved to be the case, in accordance with section 776(a) of the Act,(331) we were required to use facts available. Our use of neutral facts available is issue specific (see below). • With regard to Weyerhaeuser's misclassification of and failure to report subject merchandise, we agree with the petitioners that these U.S. sales should be included in the calculation of the dumping margin, but do not agree that adverse facts available are appropriate. We agree with Weyerhaeuser that these unreported sales amount to an inconsequential portion of its overall sales. Moreover, the invoices for the sales coded NCOSR were of merchandise the company does not normally sell. At verification, we confirmed that Weyerhaeuser could not properly identify each product sold without examining each paper invoice.(332) The large number of invoices made it impracticable for Weyerhaeuser to examine each one individually. On this basis, we have excluded these sales from our analysis and assigned the weighted-average dumping margin calculated for Weyerhaeuser's other U.S. sales. • Regarding U.S. warehouse-to-customer freight expenses for sales made from WBM's inventory, the Department agrees with the petitioners that the expenses based on sales value result in unreasonable amounts being reported. We note that this problem applies to WBM's Canadian sales as well as to its U.S. sales. At verification, we confirmed that the weights taken from WBM's computer system, which were used as the basis of the weight-based freight allocation, were inaccurate. Weyerhaeuser itself pointed this out, stating that it was in the process of developing more accurate weights, but that during the POI the process was still on-going and, therefore, many of the weights were incorrect. The inaccurate weights were the only product-specific shipment quantity information available to Weyerhaeuser in electronic format. We do not find that adverse facts available are justified in this circumstance. The verification established that a variety of products were shipped that could not be converted to a single unit of measurement and that freight contracts were not negotiated on a shipment-specific or quantity basis. For the final determination, we took the freight expenses of each of WBM's profit and loss centers as reported in the database using the value-based methodology, totaled these expenses, and divided the total by the total sales of each centers on an MBF basis. We recognize that this does not resolve the problem of allocating freight between subject and non- subject merchandise, but we are using this information as neutral facts available, because we agree that Weyerhaeuser acted to the best of its ability, although it was unable to provide the data in the manner requested by the Department. • With regard to the out-bound freight ratio for WBM's Edmonton warehouse sales, the Department agrees with Weyerhaeuser. The Department's verifiers tied company sales records to the general ledger. Inasmuch as the correct information was verified, there is no reason to apply facts available. • In our examination of CLB's freight expenses, we note that there are two separate expenses reported by Weyerhaeuser at issue: warehousing costs related to the JT reload, and an inter-company charge for loading and unloading. With regard to warehousing costs, Weyerhaeuser reported a transfer price between itself and the Edmonton CSC responsible for running the reload. Because CLB and the Edmonton CSC are not affiliates, but rather divisions of the same company, Weyerhaeuser should have reported the actual cost of providing these services, as was requested by the Department in both the first and the second supplemental questionnaires.(333) At verification, we confirmed that the transfer price for warehousing services did exceed the cost of providing those services. Therefore, for the final determination, we have lowered the warehousing expenses at the JT reload by the ratio of transfer price to cost, as stated in the verification report.(334) The second expense at issue is the inter-company charge paid by CLB to the Edmonton CSC for loading and unloading, which Weyerhaeuser stated in its second supplemental questionnaire had been included in the freight expense field.(335) We found at verification that this charge had not been incorporated into the database. As with the warehousing expenses, Weyerhaeuser should have reported the actual cost related to providing these services. However, the only information currently on the record relates to the transfer price. Therefore, we have disallowed this adjustment in the home market, and in the U.S. market we have used the transfer price provided. • With regard to inventory carrying costs, we disagree with the petitioners. It is the Department's practice to correct minor errors found during the course of verification.(336) The Department's sales verification team thoroughly examined the nature of the database coding errors, as well as the correct data already on the record in the form of exhibits to Weyerhaeuser's previous submissions. Weyerhaeuser explained, and quantified, the nature of the error to the Department's satisfaction, as was stated in the verification report. See the February 4, 2002 Weyerhaeuser Verification Report at pages 49-50; see also Exhibit F-5. Therefore, we will use the corrected, verified information for the final determination. • We found certain data errors on both of Weyerhaeuser's December 14, 2001, volume and value-based allocation data sets. The data errors were in both the SAS and Excel versions. In order to use the files, it was necessary to create a clean data set before we calculated the margin. Specifically, we found that certain COCONOs did not cross-foot to the TOTCOM field. Moreover, we found that several of the processing fields were reported in the wrong columns. After comparing them to earlier submissions, it became apparent that it would be necessary to shift the data for purchased rough cut lumber and processing costs from one field to another. This error was not across all mills. We also note that the extended TOTCOMs from the data files were reconcilable to the costs verified by the Department. Finally, it was necessary manually weight-average the costs for certain COCONOs because of amounts for inter-mill transfers. Comment 39: The petitioners received inadequate time to examine the Weyerhaeuser sales verification report The petitioners protest the seven-day deadline from the issuance of the Department's verification report for the submission of their case brief as an abuse of the Department's discretion.(337) The petitioners had pointed out in January the necessity for an extension of time for filing the case brief.(338) According to the petitioners, the Weyerhaeuser verification report is unusually complex and the Department's failure to allow extra time for the preparation of the petitioners' case brief arguably biases the outcome of the proceeding in favor of Weyerhaeuser inasmuch as the company knew what occurred at verification and was able to begin its case brief well before the petitioners received the sales verification report.(339) On this basis, the petitioners requested an additional five days with which to further brief Weyerhaeuser issues.(340) That request was denied in a telephone conversation between Department officials and counsel for the petitioners. Weyerhaeuser did not comment on this issue. Department's Position: The Department does not agree that the investigation may have been biased because the petitioners could have used more time for analyzing the Department's sales verification report for Weyerhaeuser. This investigation is subject to a statutory deadline. Although we agree with the petitioners that the Weyerhaeuser verification was unusually complex, we were not able to grant additional briefing time because the deadline for the final determination had already been fully extended. The Department made every effort to work with the parties to schedule verifications and stagger the release of our verification reports. The Weyerhaeuser verification was the most complex of the softwood lumber verifications and the Department had prepared and released the verification report less than two weeks from the conclusion of the verification to prevent a delay in the briefing schedule. Comment 40: Warehousing expenses for WBM inventory sales According to the petitioners, Weyerhaeuser reported warehousing expenses associated with WBM-U.S.' inventory sales as indirect selling expenses in the U.S. market while reporting WBM's(341) Canadian warehousing expenses associated with its inventory sales as direct selling expenses. The petitioners contend that Weyerhaeuser should, in fact, have done the reverse. The petitioners argue that warehousing expenses associated with WBM-U.S.' inventory sales should be treated as direct selling expenses in the U.S. market because, "pursuant to 19 CFR 351.401(e), the 'original place of shipment' is the actual production facility . . . and WBM-U.S. is a separately incorporated, affiliated reseller."(342) The petitioners argue that these warehousing expenses were incurred after the subject merchandise left the original place of shipment and should thus be treated as direct selling expenses. The petitioners contend that the warehousing expenses associated with WBM's inventory sales should have been reported as indirect selling expenses in the home market The petitioners point out that, unlike WBM-US, WBM is not a separately incorporated entity, but a division of Weyerhaeuser Company Ltd. Consequently, the petitioners argue that WBM's warehousing expenses are associated with transferring product from one division of the company to another. According to the petitioners, the "original place of shipment" encompasses the single company, and therefore WBM's warehousing expenses should be treated as indirect selling expenses.(343) The petitioners point to the fact that the Department has recognized pre-sale warehousing expenses as indirect expenses in two previous cases.(344) Weyerhaeuser argues that it reported WBM's home market and U.S. warehousing expenses as requested by the Department's Sections B and C questionnaire, and the Department never requested that Weyerhaeuser report its warehousing expenses differently. Weyerhaeuser observes that the Department used the reported information for the preliminary determination, and verified the accuracy of the warehousing expenses.(345) Therefore, Weyerhaeuser contends that the Department should continue to use the verified warehousing expenses reported for WBM for the final determination. Weyerhaeuser also argues that the Department must reject the petitioners' claim that WBM's home market warehousing expenses should be treated as indirect selling expenses, and continue to treat WBM's warehousing expenses as it did for the preliminary determination. Weyerhaeuser contends that to treat its home market warehousing expenses as indirect selling expenses would be "at odds with the statute," and that "the URAA stated for the first time that movement expenses incurred after merchandise leaves the place of production should be deducted from normal value" and that "the SAA makes clear that warehousing expenses must be included in this deduction."(346) Weyerhaeuser contends that the petitioners have no legal support for their argument that WBM should be considered an extension of Weyerhaeuser's production facilities, and therefore, all of WBM's warehousing expenses should be considered "factory warehousing."(347) Weyerhaeuser contends that the two cases cited by the petitioners to support pre-sale warehousing expenses being treated as indirect expenses are pre-URAA decisions, and that the cases have no bearing on post-URAA decisions. Furthermore, Weyerhaeuser argues that WBM is a sales and distribution entity, not a "factory warehouse."(348) Department's Position: The petitioners are correct that sections 351.401(e) (1) and (2) of the Department's regulations state that the original place of shipment is normally considered to be the production facility, and that warehousing expenses incurred after the subject merchandise or foreign like product leaves the original place of shipment are characterized as movement expenses. However, we note that the Department's questionnaire, dated May 25, 2001, instructed the company to report "only expenses incurred at a warehouse not located at the distribution facility that sold the merchandise."(349) Weyerhaeuser complied with the questionnaire's instructions for reporting these expenses, and we did not ask Weyerhaeuser to revise its reporting at any time in the investigation. We further note that the Department cannot penalize the respondent for following the instructions given in the questionnaire. In addition, we note that because WBM-U.S.' warehousing expenses were incurred in the United States on CEP sales, they were deducted from the starting price as part of indirect selling expenses incurred in the United States. In addition, there is no possibility of the offset being skewed by the inclusion of these movement expenses in indirect selling expenses because no CEP or commission offset has been granted for Weyerhaeuser. Therefore, for the final determination, we have continued to include Weyerhaeuser's reported warehousing expenses associated with WBM-U.S.' inventory sales in its indirect selling expenses in the U.S. market. We note that home market warehousing expenses are correctly identified as a movement expense, and we have not reclassified them as an indirect selling expense for the final determination as requested by the petitioners. The petitioners' citation to Cold-Rolled from Korea is inapplicable in this case because Weyerhaeuser was able to demonstrate that its warehousing expenses were directly related to the home market sales under consideration.(350) We have continued to treat these expenses as movement expenses in the final determination. Comment 41: British Columbia Coastal's (BCC) warehousing expenses The petitioners argue that throughout this proceeding, Weyerhaeuser claimed it incurred no U.S. warehousing expenses for BCC during the POI. However, the petitioners state that at verification, the Department was notified that BCC's Somass mill sent merchandise to the Bridges reload, and that the merchandise was typically destined for the United States. Due to Weyerhaeuser's failure to report BCC's warehousing expenses incurred on U.S. sales for merchandise shipped through the Bridges reload, the petitioners argue that the Department should apply as adverse facts available the highest reported U.S. warehousing expense to all of BCC's U.S. sales through the Somass mill. Weyerhaeuser contends that, at the outset of verification, it informed the Department that it had not revised a table containing BCC's warehousing expenses to reflect NLGA grades, thereby causing the Bridges reload expenses to be omitted from the database. Therefore, Weyerhaeuser argues that the Department should reject the petitioners' request to apply adverse facts available and use the verified, corrected warehousing expenses for the final determination. Department's Position: We disagree with the petitioners. Weyerhaeuser presented the minor correction involving BCC's warehousing expenses at the outset of verification as stated in the February 4, 2002, Sales Verification Report at page 15. The Department verified that the only warehousing expenses for BCC were incurred for the Bridges reload. We thoroughly examined the corrected warehousing expense amounts, and tied them to Weyerhaeuser's books and records. For the final determination, we have used the corrected and verified warehousing expense amounts. Comment 42: Early payment discounts The petitioners argue that the Department found at verification that for a portion of U.S. and home market sales Weyerhaeuser failed to report early payment discounts that Weyerhaeuser claimed it had granted.(351) The petitioners argue that this error cannot be construed as minor in nature. Because Weyerhaeuser failed to properly report early payment discounts, the petitioners propose that the Department apply partial facts available by using the highest reported early payment discount for each of the U.S. sales involved, and deny any early payment discount for the home market sales involved. Weyerhaeuser argues that it inadvertently omitted early payment discounts from the U.S. and home market databases, but that "the impact of this error is insignificant" and no adverse inferences are warranted.(352) Weyerhaeuser contends that its efforts to convert information from the GFL sales system, an accounting system that Weyerhaeuser no longer uses, to the database submitted to the Department, were time consuming yet successful. Weyerhaeuser contends that when this issue was discovered at verification, the company concluded that the problem resulted from a programming error that was limited to the GFL system. Weyerhaeuser argues that the Department verified the data concerning the Trading Group's early payment discounts, and there is no basis for applying adverse facts available. Department's Position: We disagree with the petitioners. It is the Department's practice to correct minor errors found during the course of verification.(353) The Department's sales verification team thoroughly examined the nature of the programming error, and confirmed that the error was limited to the GFL system. Furthermore, Weyerhaeuser explained and quantified the nature of the error to the Department's satisfaction, as was stated in the verification report.(354) Therefore, we used the corrected, verified information for the final determination. Comment 43: CLB's SLA tax amounts Weyerhaeuser argues that the Department's verification report erroneously states that CLB was unable to tie the allocations of the SLA export tax on its worksheet to the general ledger.(355) Weyerhaeuser states that the actual payments and refunds can be reconciled for each province shown on page 4 of verification exhibit K-26. Exhibit 4 to Weyerhaeuser's case brief accomplishes this reconciliation. The petitioners did not comment on this issue. Department's Position: We disagree with Weyerhaeuser's contention that the sales verification report was erroneous. At verification, CLB was unable to tie allocations of the SLA export tax from worksheets to the underlying accounts. However, because Weyerhaeuser was able to utilize information already on the record to complete its reconciliation, we have not made any changes to its reported SLA tax. Comment 44: CLB's quota-transfer sales Weyerhaeuser reported that its home market sales for which SLA quota had been transferred to a Weyerhaeuser customer would be removed from the home market sales database because Weyerhaeuser could tie the sales to specific invoices and thereby had knowledge that the product was destined to the United States. The sales verification, however, disclosed that a "computer programming error had caused all of CLB's sales made with quota transfers to be left in the home market database."(356) Weyerhaeuser argues that the Department should remove these sales from the home market database. In addition to these misclassified U.S. sales discovered by the Department at verification, the petitioners point out that the Department's sales verification report also describes quota transfers that the Department found had never been linked to individual invoices. The petitioners argue that the accurate reporting of U.S. sales at their actual prices is at the heart of an antidumping investigation(357) and these misreported U.S. sales were of a magnitude that cannot be characterized as a "minor error." Moreover, both the misclassified sales and the quota amount not linked to invoices were uncovered by the Department at verification, indicating the pervasive unreliability of Weyerhaeuser's reporting of quota sales by CLB. The petitioners argue that the Department should apply, as adverse facts available, the highest calculated margin for any CLB U.S. sale to the total unreported volume of CLB quota sales.(358) Department's Position: The Department does not agree that adverse facts available are required for these quota sales. The misclassified sales, which contain all of the relevant adjustments, can be moved from the home market to the U.S. sales database. The volume of CLB quota sales not linked to invoices can be assigned a neutral facts available dumping margin. As neutral facts available, the Department chose to apply the overall weighted dumping margin calculated for other U.S. sales. Comment 45: Critical circumstances data for Monterra Lumber Weyerhaeuser alleges that, contrary to the Department's sales verification report, the critical circumstances data for Monterra Lumber presented at verification did tie to source documents. Furthermore, Weyerhaeuser contends that the correct critical circumstances data for the months reviewed by the Department for Monterra are included in the sales verification report.(359) The petitioners did not comment on this issue. Department's Position: Contrary to Weyerhaeuser's assertion, the Department's Sales Verification Report at pages 45 and 46 correctly states that the submitted quantity and value for Monterra did not tie to the company's books and records. We note that the information pertaining to Monterra's critical circumstances data was incorrectly reported to the Department in Weyerhaeuser's submissions of September 14 and November 7, 2001. However, the Department verified the corrected quantity and value of shipments and these figures were supported by Weyerhaeuser's books and records. The revised information is included as Exhibit F-19 of the Department's verification report. Comment 46: Log/wood costs In reporting costs to the Department, like other respondents, Weyerhaeuser submitted two data sets, one using a value-based cost allocation method and another using a volume-based cost allocation method. However, Weyerhaeuser's situation differs somewhat from the other respondents in that it was required to address the issue of how to allocate costs between logs sold and logs retained for use as an input in its sawmills. Another related issue for Weyerhaeuser was how to account for the fact that each mill received logs of significantly different quality and type, which it then processed into products that were often specific to that mill. To address these issues, Weyerhaeuser relied on its internal transfer prices recorded in its normal books and records, adjusted to account for any profit or loss on the transfer. Weyerhaeuser's internal transfer prices are based on the market prices specific to the species and log quality.(360) Thus, a value-based cost was obtained by backing out the profit or loss. For its volume-based cost allocation method, Weyerhaeuser first reported the same overall total wood costs that it calculated under the value method (i.e., a value method for the logs sold versus logs retained), but then calculated an overall average cost per MBF, per species, not specific to a sawmill. Weyerhaeuser later revised this method and calculated one average cost per MBF, per species, regardless of whether the logs were sold or retained. The petitioners argue that the Department should apply partial adverse facts available to Weyerhaeuser's reported wood costs. They contend that the Department cannot rely on either Weyerhaeuser's value-based allocation method -- because it uses transfer prices, or Weyerhaeuser's volume-based allocation method -- because it includes average costs across species and values incorrectly the cost of logs sold. Concerning the value-based method, the petitioners argue that Weyerhaeuser incorrectly relied on intra-company prices (adjusted for average profit) to arrive at the reported wood costs for each sawmill. It argues that the reported wood costs under this method are species-specific only in that they result from a value-based allocation, and do not reflect the actual costs incurred by the Timberlands Unit to acquire the wood consumed by British Columbia Coastal (BCC) sawmills. Moreover, they argue that the Department recognizes that the intra-company prices are inherently unreliable in determining the cost of a major input (i.e., wood costs for lumber) and thus disregards input prices between divisions of the same legal entity in favor of actual costs. The petitioners argue that companies may internally price an input without regard to the actual cost of the input, but only with regard to other concerns, such as tax consequences.(361) Further, the petitioners argue that using prices to determine costs is always suspect in the context of an antidumping cost investigation, which must determine whether price discrimination exists. The petitioners argue that the Department should reject this inherently unreliable and inaccurate method of reporting wood costs for the final determination. Concerning Weyerhaeuser's volume-based method, the petitioners argue that Weyerhaeuser incorrectly allocated costs between logs sold and logs retained (for lumber production at its own mills). Specifically, the petitioners argue that the cost of logs retained was undervalued in Weyerhaeuser's most recent submissions and, therefore, the reported cost of wood consumed in producing lumber was improperly reduced. As a result, the petitioners argue that only the wood costs associated with logs consumed at BCC's mills should be used in determining Weyerhaeuser's BCC's wood costs. They argue that the record shows that there were differences between the logs sold to third parties and the logs consumed by the BCC sawmills and assert that the costs of the logs should reflect this fact. With regard to the petitioners' argument that Weyerhaeuser failed to provide species-specific log costs for wood consumed by BCC sawmills, they argue that Weyerhaeuser did not report species-specific wood costs as instructed, but rather reported an average cost that includes the stumpage costs of multiple species. The petitioners assert that as a result of this methodology Weyerhaeuser has submitted costs that are inaccurate and distortive. In the petitioners' view, Weyerhaeuser could have provided species-specific stumpage costs. They note that when Weyerhaeuser cuts timber from Crown Land in B.C., a licensed scaler records each piece, by species and cubic meter. They further argue that the B.C. government requires that the scaler maintain detailed scaling data, including a scale return, which includes a piece segregation by species and grade quality, copies of which must be provided to the company whose logs are scaled. Thus, they claim, Weyerhaeuser either maintained or had access to the underlying data (possibly electronically) regarding the volume, species and quality of each log cut from every timber mark. Due to Weyerhaeuser's inaccurate and distortive submitted wood cost data, the petitioners argue that it is evident that a partial adverse inference is warranted in selecting from the facts otherwise available to determine the actual species-specific wood costs for the BCC mills. They point out that once the Department has fairly requested the data it needs to compute antidumping duties, it has discretion to determine whether the respondent has complied with such requests as a prerequisite for facts available.(362) Therefore, the petitioners argue that as partial adverse facts available, the Department should use the single highest reported wood cost at any BCC mill for all BCC wood costs. Alternatively, the Department could employ the highest species-specific cost reported for each BCC mill as the wood cost for all species at that BCC mill. Weyerhaeuser contends that it provided information in the form required for both a value-based and volume-based log cost allocation and that the log cost information was verified for both methods. Weyerhaeuser argues further that the Department's decision at the preliminary determination to reject the value-based allocation at the sawmill stage necessitates the rejection of a value-based wood cost allocation, in order to not distort the margin analysis on BCC products. Weyerhaeuser argues that as a result of the Department's preliminary determination methodology, the log costs assigned to reportable merchandise became distorted, which in turn distorted the margin analysis by creating fictitious home market profits and losses. However, Weyerhaeuser concurs with the petitioners that the value-based method should not be used for the final determination. It agrees with the petitioners that intra-company prices should not be used to allocate BCC Timberlands' log costs. Weyerhaeuser argues that in the normal course of business, the BCC Timberlands simply divides its total harvesting cost by the total quantity of logs it harvested. This allocation method, it asserts, is the generally accepted method within the industry. Moreover, it notes, parties to this case agree that, except for stumpage, log harvesting costs do not vary to any meaningful extent across species. Furthermore, Weyerhaeuser argues that the cost of harvesting logs is incurred jointly for all products, regardless of species, grade, or dimension. Thus, it concludes, a log sold should receive the same proportion of costs as a log that is consumed internally. Concerning the issue of species-specific costs that are alleged by the petitioners to be lacking for the volume-based method, Weyerhaeuser argues that the log grade percentages for any given species of timber under a cutting authority are derived from the billing history record. Weyerhaeuser argues that it has provided a stumpage cost that precisely corresponds to the way in which the B.C. Forest Service bills Weyerhaeuser. Thus, it argues that the reported costs are reasonable and fairly represent the amount of stumpage the company pays for harvesting a particular species. It notes that, in the normal course of business, Weyerhaeuser does not track stumpage by species and that the Forest Service does not provide, calculate, or bill Weyerhaeuser for stumpage on a species-specific basis. In addition, it argues that for cost reporting purposes, Weyerhaeuser relied on the Forest Service's methodology of calculating and billing stumpage. It notes that a harvest of 100% of a particular species at a particular BCC timber mark does not occur. Thus, a given coastal cutting permit will inevitably yield multiple species. It argues that one can see from the stumpage models, shown at cost verification exhibit 55, the variations in stumpage rates that can be calculated are almost unlimited due to the components of the Forest Service calculations (e.g., variations in species harvested, the date harvested, the grades harvested, the change in market prices used in the calculation, the difficulty and cost of harvesting that cutting permit, the number of timber marks involved, etc.). Finally, Weyerhaeuser notes that there is no evidence to indicate that the reported species-specific stumpage is unreasonable. Weyerhaeuser argues that the Timberlands, the Weyerhaeuser entity that manages the forests, uses an average cost to determine the cost of sales and financial statement inventory amounts reported in the audited financial statements, prepared in accordance with GAAP. It argues that while the log transfer to the mill is at a market price, the market price of the mill's inventoried logs is adjusted back to the Timberlands moving average-cost for financial statement purposes, prepared in accordance with GAAP. It further argues that since the Timberlands and the mill are merely integrated operating units of Weyerhaeuser Company Limited, the market price-based transfer price is negated upon consolidation. Therefore, it argues that it is reasonable and appropriate to use the cost of wood per MBF rather than the market price-based transfer price. Finally, Weyerhaeuser argues that departing from its cost accounting systems in favor of the method used in its financial statements is consistent with the Department's past practice. Weyerhaeuser objects to the petitioners' request for facts available on BCC Timberlands' total log cost. Weyerhaeuser argues that the Department's Cost Verification Report identified a problem only with the allocation of species-specific stumpage cost, not total log costs. More importantly, it asserts, the Department found no discrepancies with the total cost of logs or the total quantity harvested used to calculate per-unit log costs. Lastly, Weyerhaeuser argues that if the Department does not accept this method, it should use one of the individual factors that the Forest Service uses to calculate stumpage, (e.g., the stumpage cost could be allocated based on volume harvested or the market price of the logs harvested). Department's Position: We disagree with both the petitioners and Weyerhaeuser that the total wood costs, by species, under its value-based log cost allocation are unreliable. Weyerhaeuser's value-based wood cost allocation method is in accordance with its normal books and records, it reasonably reflects the cost associated with the production and sale of the merchandise, and it was successfully verified by the Department. Section 773(f)(1)(A) of the Act states, "In general - costs shall normally be calculated on the basis of the records of the exporter or producer of the merchandise, if such records are kept in accordance with the generally accepted accounting principles of the exporting country ... and reasonably reflect the costs associated with the production and sale of the merchandise." Despite its assertions to the contrary, Weyerhaeuser's books and records do account for logs using a value-based cost allocation method. That is, the amount charged to a sawmill is based upon the market price of the log, a price which it demonstrated to be reflective of the quality and species of the log. The Department reviewed several of these records at verification and included others as verification exhibits.(363) We disagree with Weyerhaeuser that Uranium From France stands for the proposition that the Department will reject the product-specific costs recorded in a respondent's cost accounting system in favor of the broad average aggregate inventory figures maintained in its financial accounting records or on its balance sheet. Uranium From France addressed the issue of a cost element that was valued at zero in the company's cost accounting system while the actual amount paid for the item was included in the costs on the financial statements. The Department routinely looks to the respondent's cost accounting system as the starting point for reporting, as long as that system does not result in distorted per-unit costs and can be proven to capture all product costs by reconciling it to the audited financial statements. Concerning species-specific costs, we have determined that it is appropriate to use the wood costs by species from Weyerhaeuser's value- based cost allocation method. In its methodology for the value-based figures, Weyerhaeuser addressed the issue of species-specific costs by applying the value-based method first to particular qualities of specific species of logs, before allocating the sawmill specific costs to lumber using a second value allocation. As a result, we have on the record the species-specific costs for logs. We agree with Weyerhaeuser that its value- based cost reporting methodology addresses this issue. The log costs recorded by the sawmills are representative of market prices, and these costs flow through the sawmills' records in calculating lumber costs. It is only upon consolidation that the elimination of the profit or loss made by the Timberlands is removed. The petitioners' argument that the Department always disregards input prices between divisions is misplaced. The log transfer prices between divisions are simply being used as a means to allocate the actual costs of the Timberlands units, not to determine the wood cost to use for COP and CV purposes. Moreover, the Department relies on transfer prices when they are determined to be at arm's-length levels (i.e., at market prices and, for major inputs, above cost), which is the case for Weyerhaeuser. The method used by Weyerhaeuser to adjust its log transfer prices was reasonable and was verified and benchmarked the transfer price against actual market prices by the Department verifiers.(364) While there may have been alternative methods to accomplish the allocation, the method it chose has the merit of relying on its actual books and records to the greatest extent possible. Thus, we disagree with the petitioners that partial adverse facts available is necessary and we have chosen to use the wood costs reported by Weyerhaeuser in its value-based reporting method. Further, we disagree with the petitioners that the circularity argument applies to logs which, in this case, are not subject merchandise. Moreover, we are not allocating between two categories of products, one of which has been alleged to be dumped, but within the same category, and none of which is alleged to have been dumped. Furthermore, we agree with Weyerhaeuser that there is no evidence on the record that indicates that the relative values between log sorts and grades in the B.C. log market are distorted. However, we agree with the petitioners that Weyerhaeuser's reported wood costs, in its volume-based allocation method, do not accurately reflect the costs incurred by Weyerhaeuser for individual species. Weyerhaeuser reported wood costs in its volume-based allocation method using its billings from the government. However, these costs are weighted-average figures and do not reflect the actual species-specific stumpage fees paid by Weyerhaeuser. While it is impossible for us to know specifically what records Weyerhaeuser might have used to comply with the Department's request for species-specific costs, it is clear from the record that Weyerhaeuser has the underlying detail data on the stumpage fees paid for different species and qualities of trees. We also note that the fact that Weyerhaeuser had not reported species-specific wood cost did not arise until found by the Department at verification. Finally, we note that other respondents with B.C. operations took steps to disaggregate their stumpage fees amongst species. Comment 47: Depletion expenses The petitioners argue that the Department should revise Weyerhaeuser's wood costs to account for depletion expenses. The petitioners assert that Weyerhaeuser did not report any costs related to the depletion of its privately-owned timberlands, stating that "Weyerhaeuser owns that land and it only incurs harvesting costs. It does not have to pay any stumpage fees on these logs." The petitioners argue that timber is a natural resource for which GAAP ordinarily requires the recognition of a depletion expense. They state that, "{i}n accounting, depletion is the allocation of the cost of a natural resource against revenue as it is exploited and sold. Examples of such resources are ore, oil {and} timber."(365) They argue that the depletion expense relates to the reduction in the value of the timberlands that occurs as a result of removing timber from the land. The petitioners further argue that, for purposes of deriving the costs of merchandise under consideration, the Department recognizes a depletion expense even when it may not be required by the GAAP of the producer's country.(366) Therefore, the Department must resort to "facts otherwise available" (19 C.F.R. 351.308) in order to account for Weyerhaeuser's missing depletion costs in the present case. The petitioners argue that the Department should, as facts available, apply the depletion cost Weyerhaeuser reported on interim financial statements. Weyerhaeuser rejects the petitioners' allegation that it excluded depletion expense from its reported log costs. It argues that the verification exhibits taken by the Department clearly show that Weyerhaeuser included depletion as a component of its reported log costs. Therefore, it asserts, the Department should ignore the petitioners' allegation. Department's Position: We agree with Weyerhaeuser that it properly included the depletion costs as is shown in cost verification exhibits 30 and 40. These costs were tied to the reported costs and to the financial accounting records. Thus, no adjustment for depletion expense is deemed appropriate. Comment 48: G&A expenses The petitioners argue that both the numerator (i.e., general and administrative expenses) and the denominator (i.e., cost of goods sold) of Weyerhaeuser's G&A expense rate calculation should be revised. Weyerhaeuser argues that, for submission purposes, it correctly reported the company-wide G&A expenses incurred at Weyerhaeuser Company Limited (WCL), its Canadian subsidiary that produces the merchandise under investigation in Canada. In addition, it argues that it correctly added a proportionate amount of corporate-wide (headquarters) G&A expenses, incurred by Weyerhaeuser Company, that was not otherwise reflected in WCL's G&A expenses. Specifically, it argues that it isolated its U.S. parent's headquarters costs (e.g., executive salaries, officer salaries, corporate R&D, corporate information technology) that related to the consolidated company as a whole and included the appropriate portion of these expenses in the reported costs. The petitioners and Weyerhaeuser disagree on the following specific G&A issues: a. "Real Estate and Related Assets" The petitioners argue that expenses related to "Real Estate and Related Assets" should be in the numerator of the G&A ratio, rather than the denominator. The petitioners argue that these expenses clearly are not production costs, and they assert instead that they are identified as "{r}eal estate held for sale," in notes to Weyerhaeuser's financial statements.(367) These expenses, they assert, relate to the company as a whole and, accordingly, should be included as G&A expenses in Weyerhaeuser's G&A expense rate calculation. In addition, the petitioners argue that even if the Department were to agree with Weyerhaeuser that these expenses should not properly be included in the company's G&A expenses, the Department still must remove the real estate operation's cost of sales amount from Weyerhaeuser's overall cost of sales (i.e., the denominator of the rate), as the activities of the real estate operation certainly do not relate to actual production of merchandise. The petitioners assert that Weyerhaeuser did not include the "cost and operating expenses" associated with the company's real estate operation in the company's overall cost of goods sold in its financial statements. They argue that there is no evidence that Weyerhaeuser is in the business of buying and selling real estate, or that these real estate expenses relate to the manufacture of lumber. Thus, such expenses are not a cost of production and cannot be properly classified as part of the cost of goods sold. Weyerhaeuser argues that the purpose of the Department's corporate-wide G&A expense allocation methodology is to properly allocate those headquarter G&A expenses that the parent incurs on behalf of its subsidiaries. In this instance, it argues, Weyerhaeuser has identified and allocated these expenses over the cost of sales of all operations that benefit from the services. As such, it contends that the denominator used to allocate these costs should be Weyerhaeuser's total cost of goods sold, because all operations benefit from the services. Weyerhaeuser asserts that it is not required to include its U.S. real estate operation's general expenses in the calculation of headquarters G&A because these expenses are not corporate expenses and do not relate to the consolidated entity as a whole.(368) Weyerhaeuser argues that the petitioners' allegations appear to be based on a misunderstanding of what Weyerhaeuser's corporate expenses (i.e., parent G&A and net financial expenses) represent and the mistaken assumption that these costs should not be allocated to all Weyerhaeuser subsidiaries that benefitted from the services provided.(369) Weyerhaeuser claims that the petitioners' allegations are contrary to the Department's precedent and the record evidence. In reporting these ratios, Weyerhaeuser asserts that it has shown why it has included or excluded an item in its calculations. It asserts that, moreover, most of the proposed adjustments involve expenses that have already been captured in the reported costs or relate to the expenses of other subsidiaries that have nothing to do with the production of Canadian softwood lumber. Thus, it argues, adopting the proposed adjustments would erroneously double count and overstate costs. Department's Position: We agree with Weyerhaeuser that the cost of sales associated with "real estate and related assets," which relate to a grouping of Weyerhaeuser companies involved in real estate and homes, should not be included in the numerator of the G&A expense calculation (i.e., not included as a G&A expense related to lumber production and sales). We note that on both the balance sheet and income statement, Weyerhaeuser's consolidated financial statements present its forest products companies separately from the real estate companies. Moreover, Weyerhaeuser is correct that the purpose of the Department's corporate- wide G&A expense allocation methodology is to properly allocate only those headquarter G&A expenses that the parent incurs on behalf of its subsidiaries. We believe it would be proper to only capture an appropriate portion of the parent's G&A expense and the entire portion of WCL's G&A expenses. Therefore, we have included the cost of sales of the real estate companies in the denominator of headquarters' G&A rate and excluded the corresponding selling, general and administrative expenses of the companies involved in the real estate operations from the numerator of the headquarters G&A rate. b. "Settlement of Claims" The petitioners argue that the expenses associated with the "Settlement of Claims" should be included in the numerator of Weyerhaeuser's G&A expense rate calculation. The petitioners argue that Weyerhaeuser treated these expenses as a component of the cost of products sold, and not as G&A expenses, in calculating the Weyerhaeuser-corporate G&A expense rate. The petitioners assert that these expenses are not production costs, and were not classified as a part of the cost of products sold in Weyerhaeuser's financial statement.(370) These expenses, they assert, relate to the company as a whole and accordingly should be included as G&A expenses in Weyerhaeuser's G&A expense rate calculation The petitioners disagree with Weyerhaeuser's claim that, because these "settlement of litigation expenses" are not general in nature, but relate instead to a class action for claims involving non-subject merchandise, the expenses cannot be part of corporate G&A. The petitioners assert that such expenses do not ever relate to actual production costs. The petitioners argue that Weyerhaeuser included these costs in the denominator of its parent's corporate overhead G&A rate. They argue that the cost of goods sold should involve only those expenses related to producing current production and should not include expenses incurred after production to settle claims. Therefore, they argue, the Department should not treat the settlement claims at issue as part of the cost of goods sold. Rather, these expenses relate to the company as a whole and should be included in G&A expenses. Weyerhaeuser argues against the suggestion that it would be appropriate to include claims made with respect to hardboard siding as a component of the corporate-wide G&A expenses, rather than the manner in which it treated them, as cost of sales. It claims that these expenses are not general in nature and do not relate to the operations of the company as a whole, but rather relate to a proposed class action settlement of the hardboard siding claims. It notes that the settlement class consists of all persons who own or owned structures in the United States on which the company's hardboard siding has been installed. Thus, it contends, the facts on the record clearly show that this cost is associated with a specific product line of non-subject merchandise and that the expense does not relate to the operations of the company as a whole. Therefore, it should not be included as a component of corporate G&A. Finally, Weyerhaeuser argues that its inclusion of this amount in cost of sales is appropriate. It argues that most of the individual expenses shown on the consolidated income statements result from reclassification of costs that the subsidiaries account for as cost of sales, like R&D discussed below. It claims that this cost was reclassified from cost of sales to a separate line item for third party reporting purposes. Weyerhaeuser also notes that this item should be included in the cost of sales used to allocate company-wide and consolidated financial expenses. By doing so, Weyerhaeuser claims, it has insured that its corporate-wide G&A and consolidated financial expense ratios are on the same basis as the amount to which they are applied.(371) Department's Position: We disagree with Weyerhaeuser. Settlement claims are not a cost of goods sold, which is the base the Department typically uses to allocate G&A expenses. Instead, these costs represent the settlement of claims against products sold in prior years. We note that these costs are included on the consolidated financial statements under the forest products group companies. While the costs relate to non-subject product, hardboard siding, the Department typically allocates business charges of this nature over all products because they do not relate to an production activity, but to the company as a whole. We recognize that one time charges like this are ultimately a cost of doing business for the company. Therefore, we have included them in the headquarters G&A, but allocated them over all products in deriving the rate. c. "General Research and Development Expenses" The petitioners argue that the Department should include Weyerhaeuser's "General Research and Development Expenses" in the G&A expenses. The petitioners contend that Weyerhaeuser treated some of these expenses as a component of the cost of products sold, and none as G&A expenses, in calculating the Weyerhaeuser-corporate G&A expense rate. They assert that the Department's practice is to treat general R&D as a G&A expense.(372) The petitioners argue that even if part of the total R&D expenses are already included in the reported costs, the remaining amount should be included by the Department. Moreover, the petitioners argue that none of the R&D expenses are listed under cost of products sold in Weyerhaeuser's financial statements, but rather are listed merely as "R&D" in its financial statements. Therefore, they conclude, these costs appear to be general R&D expenses (not specific R&D), which the Department should treat as G&A expenses. Weyerhaeuser argues that for cost calculation purposes, it relied on the way in which the business unit captured its G&A costs. It contends that it included the cost of R&D performed at the mill as a component of the cost of manufacturing. Alternatively, it states, if a company treated part of this expense as a general expense, Weyerhaeuser captured it as a component of company-wide G&A expenses. Weyerhaeuser asserts that it treated any R&D costs not captured by the business units as a component of corporate-wide G&A expenses. Moreover, Weyerhaeuser objects to the suggestion that it may be appropriate to include the R&D expenses excluded from the corporate level in the calculation of the parent's G&A expenses. Weyerhaeuser argues that the R&D amount that appears on the consolidated income statement represents Weyerhaeuser's total R&D expense. It contends that it reclassifies certain manufacturing costs that are included in its subsidiaries' cost of sales figures to more informative cost groupings. It argues that Weyerhaeuser shows these informative cost groupings on its consolidated income statements and that the total R&D amount reported on the consolidated income statements is one of these reclassified items. Finally, Weyerhaeuser argues that if the Department includes this amount as a component of parent G&A, it would erroneously double count costs. As for treating part of the R&D as component of cost of sales, it contends it included only the amount that had been included in the subsidiaries' cost of manufacturing. It argues that it has already included most of these costs as a component of its WCL and sawmill costs and that the only reason they are shown in the parent's financial statements is because of reclassifications made for financial statement presentation purposes. Department's Position: We agree with Weyerhaeuser that we should not include the R&D expenses that it excluded in our revised calculation of the headquarters G&A expenses. The difficulty with calculating Weyerhaeuser's headquarters G&A expenses from the consolidated financial statements is that the Weyerhaeuser parent company does not publish a separate unconsolidated financial statement and the consolidated financial statements include all of the Weyerhaeuser companies. Each of these companies brings with it to the consolidation its own R&D expenses. We agree with Weyerhaeuser that it captured the R&D expenses at the Weyerhaeuser Company Ltd. level and that the amounts excluded from the headquarters G&A rate calculation includes these company specific R&D costs already captured. Therefore, we have not made an adjustment for this expense. d. "Taxes Other than Payroll and Income Taxes" The petitioners argue to reclassify "Taxes Other than Payroll and Income Taxes" to G&A from cost of sales and product costs. The petitioners assert that for both the Weyerhaeuser Company Limited and Weyerhaeuser-corporate G&A expense calculations, Weyerhaeuser treated taxes, other than payroll taxes and income taxes, as a component of the cost of products sold. It argues that these taxes are not, however, classified as a component of the cost of products sold on the companies' financial statements.(373) The petitioners argue that non-income-based taxes are G&A expenses and have been treated that way by the Department.(374) According to the petitioners, the Department's practice is to treat Canadian property taxes, business taxes, and capital taxes as G&A expense items as they are periodic expenses, general in nature, and related to the company as a whole.(375) Weyerhaeuser claims that it properly treated its tax expenses in the calculation of its G&A expense ratios. As it argued before, Weyerhaeuser asserts that it reclassifies certain manufacturing costs that are included in its subsidiaries' cost of sales figures to more informative cost groupings. Weyerhaeuser claims that it shows these informative cost groupings on its consolidated income statement and that the total "taxes other than payroll and income taxes" reported on the consolidated income statements is one of these reclassified items. Weyerhaeuser contends that at the business level (e.g., B.C. Coastal, Canadian Lumber Business), these expenses are treated as either a manufacturing cost or a general expense, depending on the nature of the expense. For cost calculation purposes, Weyerhaeuser asserts that it relied on the way in which the business unit captured these costs. In addition, Weyerhaeuser argues that it included the taxes incurred at the mill as a component of its cost of manufacturing, however, if a company treated part of this expense as a general expense, then it would be captured as a component of company-wide G&A expenses. It argues that the record evidence supports this fact. In conclusion, Weyerhaeuser contends that it would be incorrect to capture these costs at both the company-wide producer level and at the consolidated parent level. Department's Position: We agree that we should not include the "taxes other than payroll and income taxes" excluded by Weyerhaeuser from its calculation of the headquarters G&A expenses. We agree that it treated "taxes other than payroll and income taxes" consistently with how it classifies these costs in each consolidated company's normal books and records. As noted above, the difficulty with calculating Weyerhaeuser's headquarters G&A expenses from the consolidated financial statements is that Weyerhaeuser's parent does not publish an unconsolidated financial statement and the consolidated financial statement includes all of the Weyerhaeuser companies. Each of these companies brings with it to the consolidation its own taxes and fees. We agree with Weyerhaeuser that it captured these costs appropriately at the WCL level and the excluded amount includes the costs already captured, plus the costs of other forest products group companies. Therefore, we have not made an adjustment for this expense. e. "Non-product Revenue and Expense" The petitioners argue for the inclusion of "Non-product Revenue and Expense" in the G&A expense rate calculation. The petitioners assert that for the WCL G&A expense calculation, Weyerhaeuser treated non-product revenue differently than non-product expense. Specifically, Weyerhaeuser offset G&A expenses by non-product revenue, but the non-product expense was not included as a G&A expense. The non-product expense relates to the company as a whole and should be included as a G&A expense. Weyerhaeuser argues against the suggestion that WCL's "non-product revenue and expense" amounts should be included as a component of company- wide G&A. It asserts that it appropriately reported the applicable portion of these costs. It claims that, consistent with the Department's established practice, Weyerhaeuser excluded the item from both its corporate and company-wide G&A expense calculations.(376) Weyerhaeuser argues that if the Department were to include this as an expense at the company-wide level, it would then have to make a corresponding offset to Weyerhaeuser's corporate-wide G&A expenses. This amount would have to be calculated by the Department because the amounts reported on Weyerhaeuser's consolidated financial statements do not reflect the impact. Weyerhaeuser argues it properly treated its royalty expenses in the calculation of WCL's company-wide G&A expense ratio. It notes that it did not treat royalty revenue different than royalty expense. It asserts that Weyerhaeuser removed from G&A the royalty expenses that WCL paid to the parent and excluded from the parent's G&A calculation the royalty revenue it received from WCL. Weyerhaeuser argues that parent G&A was not offset by the royalty income the parent received from its subsidiaries. It contends that if the Department includes intra-company royalty expenses at the company-wide level, it will have to make a corresponding adjustment to Weyerhaeuser's parent G&A expenses in order to be consistent with its established practice.(377) Thus, Weyerhaeuser argues that the other operating expense amount included as a component of WCL's general expense is an amount that is net of the royalty expense. It states that this remaining balance consists of various miscellaneous items (e.g., rental income, insurance proceeds, fines, legal expenses). Weyerhaeuser claims that the Department normally includes these types of expenses as components of G&A expense.(378) Department's Position: While we agree that the non-product revenue and expenses at issue should be included in the G&A rate calculation, we disagree with Weyerhaeuser that it properly included these costs. The cost verification exhibits show that the net expense for this item was included in WCL's financial statements. In calculating its G&A expense rate for WCL, however, it included only the non-product revenue and not the expenses. Therefore, we have included the non-product expenses in the G&A expense rate calculation for the final determination. Comment 49: Interest expense The petitioners argue that the Department should revise several items improperly reflected in Weyerhaeuser's interest expense rate calculation. Specifically, the petitioners argue that costs associated with real estate, the settlement of claims, general R&D costs, and taxes should be removed from the cost of products sold (i.e., the denominator) in deriving the net interest expense rate. The petitioners rely on their reasoning as addressed above in connection with the calculation of the Weyerhaeuser- corporate G&A expense rate. The petitioners argue that certain items that Weyerhaeuser included as offsets to interest expense relate to returns on long-term investments. The petitioners argue that these items should not offset interest expenses. Only income related to short-term investments of working capital qualify as an offset to interest expenses. Weyerhaeuser argues that it properly reported financial expenses by excluding certain foreign exchange losses. Weyerhaeuser argues that at the highest level of consolidation, the Department requires that the respondent include a portion of its net foreign exchange transactions that relate to borrowings denominated in foreign currencies. Weyerhaeuser argues that during the fiscal year used to calculate the financial expense ratio (i.e., 2000), the corporate entity had no borrowings denominated in foreign currencies. See Weyerhaeuser's Consolidated Financial Statement Footnotes 11 and 12 in Weyerhaeuser's Section A response at Exhibit A-15. For these reasons, Weyerhaeuser claims that it has appropriately accounted for its foreign exchange transactions and no adjustment is necessary. Furthermore, Weyerhaeuser argues that it calculated the appropriate offset to financial expense. It argues that the items that make up the offset were explained at verification and it demonstrated that it appropriately removed dividend income, rental income, fire and casualty reimbursements and long-term interest income from its financial expense calculations. Finally, as for the denominator used to allocate net financial expenses, Weyerhaeuser argues that net financial expenses are allocated on the same basis as the cost of manufacturing that the ratio is being applied to. Weyerhaeuser notes that the Department should include in the denominator of the interest expense rate calculation, the real estate operation's cost of sales, the cost of settling claims, certain R&D included in COM, and taxes included in COM. The inclusion of these amounts as components of Weyerhaeuser's cost of sales follows the Department's established practice. Department's Position: For reasons cited above, we agree with the petitioners that the settlement of claims should be removed from the denominator. However, the other items included by Weyerhaeuser in its consolidated cost of sales appear appropriate, including the cost of sales of the real estate companies. We disagree with the petitioners concerning the adjustments for "offsets" to interest expense. These items have already been removed by Weyerhaeuser. We agree with Weyerhaeuser that it is correct to not offset interest expense by these items. Finally, we agree with Weyerhaeuser that the Department should not include any further adjustments for foreign exchange gains and losses, since during the fiscal year used to calculate the financial expense ratio (i.e., 2000), Weyerhaeuser had no foreign denominated borrowings. Scope Issues The scope and class or kind issues discussed below concern both the antidumping and the countervailing duty investigations. During the course of these investigations, the Department received numerous scope-related requests. These requests could generally be classified into one of two categories: (1) scope exclusion requests, and (2) scope exclusion requests premised upon the theory that the various products constitute separate classes or kinds of merchandise when analyzed under the Diversified Products(379) criteria, and as such, are outside the scope of the petition. In these instances, it is further argued that the products should be excluded from the investigations because either the petitions lack adequate description of these products, or the petitions lacks the necessary elements to sustain an investigation on these products.(380) We consider there to be one class or kind of merchandise within the scope of these investigations. Further, as stated in our preliminary determination regarding the class or kind requests,(381) and contrary to the assumptions behind the requests, a finding of multiple classes or kinds does not automatically lead to the exclusion of a given product from the scope of an investigation. Rather, if the Department finds that the petition encompasses multiple classes or kinds of merchandise, the Department must determine whether dumping or subsidization is occurring with respect to each distinct class or kind of merchandise. If the Department finds only one class or kind of merchandise, then it will calculate a single dumping margin or subsidy rate with respect to that class.(382) When the Department receives a petition that meets the requirements of the statute, it must initiate an investigation(383) and, if warranted by the evidence, provide the relief requested.(384) The starting place for determining the merchandise that is to be the subject of an investigation is the petition itself.(385) The Department does, however, have the authority to define or clarify the scope of an investigation(386) and must exercise this authority "in a manner which reflects the intent of the petition"(387) and the Department generally should not use its authority to define the scope of an investigation in a manner that would thwart the statutory mandate to provide the relief requested in the petition. As a result, absent an "overarching reason to modify" the scope in the petition, the Department accepts it.(388) There are circumstances under which the Department has invoked its authority to depart from the manner in which the petition treats the merchandise subject to the investigation. For example, what is described in the petition as a single class or kind of merchandise may, in fact, encompass multiple classes or kinds of merchandise. In such cases, the Department defines the separate classes or kinds covered by the petition,(389) then conducts a separate investigation of each and, if the decisions are affirmative, issues separate determinations for each class or kind of merchandise. The Department has also invoked its authority to define the scope of an investigation when the class or kind of merchandise, as defined by the petitioner, was not administrable. For example, in some cases, petitioners will include parts and components in the class or kind of merchandise, usually to avoid circumvention. In past cases, the Department amended the scope of an investigation to exclude all parts and components, except the primary component, because the others were so widely used that the scope would capture parts and components used for non-subject merchandise, which was not the petitioners' intent.(390) In the instant softwood lumber investigations, as detailed in the March 12 Scope Memo, the Department received numerous requests for scope exclusions and exclusion requests based on separate class or kind treatment. The Department has responded to a number of these requests in earlier preliminary determinations.(391) The Department received more than 200 scope related requests. These requests covered various types of products including: (1) general lumber products (e.g., industrial grade lumber, dimension lumber less than three feet in length, timbers, boards, etc.); (2) carpentry construction products (e.g., door frame and sill parts, door jacks, fascia and trim boards, flooring and siding, etc.); (3) components and parts of finished products (e.g., furniture parts, refrigerator stock, trellis stock, vegetable box components, etc.); and (4) species specific (e.g., Western red cedar, Eastern white cedar, Eastern white pine, yellow cedar, etc.). The Department received all the information about these products and addressed many of these requests before issuing its March 12, 2002, decision on scope and class or kind treatment. In the March 12, 2002, scope memo, the Department conducted a class or kind analysis with respect to those products that it determined may demonstrate clear dividing lines and for which the parties provided ample information. Thus, we analyzed Western red cedar, Eastern white cedar, Eastern white pine, shop and better grade lumber, finger-jointed flange stock, pallet stock, bed frame components and log cabin siding, and a few other products. We were not persuaded to accept the various arguments in favor of separate classes or kinds of merchandise. After considering all of the information on the record, we found that all of these products were within the scope and,(392) thus, we have continued to treat softwood lumber products as a single class or kind of merchandise.(393) Moreover, with respect to scope exclusion requests, we reviewed the description of each product provided by the parties and compared the descriptions to the scope established at initiation, which was subsequently amended and clarified in our preliminary determinations. Based on this comparison, we determined whether a particular product was covered by the scope of these investigations.(394) In some instances we found products were within the scope and in others we found products to be outside of the scope. For example, we determined that Western red cedar (WRC), as classified under headings 4407.10.68 and 4407.10.69 of the Harmonized Tariff Schedule of the United States (HTSUS), is part of the scope as defined in the petition and our initiation notices, and as amended in the preliminary determinations, because the petition specifically described the products contained in these HTSUS headings.(395) Conversely, by looking at "bed frame kits," we determined that when certain circumstances were met, these products were outside of the scope of these investigations.(396) Comment 50: Due process Among others, the Weyerhaeuser Company (Weyerhaeuser) and U.S. Red Cedar Manufacturers Association (USRCMA) (collectively, the requesters), two parties requesting separate class or kind treatment and scope exclusion for Western red cedar, argue that the Department's issuance of its preliminary decisions on class or kind so late in the investigations violates statutory and regulatory procedural requirements and deprives the requesters of their right to due process.(397) They assert that the Department's March 12 Scope Memo violates the statutory requirement that a preliminary determination be issued within 190 days of initiation.(398) The requesters protest that the three days allowed to respond to the Department's preliminary decision did not permit parties sufficient time for a meaningful analysis of the Department's decision. The requesters contend that Article 6.2 of the WTO Agreement on Implementation of Article VI of GATT 1994 provides that in an antidumping investigation the "parties shall have a full opportunity for the defense of their interests." They note that Article 6.9 elaborates that the "authorities shall, before a final determination is made, inform all interested parties of the essential facts under consideration which form the basis for the decision" and, according to the requesters, to issue a preliminary determination.(399) The requesters maintain that the Department has acted in an arbitrary and capricious manner in failing to provide more time for parties' review of its class or kind decision.(400) The requesters assert that, in violating statutory and regulatory requirements concerning the timing of preliminary determinations, the Department has deprived parties of their due process rights under the Fifth Amendment of the Constitution. They cite a Federal Circuit decision which stated that an importer is entitled to due process whenever it faces a deprivation of property by the Federal Government.(401) The requesters argue that the Department's actions preclude due process in two ways. First, they contend that the compressed briefing schedule did not provide sufficient time for the requesters to address the Department's lengthy decision. Second, given the short time remaining before the final, they argue that the Department will not have time to consider the requesters arguments adequately. The petitioners respond to these assertions with four arguments. First, they contend that, while the timetable was somewhat compressed, the parties had adequate time to brief these issues and have done so for almost 11 months.(402) Second, they cite to their filings and respondents' and other parties' submissions to demonstrate the depth and adequacy of the submissions and information on the record pertaining to scope issues.(403) Third, they note that the Department considered scope issues and the information presented for several months, as illustrated by the number of submissions by and meetings with the parties.(404) Fourth, they infer that all of the evidence needed for the Department's decision was previously submitted well in advance of the briefing and hearing schedule, because there was no new information presented in the briefs or at the hearing.(405) Therefore, the petitioners conclude that all parties were given ample process. Department's Position: We agree with the parties that these investigations are among the most complex ever presented. The issues pertaining to scope in these cases were burdensome in that the Department received scope-related requests covering more than 50 products, ranging from species-specific requests to engineered wood products, all of which required our attention throughout the investigations.(406) We dealt with scope issues throughout the investigations and during this process, the Department considered information submitted by the parties and sought advice from other experts such as U.S. Customs Import Specialists.(407) And, while we agree with the requesters that the scope issues in these investigations were unusually complex, we disagree that we were unable to consider all submitted information. We evaluated and considered all submitted information on these issues in a manner that allowed us to comply with our statutory obligations.(409) Thus, we agree with the petitioners that all parties were afforded due process and ample time to respond to issues pertaining to scope. The Department satisfied its statutory obligations with respect to sections 774 and 782(g) of the Act. Section 774 of the Act provides that, in an investigation, the Department ". . . shall . . . hold a hearing in the course of an investigation upon the request of any party to the investigation before making a final determination. . . ."(410) Section 774 further states that ". . . any hearing required or permitted under this title shall be conducted after notice published in the Federal Register. . . ."(411) Section 782(g) provides that the Department, before making a final determination, ". . . shall cease collecting information and . . . provide the parties with a final opportunity to comment on the information obtained by the {Department} upon which the parties have not previously had an opportunity to comment."(412) The Department provided notice of the scope hearing in two ways: First, when it published its Federal Register notice of Preliminary Determination; and second, when it distributed the verification reports with a cover letter alerting parties to the separation of scope issues from general issues.(413) Although the published Federal Register notices of the Preliminary Determinations did not specifically mention the scope hearing, the notices did alert parties that there would be a hearing, if requested, on issues in the investigations.(414) Further, the antidumping notice stated that, upon receipt of a valid request for a hearing, the Department would provide notice to the parties and that the general briefing schedule would be in direct correlation to the issuance of verification reports.(415) This series of events alerted parties to the fact that a hearing, if requested, would be forthcoming. The Department, in a January 2, 2002, letter indicated that the record would be closed and no new factual information would be accepted with respect to scope and class or kind issues, hence all parties who submitted new factual information on these issues, did so no later than 70 days prior to the hearing.(416) When the Department distributed its antidumping verification reports on January 30, 2002, as it stated in the preliminary determination, it notified parties of the hearing and briefing schedule, and also stated that scope issues would be handled separately.(417) The effect of the January 30, 2002, letter was to put parties on notice that the scope hearing would be after the hearing on the preliminary determination and before the final. Based on the prior closure of the record, there was a definitive period during which the parties would have an opportunity to comment fully on the information presented and participate meaningfully prior to the Department's issuance of its final determination. After the AD and CVD hearings on general issues, the Department issued its preliminary class or kind determination in the March 12 Scope Memo with a letter containing the briefing and hearing schedule for the scope portion of the investigation, and the Department adhered to this schedule. Therefore, by holding a hearing, providing notice to the parties, and closing the record before the final determination and allowing parties to comment meaningfully, the Department complied with its statutory obligations. Further, prior to issuing its final determinations, the Department thoroughly considered and addressed all comments and information provided by the parties with respect to these and other issues.(418) The Department's preliminary scope decision is based on the record, including facts and arguments submitted by all parties. Although the Department did not provide a Diversified Products analysis for each of the requests filed, because to do so would be too administratively burdensome, the Department did consider all arguments and in its analysis indicated that much of its analysis would be applicable to other products.(419) In many instances, as discussed in the March 12 Scope Memo, the arguments and rationale for addressing scope related comments for one product were the same for dealing with others.(420) Moreover, contrary to assertions by Weyerhaeuser, USRCMA, and others, we have not violated either the statute or our regulations by issuing our preliminary decisions on scope issues, including a determination of class or kind, close to the date of the final determination. In the present cases, the Department gave parties adequate notice, ample briefing period, and an opportunity to participate meaningfully in the hearing.(421) Comment 51: The Department has the Authority to Define the Scope of These Investigations and Determine That Certain Products Are a Separate Class or Kind The Government of Canada, the Canadian Provinces and Territories and Canadian industry associations ("Canada") argue that the Department has "the inherent authority to define the scope of an ... investigation."(424) Canada states that "(w)hile the description of the product in the petition must be considered by the Department, the Department cannot abdicate all responsibility to the petitioner to define the scope of the petition."(425) Canada asserts that in particular the Department is obligated to determine if merchandise included in the petition actually constitutes one class or kind of merchandise.(426) It contends that the Department has a legal obligation to limit the imposition of antidumping duties to those products actually determined to be unfairly traded. Canada state that the Department need not defer to the petitioners regarding the definition of the scope and must determine whether certain species constitute a different class or kind of merchandise and certain product may be excluded. Department's Position: The Department states it position on its authority to define or clarify the scope of an investigation in the introduction of this section and in the March 12 Scope Memo.(427) Comment 52: Class or Kind of Products A. Western Red Cedar Weyerhaeuser and USRCMA (jointly, the WRC requesters) argue that while no one characteristic of WRC may be conclusive under the class or kind factors, taking cumulatively all of the factors into account, the evidence overwhelmingly establishes that WRC is a separate class or kind of merchandise. The Government of Canada, Canadian Provinces and Territories and Canadian industry ("Canada") concur with this assertion. The WRC requesters reject the notion that all softwood lumber represents a continuum. They assert that the boundaries of the petitioners' continuum are drawn in a completely arbitrary fashion and suggest that if the logic of the continuum arguments is actually applied, one would have to include hardwood species in the scope of the investigations as well. They suggest that the March 12 Scope Memo in which we make our determinations regarding requests for separate class or kind treatment ignores much of the evidence on the record. The WRC requesters maintain that WRC as a species is unique and constitutes a distinct class or kind of merchandise. The petitioners argue that the Department properly found that analysis of the Diversified Products criteria demonstrates that WRC is not a separate class or kind of merchandise distinct from other softwood lumber. WRC's physical characteristics set it apart from other species: The WRC requesters assert that a basket of characteristics distinguish WRC as a unique species. They insist that the Department ignored this basket of characteristics in making a determination that WRC fits within a continuum of softwood species. The WRC requesters take issue with the Department's finding on WRC and assert that the Department's decision contradicts the Department's recognition of the commercial significance of many of WRC's physical attributes. In this regard, they cite the Department's acknowledgment of both WRC's natural durability and low structural strength. They fault the Department's analysis of WRC's physical characteristics in general, alleging that the Department has considered particular attributes of WRC that other species might also possess without considering the sum of WRC attributes. The WRC requesters argue repeatedly that it is this combination of attributes that makes WRC unique as a species and that it is unfair to single out individual attributes that certain other species share with WRC. The WRC requesters consider the Department's statement that the natural resistance of WRC to decay is not enough to put WRC in a class by itself to be particularly egregious.(428) They note that the Department supports its conclusion by citing a recommendation of an independent expert that WRC be pressure treated for certain applications.(429) The WRC requesters suggest that the Department's use of this information is misleading since it only pertains to certain WRC products which are to be exposed to extreme conditions. They state that the same source states that untreated WRC in such applications simply has a reduced life span and alludes to the fact that pressure treatment of WRC is difficult and rare. In the same paragraph,(430) apparently referring to an earlier exchange of arguments,(431) the WRC requesters state that "{c}omparing the coatings occasionally applied to WRC by a do-it-yourselfer to a complex pressure treatment manufacturing process is a non sequitur." The WRC requesters list a number of unique WRC attributes which they say the Department has recognized.(432) They argue that while the Department acknowledges the commercial implications of these attributes, it fails to analyze them sufficiently. They argue that the Department's analysis is flawed for failing to consider such characteristics as dimensional stability, insulation properties, light weight and fragrance in sufficient detail. They suggest that the Department's comparison of WRC with yellow cedar reveals the weakness of the Department's analysis, noting that, when compared to WRC, yellow cedar has a different appearance, fragrance and texture when cut. The petitioners fault the logic and factual claims of the WRC requesters' physical characteristics position. They assert that the WRC requesters have simply described all the distinguishing features of one point of the continuum of softwood lumber species and claim that it is therefore a separate class or kind. The petitioners contend that by this logic any product or species on the softwood lumber spectrum could claim to be a separate class or kind of merchandise based on a combination of characteristics. They argue that the WRC requesters implicitly recognize the flaw in their logic when they claim that "WRC is unique and distinct from all other softwood species."(433) The petitioners assert that the WRC requesters are arguing "that WRC and only WRC is different."(434) They remark that the WRC requesters have never explained why only WRC is so different as to constitute a separate class or kind but all the other species remain in a single continuum. The petitioners contend that the WRC requesters' are also flawed on a factual basis. They argue that WRC physical characteristics do overlap with those of other species and are in some ways indistinguishable from other species.(435) End-Use/Customer Expectations: The WRC requesters assert that the Department's findings in the March 12 Scope Memo on the end-uses of WRC are based on a number of generalizations that are completely unsupported and erroneous. As an example, they suggest that the Department erred in using decking as an example of an application where WRC is used for structural purposes. The WRC requesters contend that in decking, WRC is only used for deck boards and not for the joists that underpin the deck. The WRC requesters also maintain that the record shows that, in general, other softwoods are not substitutes for WRC in decking or other applications. Rather, they argue that the record shows that the main substitutes for WRC are composites, cement products and bricks.(436) The WRC requesters contend that they never argued, as the Department suggests,(437) that non-structural items are outside the scope of the investigations, but have argued that since WRC is not generally used for structural and framing purposes, the lack of interchangeability is a factor that serves as a basis for a separate class or kind finding. The WRC requesters note the Department agrees with them that WRC is used predominantly in high-end applications. However, they argue that the Department is incorrect in opining that WRC is interchangeable with other high-end woods such as old-growth Sitka spruce, hemlock and Douglas fir.(438) The WRC requesters dismiss the Department's observation that "from a technical standpoint"(439) WRC could be substituted for other softwood products in structural applications, stating that the Department's decision must be grounded in reality, not the hypothetical. They assert that the Department has failed to provide support or take into account contrary information on the record when it concludes that the interchangeability of WRC with other high-end types of lumber anchors WRC firmly to a broader single class or kind of merchandise.(440) The WRC requesters criticize the Department's analysis of customer expectations in which the Department considers the possibility that a customer can build a deck from either treated Spruce-Pine-Fir or WRC.(441) They assert that the Department undercuts its own argument of interchangeability when it observes that customers will know that a WRC deck will be higher quality in terms of appearance and durability.(442) The WRC requesters maintain that the fact that customers are willing to pay twice as much for a WRC deck as for a pine deck clearly shows that they distinguish WRC from other softwoods. In the discussion of WRC's end-use as a distinguishing factor, the WRC requesters dismiss the Department's conclusion that there are other varieties of high-end lumber in the same price range dedicated to the same end-uses.(443) The petitioners assert that WRC is highly substitutable with other species and reject the WRC requesters claim that WRC is unique because it is ideal for particular specialty appearances. The petitioners reiterate that non-structural lumber is part of the scope. They also maintain that other species, such as redwood, Douglas fir, incense cedar overlap with WRC in end uses such as decking, fencing, shingles, and interior and exterior trim and fascia..(444) The petitioners contend that customer expectations are similar to those of certain other products, including expectations regarding price, such that WRC cannot be distinguished as a separate class or kind on the basis of this criterion. They state that there is naturally competition based on price and performance all along the continuum of softwood lumber with overlapping uses.(445) Whether WRC is sold through distinct channels of distribution: The WRC requesters contend that the Department offers no support for its conclusion that other high-end lumber products are marketed through specialized channels similar to those which the WRC requesters describe for WRC. They maintain that the channels of distribution as described in earlier submissions are unique for WRC.(446) In addition they argue that WRC distributors store, handle and transport WRC differently than other softwood products. The petitioners maintain that the WRC requesters ignore ample evidence that many distributors and remanufacturers specialize in high-end products from many species in addition to WRC and that WRC is not unique simply because certain distributors and remanufacturers specialize in it.(447) They argue that evidence on the record shows that some distributors carry both WRC and other products.(448) Whether the manner in which WRC is advertised and displayed is unique: The WRC requesters argue that the Department's finding that other high-end lumber products are advertised in much the same manner as WRC is unsupported and erroneous. They state that while there is advertising of other species, there is nothing near the scope or magnitude devoted to WRC. They state that Weyerhaeuser, as the largest softwood lumber producer in the United States and North America, is well qualified to know about how WRC is marketed and sold. The WRC requesters acknowledge that Weyerhaeuser has a separate website for Douglas fir, but argue that this website is much less elaborate than their site for WRC. The WRC requesters also note that WRC has its own association, the Western Red Cedar Lumber Association which connects an extensive network of specialized WRC producers, manufacturers and distributors. They argue that contrary to the Department's conclusion that marketing WRC is similar to other high-end products, the record shows that Weyerhaeuser, the WRCLA and other specialized businesses have developed a broad range of WRC promotional materials in different media that are unlike anything developed for other softwood products. The petitioners dispute WRC requesters' claims that the method of marketing WRC products is unique and argue that other high-end products are marketed in the same manner. They assert that there is ample evidence on the record of this fact.(449) The petitioners reject the notion that the brand name and website that Weyerhaeuser devotes to WRC are so unique as to create a clear class or kind dividing line for WRC under this criterion. The petitioners observe that Weyerhaeuser maintains websites for other products as well. Department's Position: For WRC and all of the other products discussed below, in deciding whether a product included in the scope of a proceeding falls within a separate class or kind of merchandise, the Department looks for clear dividing lines through the application of the five Diversified Products criteria which may distinguish the product in question from other products for which the petitioners have requested relief. In the case briefs submitted on class or kind in the instant investigations, many respondents and interested parties appear to discount the Department's analysis on this score. For each product or product group for which a party provided even minimal Diversified Products analysis, the Department generally examined each of the five Diversified Products criteria to the extent the information on the record permitted it do so, and considering the totality of the evidence in making its determination. Everybody involved in the proceedings, including the petitioners, agrees that there are significant differences found among the wide range of products included in the scope of the investigations. As the March 12 Scope Memo clearly demonstrates, we went to great lengths to identify and understand these differences for all of the products for which separate class or kind status was requested or suggested. Contrary to assertions that the Department based its class or kind finding only on selected submissions in the record,(450) we based our decision on a examination of a wide range of products included in the scope. It was on the basis of our comparison of the requested products with each other, and with other products covered by the scope, that we concluded that there was no basis to treat any single softwood species or product as a separate class or kind of merchandise. Although we found some unique physical characteristics and distinct end uses for most of the products for which separate class or treatment was requested, it became clear that these differences were not enough to make any individual product a separate class or kind of merchandise. Looking at all of the products requested, we noted a commonality among the very distinctions which each requesting party touted as the basis for separate class or kind treatment for their specific product. It also became apparent that other products in the softwood lumber spectrum for which we had not received requests also possessed distinctions that, pursuant to the rationale of class or kind requests we had received, would also be candidates for separate class or kind treatment. Given the diversity of products, even in the high-end sector of the lumber family, we found no clear dividing line by which to treat products as outside the class or kind of softwood lumber products. At the scope hearing, the representative of the Government of Quebec observed that there should probably be a single separate class or kind of merchandise for all high-end appearance grade softwood lumber.(451) Species such as Douglas fir provide both appearance grade lumber for speciality products and dimension lumber for basic construction, so species does not appear to provide a means of distinguishing such a class or kind. It also does not seem likely that we could administer any order on this basis. We have concluded that our current treatment of softwood lumber products as a single continuum of products within one class or kind is supported by the record and is reasonable. Paradoxically, it is as much the diversity of lumber production as the characteristics that all softwood lumber have in common that lead us to continue to treat all softwood lumber as a single class or kind of merchandise. Moreover, in all of the other investigations on softwood lumber products that the Department has conducted in the last twenty years, covers all softwood lumber, whether used in structural or other applications. Having made these general observations on the difficulty of separating individual lumber products out of the spectrum as separate classes or kinds of merchandise, we nevertheless had to validate our general conclusion with product-specific Diversified Products analysis of the softwood lumber products for which separate class or kind treatment was specifically requested. As we outlined in the summary of arguments, requesting parties have raised serious questions about the depth of our product-specific analysis for our preliminary decision. We have re- examined our product-specific class or kind analysis for all products which parties addressed in the case briefs. We summarize our review of our Diversified Products analysis below for Western red cedar, Eastern white cedar, Eastern white pine, selected shop or better lumber, flange stock and bedframe stock. We also consider class or kind arguments for railroad ties which we did not explain in detail our class or kind decision. Physical Characteristics: In our preliminary analysis, we noted a number of WRC's distinctive characteristics, including appearance, natural durability, fragrance, dimensional stability, thermal and sound insulation qualities, and light weight. In their case brief, the WRC requesters maintain that, given our recognition of these characteristics, only one conclusion was possible. We maintain that WRC's distinct physical characteristics, even when considered in combination, do not provide us with the clear dividing line necessary to consider WRC as a separate class or kind of merchandise. We found in our class or kind determination that, as important as these characteristics are to WRC in the market place, they are by no means unique to the species. The record we have concerning the other species-related class or kind requests (Eastern white pine, Eastern white cedar and shop and better made from four old-growth species) already provides ample evidence that there are other species covered by the scope that have similar distinct characteristics. The Department found that these other species possess similar distinct and commercially important characteristics such as attractive appearance (all named), light weight (EWC an EWP), natural durability (EWC and old growth shop and clear) and lower structural strength (EWP and EWC). By noting these similar characteristics we are not suggesting that these species are mirror images of WRC. Rather, we are simply indicating that the shared distinctions lead us to agree with petitioners that WRC is not so different from other softwood species in its physical characteristics that it cannot be linked on a continuum of softwood lumber products. If we add appearance grade lumber from all species and lumber milled from other cedar species to this analysis, the linkage of WRC to the continuum increases. We acknowledge, as the WRC requesters demonstrate with the example of yellow cedar's less- than-desirable fragrance and workability,(452) that none of the other species is a perfect match with WRC, but the same can be said in comparing the physical characteristics of these other species with each other. We thus agree with the petitioners that WRC's physical characteristics overlap with those of other species to one degree or another, linking WRC to other species and products covered in these investigations. End-use: In our Diversified Products analysis of WRC, we considered the ultimate use criterion at length. We stated that a fundamental underpinning of the WRC requesters' separate class or kind argument rested on the premise that WRC is not primarily used as dimension lumber for structural or framing purposes and that this argument presupposes that only lumber used in structural applications is covered in these investigations.(453) The WRC requesters have protested that they never said that non-structural items were outside of the scope, but assert that they simply sought to establish that the lack of interchangeability between structural lumber and non-structural WRC is a factor that serves as a basis for a separate class or kind finding. The Department agrees with WRC respondents that in general there is little actual substitution of WRC in structural applications where a less expensive SPF might better serve the purpose. We also agree with the WRC requesters that the hypothetical possibility that WRC could be used for structural purposes does not by itself negate the WRC requesters' argument. However, our initial conclusions concerning the ultimate use of WRC did not focus on its possible interchangeability with dimension lumber. It focused on common applications with other high-end lumber products. The record is replete with examples of other non-structural lumber that have applications in common with WRC. Weyerhaeuser provided in one of its own submissions a study that reported that WRC is used as shingles paneling, siding, poles and garden accessories such as pergolas, gazebos, fence panels and sheds.(454) The Government of Quebec reported that Eastern white cedar is also used as shingles, poles, fencing and outdoor furniture.(455) We therefore continue to conclude that there is a high degree of substitutability between WRC and other species used in high-end applications requiring good appearance and durability. If we were to apply the WRC requesters' arguments concerning the end-use criterion and WRC, it would be inconsistent on our part to ignore the other high-end products which would also satisfy the end-use criterion on this basis. We agree with petitioners that there is no clear dividing line between the multitude of lumber products with relatively unique end-uses and other softwood lumber products. Ultimate Customers Expectations: We do not dispute the WRC requesters' position that customers that purchase WRC have a distinct set of expectations about the products made from the species. The expectations are based on WRC characteristics that make it particularly suitable for certain applications. However, our review of the end-uses of WRC reinforced our conclusion that there is overlap between WRC applications and those of other selected species such as Eastern white cedar and old growth Douglas fir. The WRC requesters present the argument that WRC's unique customer expectations are reflected in the fact that the customers are willing to pay a much higher price for WRC than other softwoods. We note however that high-end customers are willing to pay a higher price for other appearance grade products as well, such as Eastern white cedar and Eastern white pine. This fact was well documented in this proceeding not by the petitioners, but by respondents and interested parties seeking separate class or kind treatment for those species. Channels of Trade: The WRC requesters argue that the channels of trade for WRC are normally quite distinct from that of dimension lumber. However, WRC requesters have not demonstrated that the WRC channels of trade are unique when compared to those of other appearance grade lumber where a high proportion of production is first sold to remanufacturers. The petitioners in an earlier submission provided examples of other species that were marketed through specialized channels.(456) Manner in Which Product is Advertised and Displayed: While the WRC requesters have indicated that Weyerhaeuser's promotional program for WRC is one of its bigger species-specific marketing efforts, we have also noted the fact that Weyerhaeuser has advertising programs for other high- end species.(457) We have learned from our review of the marketing of EWP and EWC that distributors of those species also use similar sorts of targeted marketing strategies which Weyerhaeuser and International Forest Products, Ltd. employ for WRC.(458) We therefore find that while the WRC marketing programs of the companies for which we have information are impressive in their scope, they are not so different from other high-end lumber promotional programs as to provide us with a clear dividing line for WRC with respect to this criterion. B. Eastern White Cedar The Government of Quebec (GOQ)(459) claims that Eastern White Cedar (EWC) is both a separate class or kind of merchandise and falls outside the scope of the investigations. The GOQ maintains that EWC is clearly not included in the scope of the petition which describes the subject merchandise as a commodity product used in structural applications.(460) This is in contrast to EWC which is not suitable for structural uses due to its physical characteristics, and does not compete with commodity lumber due to its high price and specialized nature.(461) However, according to the GOQ, if the Department finds the petition to be ambiguous with regard to EWC, then it is obliged to apply the Diversified Products criteria in order to determine if this species is a separate class or kind of merchandise from that covered in the petitions. In applying the Diversified Products criteria, the GOQ emphasizes that it is not necessary for the Department to determine that EWC is a completely unique product without any overlap in characteristics with other softwood species; rather, it states that it is adequate for the Department to merely find that EWC is sufficiently different from the other product types.(462) Based upon significant differences between EWC's and the subject merchandise's physical characteristics, primary uses and expectations of users, channels of trade, and the manners in which the products are advertised or displayed, the GOQ states that in the final class or kind determinations, the Department should reverse its earlier determination that EWC does not constitute a separate class or kind and, furthermore, exclude this species from the scope of the investigations. The petitioners support the Department's finding that EWC is not a separate class or kind of merchandise in this proceeding. Although the petitioners acknowledge that there are some differences between EWC and other softwoods, they state that there is sufficient overlap in all five Diversified Products criteria so as to render a clear division between EWC and all of the other softwood lumber species impossible.(463) The petitioners counter the GOQ's claim that EWC is appearance-grade lumber, unsuitable for structural purposes and, therefore, a different class or kind and outside the scope of the investigations, by stating both that EWC can be, and is, used for construction/structural purposes and that appearance-grade lumber is within the scope of the investigations.(464) The petitioners maintain that EWC is a part of a single class or kind of the subject merchandise. Department's Position: The Department holds that EWC cannot be distinguished as a separate class or kind of softwood lumber in this investigation. The Department has based this decision on a careful and thorough evaluation of the entire case record concerning EWC as it relates to the Diversified Products criteria.(465) While EWC is a separate species, it substantially shares each of the Diversified Products criteria with other softwood lumber species, particularly the other cedar species, including WRC for which a separate class or kind determination was also requested. Therefore, the Department finds that it is unable to discern a clear division between EWC and the other species that constitute the subject merchandise. C. Eastern White Pine Tembec Inc., the Ontario Forest Industries Association, the Ontario Lumber Manufacturers Association, the Government of Canada, and the Government of Quebec (collectively, the requesters,(466) for purposes of this comment), argue that Eastern White Pine (EWP) is a separate class or kind of merchandise and that the Department's failure to come to the same conclusion in its class or kind determinations is due to its inadequate application of the five Diversified Products criteria. Tembec, OFIA, and OLMA allege that the Department's preliminary class or kind determinations did not comply with "the standard of review set forth in 10 U.S.C. § 1516a" which states that the Department's determination must be supported by "substantial evidence on the record."(467) The requesters claim that the Department based its determination on a one-page National Arbor Day Foundation circular, placed on the record by the petitioners, which stated that EWP is in demand today for use as structural lumber, while ignoring the numerous declarations and other evidence to the contrary on the record.(468) Should the Department take the entire record of this case into consideration and carefully evaluate each Diversified Products criteria, which the requesters assert that it must do if it finds any ambiguity in the petitions or notices of initiation, then the Department cannot fail to determine that EWP is a distinct product. The requesters point to the different physical characteristics, uses, purchasers, advertising, channels of trade, and price movements of EWP compared to those of other products subject to these investigations. While the requesters proclaim that EWP is a distinct product according to all five of the Diversified Products criteria, they assert that it is possible for as few as two criteria to be met in order for the Department to determine that such merchandise constitutes a separate class or kind.(469) In addition, certain requesters claim that a determination of EWP as a separate class or kind of merchandise necessitates a further determination that this species is outside the scope of the investigations.(470) These requesters assert that the description of the merchandise provided in the petition, namely that of commodity softwood lumber with a high strength-to- weight ratio produced for structural uses, is not applicable to EWP, which they describe as appearance-grade lumber with a lower strength-to-weight ratio and unsuitable for structural purposes.(471) These requesters therefore ask that after having determined that EWP constitutes a separate class or kind of merchandise, the Department rule that it is also outside the scope of these investigations. The petitioners reiterate that separate class or kind determinations and scope exclusions are two distinct processes. With regard to scope, the petitioners state that the HTSUS headings cited in the petition clearly encompass all softwood species, including EWP.(472) With regard to whether or not EWP should be considered a separate class or kind of the subject merchandise, the petitioners contend that EWP exists along a continuum of softwood lumber species, sharing physical characteristics, uses, user expectations, channels of trade, and the manner in which it is advertised and displayed with other softwood lumber species, particularly the Western Pines.(473) To support this view, the petitioners refer to affidavits and a U.S. Forest Service publication which they have placed on the record. On the other hand, the petitioners claim, the requesters have relied on "only affidavits from their clients and other interested parties prepared for this litigation."(474) The petitioners support the Department's preliminary determination that EWP does not constitute a separate class or kind and ask that the Department affirm this finding in its final determination. Department's Position: The Department maintains its position that EWP is part of a single class or kind of merchandise in these investigations. The Department has reached this conclusion based on a careful and thorough evaluation of the entire case record concerning EWP as it relates to the Diversified Products criteria.(475) While the Department acknowledges that differences among softwood lumber species clearly exist, in the case of EWP, they do not rise to the level required for a separate class or kind determination. The Department finds that EWP shares its general physical characteristics with other pine species, particularly the Western Pines. Regarding its uses, the information on the record reveals that not only are EWP's primary uses as an appearance-grade lumber shared with other species including the Western Pines, WRC, and EWC, but it is also used in structural applications along with SPF lumber. User expectations for all appearance-grade lumber are quite similar as they are all based on the appearance of the lumber itself. Claims by the requesters that EWP is sold in unique and distinguishable channels cannot be substantiated with the information on the record. Although EWP may be marketed and displayed separately, so can several other species of softwood lumber such as WRC and EWC. D. Shop and Better Grades of Sitka spruce, hemlock, balsam species, Douglas fir, and cedar 5" and thicker by 5" and wider with a mill price of $500 U.S. per thousand boarded feet or higher (Shop or better) Tebb points out that the Department has said that the interchangeability of shop or better type of lumber with regular dimension lumber is unlikely. In response to the Department's assertion, in the March 12 Scope Memo, that the different high-end products are comparable to one another and may compete with shop or better lumber, Tebb argues that there are differences which make it unique from other high-end lumber and dimension lumber. First, shop and better comes from large, old growth unlike other high-end lumber products. Further, claims Tebb, old-growth lumber is not harvested in the United States and, therefore, there is nothing within the United States with which to compare it. Also, Tebb argues that shop and better lumber is manufactured for superior appearance and visible applications in home construction and is far more expensive, and less strong, than dimension lumber, which is graded on strength rather than appearance and used in applications that will ultimately not be visible once construction is completed. Tebb argues that the Department, by concluding shop or better lumber is part of a continuum of softwood lumber, was overly broad in its ruling. Tebb claims shop or better is sufficiently unique under the Diversified Products criteria to be given separate class or kind treatment and it analyzes the five criteria to support this claim. First, Tebb argues that shop and better lumber is manufactured for a desirable appearance and, therefore, its physical characteristics are unique from the other softwood lumbers in the investigations. Second, shop and better lumber ultimate customers have radically different expectations than softwood products customers do. Therefore, shop and better lumber is not interchangeable with dimension lumber. Third, the ultimate use of shop and better wood is for appearance products and musical instruments, which is entirely different from the uses of dimension lumber. Lastly, Tebb argues that shop and better lumber is distributed through different trade channels and advertised differently than dimension lumber. The petitioners respond that shop and better lumber is part of the softwood lumber continuum. They disagree with Tebb's assertion that there is nothing to compare shop or better lumber to, stating instead that it, and other high-grade lumber, competes directly with high-grade Canadian lumber. Furthermore, the petitioners claim, remanufacturing of lumber does not remove it from the scope. Therefore the remanufacturing Tebb performs on the softwood lumber it imports to produce shop or better lumber should not remove it from the scope or make it a separate class or kind. In response to Tebb's Diversified Products criteria claims the petitioners argue that Tebb's comparison of shop and better to dimension lumber was too narrow. The petitioners emphasize that the investigations are not limited to dimension lumber, and to be a different class or kind, shop or better lumber must be found to be different from all softwood lumber, something which the petitioners argue has not occurred. The petitioners also argue that ultimate use of a product is not determinative of class or kind and concluded that shop or better should not be considered a separate class or kind of softwood lumber. Department's Position: The Department recognizes that Fred Tebb's shop and better lumber has distinct physical characteristics in terms of appearance, texture and dimensions, but does not find these characteristics significantly different to draw a clear diving line between the shop and better and other high-end lumber products. We note that both physical characteristics and price make shop and better an unlikely substitute for regular dimension lumber used for construction. However, as we argued in our discussion of WRC, EWC and EWP in our class or kind determination, the high-end nature of a product does not by itself make it a separate class or kind of merchandise as there are other high- end products in the scope of the investigations which may compete with the shop and better grades considered here. For the same reason, we are unable to distinguish shop and better's market channels and marketing methods to the extent that we would consider the shop and better products a separate class or kind of merchandise. E. Bed Frame Stock/Square-end Bed Frame Components Abitibi argues that square-end bed frame components, including end filters, L-braces, center support and similar products represent a distinct class or kind of merchandise due to their similarity to radius- end bed frame components and their differences from generic softwood lumber, in terms of Diversified Products criteria. The Government of Canada agrees with this assertion. If the Departments does find square-end bed frame components to represent a different class or kind of merchandise Abitibi argues, it should be excluded from the scope of the petition and hence the investigations. Furthermore, Abitibi asserts that these products should be excluded from the scope of the investigations due to their customization, value-added processing, dedicated use, and their lack of interchangeability with the type of lumber targeted by the petition. The petitioners respond by maintaining that their previously submitted letter shows that square-end bed frame components are "merely a collection of boards."(476) The petitioners support the Department's preliminary finding that it is difficult to distinguish square-end bed frame components from other softwood lumber defined by the scope of these investigations and, therefore, the components do not represent a different class or kind of merchandise. Abitibi argues that, while the Department recognizes the Diversified Products criteria, as outlined in the March 12 Scope Memo, it only addresses the "physical characteristics," which is the first of five criteria, in its analysis. Further, Abitibi feels that there is no indication that meeting one of the five criteria is dispositive and therefore believes the Department must analyze and make a determination that is inclusive of all five Diversified Products criteria. Abitibi points out that the exclusion of radius-end bed frame components from the scope of the petition is recognized by both the petitioners and the Department.(477) Abitibi then argues that the exclusion of radius-end bed frame components but not square-end bed frame components is logically inconsistent and cannot be reconciled for the following five reasons. First, Abitibi claims that it has demonstrated that box spring manufacturers generally require both radius-end and square-cut end frame components.(478) Second, both types of components are customized during manufacturing in such a way that it is difficult to distinguish one from the other. Third, Abitibi purchase agreements with manufacturers cover both types of components. Fourth, both radius-end and square-cut end frame components have the same end use, and purchasers expect both products to be ready to use, i.e., not requiring any significant additional cutting or processing. Finally, both types of components are targeted at mattress box spring manufacturers and sold through identical channels of distribution. The petitioners respond that, due to radius cuts on both ends for facilitating bed-frame construction, radius-end bed frame components are different from square-end bed frame components, citing their previous submissions for support. A. Physical Characteristics: Abitibi argues that, despite the Department's findings to the contrary, the physical characteristics of square-end bed frame components are indeed noticeably different from other lumber products and quite unlike generic lumber. Further-processing customizes square-end bed frame components to customer-requested specifications for the size of bedframe for which the component is intended. Abitibi states that the process of turning softwood lumber into customer specified square- end bed frame components means Abitibi incurs additional production costs and, therefore, prices the components "significantly" higher than dressed and dried boards of standard dimensions. Additionally, Abitibi claims that the dimensions of square-end bed frame components easily distinguish them from standard dimension lumber. Specifically, Abitibi states that square- end bed frame components are either much smaller, shorter, of odd thickness, or uniquely shaped, as in the case of the "L-Brace."(479) Further, the fact that they are sold in boxes of 2,000 to 3,000, generally shipped with radius-end bed frame components, and sold as part of a complete set of bed-frame components makes them easily distinguishable according to Abitibi.(480) Abitibi proposes an end-use certificate could be attached to square-end bed frame components as is done with Maritime lumber from the CVD investigation of softwood lumber from Canada. B. Expectations of Ultimate Purchasers and Ultimate Use: Abitibi argues that, unlike end users of softwood lumber, bed frame manufacturers use square-end bed frame components made expressly to meet their specifications. They also argue that these components are ultimately used only to manufacture box spring frames whereas softwood lumber has multiple uses. C. Chanel of Trade and Advertising: Abitibi argues that square-end bed frame components are marketed distinctly from softwood lumber products and have a narrower channel of distribution than that of softwood lumber. Square- end bed frame components are not sold to retailers and are generally sold through annual contracts with fixed prices, whereas softwood lumber is sold to a variety of buyers, including retailers, is often sold in spot sales, is not sold under annually fixed contracts, and is subject to a high degree of price volatility.(481) Department's Position: We agree with the petitioners that it is difficult to distinguish square-end bed frame components from other lumber, based on their physical characteristics, but as a review of our statement concerning bed frame stock will reveal, we also analyzed these products under the Diversified Products criteria involving end-use and market channels to the extent the information on the record permitted us to do so.(482) In fact, we stated that there were relatively stronger arguments for separate class or kind treatment under these criteria than under physical characteristics. However, we determined that the differences did not rise to those of a separate class or kind. Regarding customer expectations, we note that these are bound to the specific end use, as is the case with many other lumber specialty products. However, because there are a multitude of lumber speciality products that are defined by their end use, it is not practical to consider each one as a potential separate class or kind of merchandise. On the same basis, for purposes of determining a separate class or kind, we are unable to draw a clear line between bedframe components and other speciality lumber products when we consider the marketing channels and methods of advertising. The difference between the square-end and radius end bedframe components is not a class or kind issue. We agree with the petitioners that both products are lumber. We granted a scope exclusion to the radius cut components because the petitioners agreed to this exclusion based on the fact that radius cut components are readily identifiable. F. Flange Stock Tembec claims that the Department must apply the five Diversified Products criteria to determine if flange stock is a separate class or kind of merchandise and cites multiple cases to support this claim.(483) Tembec stresses that, since the class or kind determination failed to consider these criteria the final determination must address all five criteria. Furthermore, Tembec asserts that because neither the petition nor the notice of initiation in this case specifically references flange stock and, since its characteristics are different from the softwood lumber described in the petition, a Diversified Products analysis must be done. Tembec argues that flange stock has the following physical characteristics that render it unique from softwood lumber and, therefore a separate class or kind of merchandise: First, flange stock, unlike softwood lumber, is engineered to be straighter, denser, stronger, more stable, and contains fewer natural defects due to an optimization process during manufacturing. Second, it is produced in only two dimensions, mainly 2x3 and 2x4, unlike softwood lumber which is produced in a wide range of dimensions. Finally, flange stock is easily identified by its length, generally 48 and 52 foot lengths, whereas softwood lumber is limited by the length of the log from which it was cut. Canada concurs with Tembec that flange stock is a separate class or kind of merchandise. The petitioners respond that flangestock is not a separate class or kind of merchandise and incorporate, by reference, arguments for this position made in previous submissions. The engineering that flangestock undergoes does not alter it to the point that it would be considered non-subject merchandise but, rather, argue the petitioners, it is a product that may be used as input to make an engineered wood end-product. Tembec argues that flange stock is engineered for highly specific uses that the scope of the investigations does not cover. Tembec also argues that neither the petitions nor the notices of initiation contain allegations or information necessary to impose countervailing or antidumping duties on flange stock as required under sections 701 and 731 of the Act, respectively,(484) and that because flange stock is a separate class or kind of merchandise and not specifically mentioned by the petitions or the notices of initiation it must be excluded from the scope of the investigations. The petitioners respond that flange stock is not a separate class or kind and, therefore, cannot be excluded from the scope of the investigations on these grounds. Furthermore, the petitioners contend that it would continue to fit into the scope even if it were erroneously considered a different class or kind than generic softwood lumber. The petitioners claim that for Tembec(485) to assert that flange stock should be excluded on the grounds of class or kind is to assume the results it seeks. In response to Tembec's claim that because flange stock was not specifically named it must be excluded from the scope, the petitioners state that not only are they not required to name every product, but to do so would make it virtually impossible to define the scope of the investigations. Department's Position: We have re-examined all the Diversified Products arguments presented by the respondents on flange stock. While the particular length of certain finger-jointed flange stock presents an unusual characteristic, we still regard flange stock as another lumber product in a broad field of lumber products with distinct characteristics and end-uses. We have not found any differences which satisfy any of the Diversified Products criteria to the extent that we would treat flange stock as a separate class or kind. The particular construction, strength rating, dimension and end-use of flanges cannot be the sole basis for their treatment as a separate class or kind. If this were the case, the number of separate classes or kinds that the Department would be obliged to create would be too numerous to administer. We note that Tembec has identified a distinct channel of trade (sales to I-beam producers) and manner of advertising (none, since it sells all of its flange stock to I- beam producers).(486) However, we again conclude that this channel of trade and this manner of advertising, distinct as they are from most of the dimension lumber, are not so distinct from those of other lumber speciality products. The Department agrees with petitioners that it was not necessary for every individual product included in the scope to be specifically named as long as the categories of products were clearly defined. In addition, all parties have been given a number of opportunities to inquire and to clarify what is included in the scope and the petitioners have made it clear throughout the proceeding that it was their intention to include flange stock in the scope. G. Used Railroad ties Anderson Wholesale requests that the Department consult with the U.S. Customs Service (Customs) in order to classify used railroad ties under HTSUS Heading 4401, a heading that falls outside the scope of the instant investigations. Anderson Wholesale states that it believes that used railroad ties are wood, waste, and scrap. If railroad ties are not excluded from the scope, Anderson requests that they be treated as a separate class or kind of merchandise, based on its Diversified Products analysis. Anderson argues that the physical characteristics of used railroad ties are unique from other softwood lumber products. They support this argument by stating that such railroad ties are used and have damaged ends and sides, or are recycled. Anderson further argues that used railroad ties can be made from hardwood and softwood and that there is no way to distinguish such a difference. These ties, argues Anderson, are used for landscaping purposes, almost exclusively and give the consumer a different expectation than that of other softwood lumber. Finally, Anderson argues that used railroad ties cannot be further manufactured, and used ties are sold by auction - a different channel of trade than that of other softwood lumber products. The petitioners argue that used railroad ties do not pass under a good analysis of the Diversified Products criteria. Under the physical characteristics criterion, the petitioners argue that used railroad ties are not unique. They argue that even if used and damaged, such railroad ties are still lumber. For the expectation of the user and for end use, the petitioners state that purchasers of used railroad ties, usually for landscaping purposes, have the same expectations for used railroad ties as they would for other timbers used in landscaping. Last, the petitioners refute the argument that used railroad ties have different channels of trade, arguing that Anderson did not show how the channel of trade differs whatsoever from other landscaping timbers. The petitioners also note that, while Anderson did not make an argument about the marketing of used railroad ties, they are not advertised nor displayed any differently than other landscaping timbers. Department's Position: We agree with the petitioners. Under no provision of Diversified Products are used railroad ties unique enough for the Department to consider them a different class or kind of merchandise. Used railroad ties are similar enough in physical characteristics, even if damaged, used, or very old, to other softwood lumber products to consider them the same class or kind of merchandise. Even damaged, used, and old softwood lumber products continue to fall under the scope of our investigations. Under the criteria of customer expectations, end use, channel of trade, and marketing; both the record evidence and Anderson fail to demonstrate that used railroad ties are different from other landscaping timbers. Therefore, the Department cannot justify giving a separate class or kind status to such products. We further find that all railroad ties classified by Customs in categories included in the scope remain in the scope of the investigations.(487) Single Family Home Packages In its July 9, 2001, submission Lindal Cedar Homes, Inc. (Lindal) argued that prefabricated home packages are outside the scope of the investigations because (1) they did not fit in the definition of the scope and (2) the prefabricated home packages satisfied the Diversified Products criteria.(488) Lindal stated that it made this request because it had been advised by the Customs Service that its home packages were to be classified based on the proper classification for each constituent element in the home package. Consequently, parts of the home packages were covered under HTSUS provisions included within the scope. Lindal argued in its submission of November 14, 2001, that the Department, and not U.S. Customs, makes scope decisions.(489) In a March 15, 2002, letter, the company noted that the petitioners had agreed that Lindal's home packages should be excluded and provided proposed exclusion language.(490) The petitioners argued the following in an earlier submission: The issue is not whether "prefabricated homes" are within the scope; Petitioner has previously agreed that prefabricated homes which are classified in HTSUS 9406, are not within the scope. The issue here is whether or not Lindal's "packages" are prefabricated homes, i.e., whether they have been properly classified by Customs.(491) In its March 15, 2002, case brief, the petitioners agreed that single family home packages meeting the criteria proposed by Lindal in its March 15, 2002, letter should be excluded from the scope.(492) Department's Position: We note that Lindal never requested that we consider prefabricated home packages as a separate class or kind of merchandise and provided only scant Diversified Products analysis. We agree with the petitioners that prefabricated homes which are classified in HTSUS 9406 are not included in the scope. Based on agreement of the petitioners, the Department is including in its final determination the exclusion language provided by Lindal for single family home packages. Comment 53: Other scope issues A. Bed-frame kits (also referred to as box-spring frame kits) The International Sleep Products Association (ISPA) and Sinclar Enterprises Ltd. (Sinclar) reiterate their request that the exclusion of wooden bed-frame kits, granted in the preliminary determinations in both the antidumping and countervailing duty cases, be expanded to cover both kits imported in bulk form and kits that are individually packaged.(493) They claim that the individual packaging of kits is economically impractical for the mattress industry because it involves increased shipping and manufacturing costs. Allowing kits to be imported in bulk, although on the same carrier, would be more economically efficient. Under ISPA's and Sinclar's proposal, if all components that arrive on a given truck entry are destined for the same customer, the U.S. Customs Service (Customs) would consider all the components presented together to determine whether the bed-frame kit exclusion is satisfied. Any other box spring frame components loaded on the same carrier that do not make up a full kit would not benefit from the exclusion. ISPA and Sinclar also contend that widening the exclusion to include bulk kits would not increase the likelihood of circumvention or impose added administrative burdens on Customs. They claim that slats, which are the components currently in the scope, have only limited alternative applications and that the likelihood of diversion is minimal because of the requirement that higher-value radius cut pieces also be included. They believe that it would be easier for Customs to verify compliance with bulk kits, rather than with individually packaged kits, because of the smaller number of bundles to inspect. As a safeguard against circumvention, ISPA and Sinclar ask that, in line with Customs' treatment of truss and pallet kits, Customs brings this product to the attention of the import specialist for review and verification. They also suggest that the bulk kit producer affix a label to inform downstream purchasers that the product is intended exclusively for consumption in the manufacture of box spring frames and that Customs require, as a condition for entry, that the destination for the qualified components is a bona fide box spring frame or mattress manufacturing plant. The petitioners respond that, as a preliminary matter, there is no such thing as a "kit" for assembly of another component.(494) Bed frames are simply components used in the manufacture of box springs; they are not finished products themselves and there is no HTSUS subheading for "bed frames." By excluding bed-frame kits from the scope, the Department has provided producers and importers of bed-frame components with an exception that would not necessarily be provided by normal Customs classification practice. As an exception to Customs' practice, this exclusion must be interpreted narrowly in order to serve a meaningful purpose. With regards to the requesters' arguments concerning the additional labor costs and the cost of possible breakage in transit, the petitioners point out that a fractional increase in the price of the components that represent only a small portion of the cost of the finished good would not have harmful effects on the mattress industry. Department's Position: The Department has weighed all of the considerations presented by ISPA and Sinclar. We understand that the requirement of individually wrapped kits imposes additional costs on the industry. However, the type of exclusion proposed by the industry presents some insurmountable problems. While the idea of bulk kits seems, on its face, fairly straightforward, the proposal contains aspects that give us pause. For instance, the Department is concerned with the implication that shipments may include not only the components necessary for the kits but also additional components. While those components would obviously not be covered by the exclusion, this arrangement adds additional layers of complexity to the administration of the exclusion as proposed by the requesters. The requesters state that this exclusion would be easily administrable. Information on the record sharply contradicts the respondents. Customs has expressed concern with regard to the implementation of any exclusion concerning bed frame kits and has advised us of specific difficulties that it would encounter in the administration of the exclusion if agreed to by the petitioners and adopted by the Department.(495) Such difficulties are primarily related to a classification of bed-frame kits in the current tariff schedule. Unlike trusses and pallets, Customs does not recognize box frame kits unless they are imported with springs - as essential elements of a box spring "kit." Therefore, under a "kits" exception, Customs does not have a specific tariff number under which to classify the kit. Therefore, the Customs entry form would list only the individual components of the kits, and each component would be classified independently, under different HTSUS subheadings. This presents enforcement problems and data collection problems, since Customs' regulations on kits would not apply. To compound this enforcement problem, there would be no possibility for data collection on these types of kits. We are aware that these difficulties also affect individually wrapped kits. However, to the extent that the petitioners have stated that such kits are not in the scope of these proceedings, we have granted the exclusion. The petitioners have not agreed to the exclusion of bulk kits. Therefore, we will continue to exclude individually wrapped bed- frame kits as described in the AD Preliminary Determination. We are not granting the exclusion of bulk kits, as proposed by the requesters. B. U.S. origin lumber further processed in Canada The Government of Quebec (GOQ) argues that U.S.-origin lumber that is minimally processed in Quebec - through drying and planing - is not substantially transformed and is outside the scope of these investigations because the country of origin remains the United States.(496) The petitioners respond that a U.S. lumber producer may ship U.S. lumber to Canada for minor processing that does not alter the essential character of the product and bring back to the United States the finished product under subheading 9802 of the HTSUS, which provides for the return of U.S. merchandise with no duty or duty assessed only on the cost or value of the additional minor processing performed abroad.(498) However, the petitioners also recognize that U.S. lumber remanufactured in Canada may or may not be classifiable under 9802, depending on the type of processing that occurs abroad and whether or not commingling of U.S. lumber with Canadian lumber occurs during the processing. Accordingly, the petitioners agree that U.S. lumber undergoing only minor processing in Canada, as provided for under HTSUS 9802, and with proper documentation of the lumber's origin (as determined by Customs) is not subject to this investigation. Department's Position: Since the petitioners have agreed to this exclusion, the Department will amend the scope language accordingly. The following language will be added to the list of products excluded from the AD and the CVD investigations: U.S. lumber shipped to Canada for minor processing and imported into the United States is excluded from the scope of the CVD investigation 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 Customs' satisfaction that the lumber is of U. S. origin. C. Pallet and Truss Kits and Stringers The petitioners state that the Department should clarify its language on scope exclusions, with regard to truss kits, pallet kits, and pallet stringers.(499) With regard to pallet and truss kits, the QLMA, Tembec, OFIA, and OLMA argue that the petitioners' assertion that such kits must be shipped with all kit components in the same railcar or truck is unadministrable. They also argue against the petitioners' request to impose size restrictions on stringers, on the grounds that there is no basis for such restrictions under the relevant HTSUS customs category. Department's Position: We agree with the QLMA, Tembec, OFIA, and OLMA that the scope exclusion language, as it is currently formulated in our scope exclusion list, is administrable for truss kits, pallet kits, and pallet stringers.(500) D. Certain further manufactured products In its March 15, 2002, brief, the QLMA requested scope clarification regarding the following softwood lumber products: 1) angle-cut for truss components; 2) I-joists for beams and their components; 3) drilled and notched lumber; 4) window, door and edge glued components; 5) wooden pallet components; 6) square-cut end bed-frame components; and 7) fence components. The QLMA claims that "none of these products {was} intended by the petitioner to be included in the investigations" and that "{i}nclusion of these products would render any resulting order unadministrable" because it would include nearly all further manufactured softwood lumber products.(501) Department's Position: All of these products are within the scope except where they have already been specifically excluded as described in comment 57 of this memorandum. As regards the questions raised by the QLMA concerning the angle-cut trusses and window and door components, see the Department's specific discussion regarding these products in comment 57. Comment 54: Industry Support Several respondents and interested parties question the petitioners' standing with respect to certain species of softwood lumber and certain specialized products for which they have requested findings of separate classes or kinds of merchandise. Abitibi states that no valid petition was ever filed against imports of square-end bed frame components because the petitioners do not purport to represent the domestic producers of square-end bed frame components and therefore lack the standing required for an investigation to be initiated against this product.(502) Tembec questions whether the petitioners have standing with respect to flange stock and whether the petition was "filed on behalf of the domestic industry."(503) Tembec argues that the petitioners fail to meet the definition of an interested party for flange stock because their members do not engage in the manufacture, production, or wholesale in the United States of a domestic like product of Canadian flange stock.(504) Tembec concludes that, because flange stock represents a different class or kind of merchandise, the lack of allegations in the petition specifically against this product, combined with a lack of record evidence establishing the petitioners as an interested party for the flange stock industry, means that the petition does not meet the requirements. Hence, investigations should not have been initiated against flange stock. Tembec, along with OLMA and OFIA, also contends that because EWP is a separate class or kind of merchandise, in order for the petitions to be valid with respect to this product, the petitioners must show that the petitions were filed on behalf of the domestic EWP industry.(505) As the petitions fail to make any mention of EWP, they were clearly not filed on behalf of the domestic industry and, therefore, the investigations with respect to EWP should be terminated.(506) In response to all of these comments, the petitioners claim that there is a single lumber industry with each of the above mentioned species or products merely parts of the whole. With the required support of the domestic lumber industry, the petitioners assert that they have standing with respect to all of the subject merchandise. The petitioners point out that according to Congress, "standing cannot be revisited at this point in the litigation."(507) Department's Position: The Department has determined that square-end bed frame components, flange stock, and EWP are all within the scope of these investigations and part of a single class or kind of merchandise. Therefore, the question of industry support and standing based upon requested findings of separate classes or kinds is moot. At the time of initiation, the Department found that the margins and industry support established by the petitions were adequate for the single class or kind of softwood lumber products. The Department is prevented under the Act from reconsidering its determination on industry support once an investigation has been initiated.(508) Therefore, the Department maintains that the petitioners have sufficient domestic industry support in these proceedings. Comment 55: Whether including certain products within the softwood lumber category is harmful to softwood lumber industry in the United States Weyerhaeuser and USRCMA argue that the inclusion of WRC within the softwood lumber category covered by the investigations will have damaging consequences for WRC remanufacturers and sellers in the United States and will harm the U.S. softwood lumber industry in general. They highlight two consequences in particular if WRC continues to be grouped with other softwood lumber as a single class or kind of merchandise in these investigations and the Department imposes duties on this merchandise as a result of the investigations. First, the requesters contend that duties on WRC affect the availability of WRC in the United States to the extent that the market will shift from WRC to non-wood substitutes such as composites and plastics because wood substitutes for WRC do not exist. Second, they predict that many of the remaining jobs in WRC remanufacturing, retail and distribution channels will shift from the United States to Canada. They note that well over a hundred companies have written to the Department about these possible consequences, asking for an exclusion of WRC. The requesters maintain that absent the Canadian supplies of WRC, these U.S. companies would not be able to obtain enough raw material to survive. The requesters assert that if the continuum theory were correct, these companies would not care about the availability of Canadian WRC because they could simply substitute another softwood as their input. Tebb argues that the inclusion of shop and better lumber in the scope of the investigations actually injures United States remanufacturers because shop and better lumber is not produced in the U.S. in "commercially needed" quantities. Tebb argues that the Act is supposed to aid the U.S. industries, not hurt them. Finally, Tebb states that besides having adverse effects on U.S. remanufacturers, leaving shop and better lumber within the scope of these investigations would give Canadian companies a large price advantage, allowing those companies to steal away customers from U.S. companies. The petitioners dispute Tebb's suggestion that since its specific types of shop or better lumber are not produced in the United State their import does not injure the U.S. softwood lumber industry. They assert that high- quality old growth lumber from Canada competes directly with other types of softwood lumber produced in the United States. Second, the petitioners assert that there is no evidence on the record that Tebb manufactures products that have been excluded such as trusses, I-joist beams, complete window frames, or furniture. Department's Position: In making the above arguments concerning injury, the requesters are confusing the functions of the Department of Commerce and the ITC. When the Department considers the universe of softwood lumber products included in the scope of the investigations, it is looking at products produced in Canada and not at possible substitutes produced in the United States. While we are well aware of the concerns of U.S. businesses that have historically depended on supplies of certain softwood products from Canada, the Department's function in its investigations is to determine whether these imports, which are included in the scope defined by the U.S. industry seeking relief, have been unfairly subsidized or sold at less than fair value. Issues of which like products in the United States are actually being injured by these imports are the domain of the ITC injury investigation. We are consequently not in a position to base either our scope exclusion decision or our separate class or kind decision on a consideration of the potential consequences that an imposition of duty on Canadian WRC and shop and better would have on U.S. users of WRC and shop and better. The ITC does, at times, consider the issue of limited availability of a given product in its injury determinations. As an additional consideration, we reiterate that even if the Department were to find that WRC or shop and better constituted a separate class or kind, our practice would require that these products remain subject to an investigation, albeit a separate investigation. Even with a separate investigation, duties could be imposed on WRC and shop and better if dumping or countervailable subsidies were found. Therefore, establishing WRC or shop and better as a separate class or kind of merchandise does not necessarily resolve the issue of WRC and shop and better availability in the United States as it is perceived by the requesters. Also regarding the possibility that imposition of duties might injuriously limit the U.S. supply of WRC and shop and better, we refer to our discussion in the March 12 Scope Memo concerning the steps that the Department has taken to insure that product coverage does not include anything that the parties seeking relief did not intend to include.(509) Comment 56: Remanufactured Products The Government of Canada (GOC), the Canadian Provinces and Territories, and Canadian industry associations argue that the Department must exclude remanufactured products from the scope of the investigations because it is not sold at less than fair value in the U.S.(510) These parties further argue that the petitioners' allegations encompassed only Eastern and Western spruce pine fir dimensional lumber produced by sawmills, leaving the export price, normal value, and dumping margins in the petition as calculations that exclude remanufactured products. Last, these parties state that sawmills and remanufacturers have such differences in size and annual shipment value that the petitioners' calculations do not represent remanufactured products.(511) Department's Position: Under the Department's regulations 19 CFR 351.225(k), the Department must first consider "{t}he descriptions of the merchandise contained in the petition, the initial investigation{s} and the determinations of the Secretary . . . and the Commission."(512) Only "{w}hen the above criteria are not dispositive, the {Department} will further consider"(513) other information. We initiated the dumping investigation based on our determination that the petition was adequate as required by 19 CFR 351.202(b) and contained the factual information describing the "subject merchandise that defines the requested scope of the investigation."(514) The regulations further require that the petition's description of subject merchandise contain the technical characteristics and uses of the merchandise and U.S. tariff classification number.(515) In these cases, we believe that the information contained in the petitions describing all subject merchandise within the scope, including characteristics and uses of the merchandise, whose descriptions included remanufactured products, was sufficient to initiate these investigations. Therefore, we maintain that remanufactured products, falling under the scope of the investigations in the petitions, should remain under the scope in these investigations. Comment 57: Scope exclusion requests This comment addresses the remaining scope exclusion requests raised by numerous interested parties in the course of these proceedings. In the preliminary countervailing duty and antidumping determinations and in a subsequent amended preliminary determination, we addressed a number of scope exclusion requests and provided a number of scope clarifications.(516) On March 12, 2002, we issued a memorandum preliminarily determining that certain lumber products for which a class or kind determination had been requested, do not constitute a separate class or kind and are included under the scope of these investigations.(517) This memorandum covers the requests for scope clarifications or scope exclusions for products which were not included in prior notices and decision memoranda. In many instances, we received multiple requests for the exclusion of the same product. Our response takes into account the information and arguments presented by all parties, although not all submissions may be specifically cited. Overview of Scope Requests We received several requests for exclusion of certain softwood lumber products from the countervailing duty investigation based on the source of the lumber or of the logs from which the lumber was manufactured: 1. Maritime lumber produced from Maritime logs, further worked in Quebec from Mobilier Rustique. 2. Lumber produced from timber harvested in First Nations territory from Dakwakada Forest Products. 3. Lumber produced from timber harvested in aboriginal lands of the nine First Nations of the Meadow Lake Tribal Council from Norsask Forest Products Inc. 4. Used railroad ties from Cando Contracting. 5. Recycled timber from Last Mountain Timber. In addition, various interested parties requested that the products in the following list be excluded from the scope of both the antidumping and countervailing duty investigations. To facilitate the analysis, we have grouped the products under the following three headings: A. Generic lumber products 1. Hemlock clear cut stock from Bridgeside Higa Forest Ind., Ltd. 2. Industrial grade lumber from Bright Wood Corp. 3. Treated lumber from Weldwood of Canada, Inc. 4. Dimension lumber (less than 3' in length) from Weldwood of Canada, Inc. 5. Timbers from Weldwood of Canada, Inc. 6. Boards from Weldwood of Canada, Inc. 7. Turning blanks from Sundance Forest Industries B. Carpentry construction products 1. 2"x3" or 2"x4" lumber of finger-jointed Eastern Canadian black spruce - machine stress rating 1650 and above 2"x4" or 2"x6" lumber, machine stress rating 1650 and above from Louisiana Pacific Corp. 2. Door frame and sill parts from Alberta Spruce Industries, Ltd. 3. Window sills and frames from Sundance Forest Industries 4. Door jacks from Weldwood of Canada, Ltd. 5. Triple corners from Weldwood of Canada, Ltd. 6. Finger-jointed blocks from Weldwood of Canada, Ltd. 7. Angle-cut lumber for trusses and sheds from Alliance Forest Products Ind., Ltd. 8. Garage door core from Bridgeside Higa Forest Ind., Ltd. 9. Laminating blanks from Sundance Forest Industries 10. Edge glue blanks from Sundance Forest Industries 11. Stair part turning squares from Cahan Wood Products 12. 3/4" and 5/16" interior tongue and grooved wall claddings from Greenwood Forest Products, Ltd. 13. Fascia and trim boards from Sundance Forest Industries 14. Real Trim (TM) exterior molding and trim board system from Woodtone 15. Flooring and Siding from Weldwood of Canada, Ltd. 16. Guard rails from Weldwood of Canada, Ltd. 17. Cedar shingle blocks from Shakertown 1992 Inc. C. Components/parts of finished products 1. Furniture parts and furniture blanks from Alberta Spruce Industries, Ltd. and Sundance Forest Industries 2. Display fixtures parts from Alberta Spruce Industries, Ltd. 3. Recreational vehicle product from Bridgeside Higa Forest Ind., Ltd. 4. Refrigerator stock from Bridgeside Higa Forest Ind., Ltd. 5. Trellis stock from Bridgeside Higa Forest Ind., Ltd. 6. Fencing and fence parts from Sundance Forest Industries 7. Turb-o-Web Truss Webs from Tembec Inc. 8. Cable reel staves from Universal Reel & Recycling Inc. 9. Box parts, crating parts, and vegetable box components from Sundance Forest Industries and Weldwood of Canada, Ltd. Analysis As a general principle, the Department has the authority to define or clarify the scope of an investigation.(518) The Department may use this authority to establish, when appropriate, separate classes or kinds of merchandise under the scope, or to modify the scope, as defined by the petitioner, when the resulting order would not be administrable. However, the Department cannot use its authority in a manner that would thwart the statutory mandate to provide the relief requested in the petition. Therefore, absent an "overarching reason to modify" the scope in the petition, the Department generally accepts the scope defined in the petition. Requests for exclusion from the scope of the countervailing duty investigation based on input sourcing 1. Maritime lumber from Maritime logs, further processed in Quebec Mobilier Rustique purchases softwood lumber from the Maritime Provinces and further processes it in Quebec by planing, cutting to length, cutting lengthwise and/or performing all processes.(519) Mobilier Rustique is asking the Department to determine that the resulting lumber products are excluded from the scope. The petitioners respond that once the lumber is processed in Quebec, it becomes a product of Quebec.(520) The petitioners point out that the extent of the processing that Mobilier Rustique performs appears to be quite extensive and that it is virtually impossible to determine whether a specific shipment of softwood lumber from a particular company consists only of lumber produced from Maritimes-origin wood, unless that company processes Maritimes-origin wood exclusively. Accordingly, the petitioners conclude that this request should be treated as a company exclusion request, not as a scope request. Department's Position: Once the lumber is processed in a non-Maritimes province, it becomes indistinguishable from lumber of other origin and may benefit from subsidies bestowed on the mill. To the extent that a company processing the Maritimes-origin lumber can demonstrate that it does not receive any other subsidies, the company can be excluded from the CVD investigation and the Maritimes-origin lumber processed in an unsubsidized mill outside the Maritime provinces is not subject to CVD duties. 2. Lumber produced from timber harvested in First Nations territory and 3. Lumber produced from timber harvested in aboriginal lands of the nine First Nations of the Meadow Lake Tribal Council Dakwakada Forest Products Inc. (Dakwakada) asks for the exclusion of products manufactured from white spruce harvested in First Nations territory, owned by the Champagne Aishihik First Nations in the Yukon Territory (which also owns Dakwakada).(521) No specific reason is provided for the request. The petitioners respond that spruce is covered in the scope and that softwood lumber products in the Yukon are no different from products from other regions.(522) Therefore, in the petitioners' view, the request should be denied. Norsask Forest Products Inc. and the Meadow Lake Tribal Council (MLTC) of Northern Saskatchewan (Norsask) request that softwood lumber products exported by NorSask be excluded from these investigations because no subsidy may be found to exist with respect to timber harvested from aboriginal lands, which supply 90 percent of the input to Norsask.(523) The petitioners assert that this lumber is covered by the scope, because the general physical requirements, end use, expectations of ultimate purchasers, channels of trade, and manner of advertisement are the same as those for softwood lumber products produced by non-First Nations Aboriginal communities.(524) Department's Position: In the CVD investigation, we have not examined the status of the aboriginal lands with respect to subsidization. Therefore, the Department has no basis to make a different finding with regard to potential subsidization affecting the products manufactured by Dakwakada and Norsask. Therefore, based on the information on the record, we are not granting the exclusion of products manufactured from timber harvested on aboriginal lands. 5. Used railroad ties 6. Recycled Timber Cando Contracting Ltd. (Cando) asks for the exclusion of railway ties which it reclaims from abandoned track throughout Canada.(525) The ties are then used in other short lines or sold to retail outlets for posts and landscape material. They are generally 30 to 60 years old. Last Mountain Timber asks for the exclusion of softwood timbers obtained from dismantling old grain elevators, barns, and warehouses.(526) The timbers are de-nailed and can be either sold as is or sawn into planks. The appearance of this wood is quite different from lumber, but it can be used in the same manner. Typically, this type of wood is used in higher-end home markets. It is currently classified under HTSUS 4407.10. The reason for the exclusion of both products would be neither of them can have benefitted from stumpage fees, the railroad ties because of their age, and the recycled timber because the source of the wood is not the Canadian public forest. The petitioners cite to a Customs ruling which classifies used railroad ties, if not further manufactured, under HTSUS 4407, as sawn pieces of lumber used principally as landscape timbers.(527) Given the classification, the petitioners claim that the product is covered under the scope. On the recycled wood, the petitioners claim that the fact that Customs classifies this type of wood under HTSUS 4407 puts the product squarely within the scope.(528) The petitioners also comment that appearance does not take recycled wood outside the scope of these investigations and that Canadian subsidies date from the beginning of the 20th Century. Therefore, it is not clear that the timber and the railway ties benefitted from them. Department's Position: The scope of these investigations includes all products classified under HTSUS 4407.1000. The petitioners do not agree to the exclusion of these products. There are no "overarching" reasons for the exclusion. Therefore, we are not granting these exclusions. Requests for product exclusion from the scope of the AD and CVD investigations A. Generic Lumber Products 1. Hemlock clear cut stock Bridgeside Higa Forest Limited Inc. (Bridgeside) describes this product as "a high grade product, species specific," and tight grained.(529) It may be either cut to length or in blocks for finger joining and it is used in the production of high-end doors. Bridgeside requests its exclusion from the scope on the following grounds: 1) the volume of imports is low; 2) domestic supply is limited and fully utilized; 3) selling price is higher than the price of structural lumber; 4) because of its grading characteristics, is not interchangeable with the domestic stock. Bridgeside did not provide a Customs classification. The petitioners respond that the scope of the petitions covers all softwood lumber, regardless of the grade, size, or use of the lumber; hemlock is covered under HTSUS 4407.10.00.64.(530) The petitioners also state that significant quantities of hemlock are produced in the United States, although, in their view, it is not necessary for the U.S. industry to be able to supply 100 percent of the market demand for this product, since lumber products of different species and grades compete with each other. Department's Position: Hemlock (rough and other) is classified under 4407.1000. The scope of these investigations includes all products classified under this subheading. The petitioners do not agree to the exclusion of this product. There are no "overarching" reasons for the exclusion. Therefore, we are not granting the exclusion. 2. Industrial grade lumber 3. Treated lumber 4. Dimension lumber (less than 3' in length) Industrial grade lumber is defined as lumber graded as shop or molding- grade and used by remanufacturers in the production of moldings, millwork, doors, door frames and door components, window components, staircase components, furniture components, and interior and exterior trim. The Bright Wood Corporation (BWC), the requester, states that because of physical differences, industrial lumber cannot be substituted for dimension, structural, and framing grade lumber.(531) BWC asks for this exclusion for the following reasons: 1) the volume of imports is very small; 2) there is limited domestic availability;(532) 3) prices are higher than those of structural and framing products; 4) it is the raw material used to produce many of BWC's products, which are exempted from the investigations; a tariff on industrial lumber favors BWC's Canadian competitors. The exclusion of treated lumber and of dimension lumber was requested by Weldwood Canada Inc. (Weldwood).(533) Weldwood did not provide a physical description of the products. With regard to treated lumber, Weldwood only quoted a sentence from a letter from the petitioners stating that treated lumber is significantly different from untreated lumber. With regard to dimension lumber, the only physical characteristic provided by Weldwood is the 3-foot maximum length. The reason provided in support of these requests is that these products are highly specialized and that it constitutes trivial export volumes. The petitioners respond that treated lumber is covered under HTSUS 4407 and that dimension lumber in lengths of 3' or less is still dimension lumber, which is also expressly included in the scope.(534) The petitioners claim that the Department cannot exclude a product based on length limitations. The petitioners also clarify that the letter cited by Weldwood was related to reporting of sales and cost information and not scope coverage. Department's Position: The petitioners have repeatedly stated that grade and price are not factors in determining whether or not a specific product is covered under the scope. Furthermore, treated lumber is classified under HTSUS 4407.1000, and dimension lumber, regardless of length, is also in the scope. The petitioners do not agree to the exclusion of these products. There are no "overarching" reasons for any of these exclusions. Therefore, we are not granting these exclusions. 5. Timbers 6. Boards Weldwood describes timbers as "lumber pieces that are at least 5" in their smallest dimension, also classified as beams, stringers, girders, etc."(535) Boards are described as lumber that is 1" in nominal thickness or less. No support for these requests is provided, except for a generic statement that this is a specialized product and import volumes are minimal. The petitioners state that timbers are simply thicker pieces of softwood lumber.(536) Both timbers and boards, 1" or less nominal thickness but greater than 6 mm in thickness, are classified under heading HTSUS 4407. Both products are included in the scope. Department's Position: The petitioners state that this product is classified under HTSUS 4407.1000 (the requester provided no tariff classification). The scope of these investigations includes all products classified under HTSUS 4407.1000. The petitioners do not agree to the exclusion of this product. There are no "overarching" reasons for the exclusion. Therefore, we are not granting the exclusion. 7. Turning blanks Sundance Forest Industries Ltd. (Sundance) requests that turning blanks, classified under HTSUS 4407, be excluded from the scope of these investigations.(537) Sundance manufactures these products in "varying degrees" of finished state and requests that the Department exclude all rough, semi-finished and finished products. The petitioners point out that this product is not adequately described for the Department to make a determination.(538) Based on the information on the record, the petitioners assert that this product is a piece of softwood lumber that may be turned. According to the petitioners, "turning blanks," are clearly within the scope of these investigations. Department's Position: The scope of these investigations includes all products classified under this HTS subheading. The petitioners do not agree to the exclusion of this product. There are no "overarching" reasons for the exclusion. Therefore, we are not granting the exclusion. B. Carpentry construction products 1. 2"x3" or 2"x4" lumber of finger-jointed Eastern Canadian black spruce - machine stress rating 1650 and above and 2"x4" or 2"x6" lumber, machine stress rating 1650 and above Louisiana Pacific Corp. (Louisiana Pacific) imports these products (two types of flange stock) to manufacture structural I-joists.(539) The reason for requesting the exclusion is that there are no domestic manufacturers of the first product and only limited domestic availability of the second. The petitioners respond that these products appear to be only a particular size of finger jointed and machine-stress-rated lumber, which is included in the scope.(540) They also point out that supply shortage is not a basis for exclusion: There is no statutory language requiring the Department to consider domestic availability when ruling on a scope exclusion request, nor is it necessary that domestic producers be able to meet 100 percent of the demand for a particular product in order to obtain a remedy for unfair trade. Furthermore, the requesters failed to demonstrate that domestic producers cannot provide these products and that domestic substitutes are inadequate or unavailable. The petitioners claim that the number of U.S. producers is higher than the one cited by the requester, that if the market permitted it, MSR capacity could be added, and that some substitutability may be possible with high-strength domestic products, such as Douglas fir and Southern yellow pine. Department's Position: The Department finds that finger-jointed flange stock is in the scope and does not constitute a separate class or kind with respect to all other softwood lumber products.(541) The petitioners do not agree to the exclusion of finger-jointed flange stock from the scope. This requester did not present any "overarching" reason to consider its exclusion from the scope. Therefore, we are not granting this exclusion. 2. Door frame and sill parts 3. Window sills and frames Alberta Spruce Industries, Ltd. (Alberta) and Sundance request that door sills and frames be excluded from the scope of these investigations.(542) Both companies claim that these products are classified under HTS 4418.20.80.60. Alberta clarifies that the company supplies ready-to- assemble frame parts in specified length ratios to produce complete frames. These frames are then assembled on site with the use of metal connector hardware. Alberta also supplies wood door sill cores that are ready to receive a plastic or aluminum extruded sill cap. Sundance does not provide a physical description of this product. Additionally, Sundance requests that window sills and frames, also classified under HTS 4418.20, be excluded from the scope.(543) With regards to both products, Sundance states the it produces these products in "varying degrees" of finished state and requests that the Department exclude all rough, semi-finished, and finished products. The petitioners respond that properly classified and assembled window and door frames are outside the scope of these investigations, but that lumber components or frame stock is within the scope.(544) The petitioners explain that softwood lumber components that may be used to make a window sill or frame are within the scope of these investigations. Department's Position: In the CVD Prelim the Department explicitly stated that properly classified complete door frames and window frames are excluded from the scope. With respect to components, the Department found that window, door, and edge-glued components are within the scope and that they do not constitute a separate class or kind of softwood lumber products.(545) The petitioners do not agree to the exclusion of these products from the scope. There are no "overarching" reasons for exclusion. Therefore, we are not granting the exclusion. 4. Door jacks 5. Triple corners 6. Finger-joint blocks Weldwood asks for the exclusion of door jacks, triple corners, and finger- joint blocks. Door jacks are pre-manufactured components used in residential construction for framing door openings; they are manufactured by laminating two pieces of 2"x4" approximately 7' and 8' in length which are then precision-end trimmed to match the length of the wall studs.(546) Triple corners are pre-manufactured components used in residential construction for framing the corner that joins two walls of a building; they are produced from three pieces of 2"x4" and trimmed to the exact length of the wall studs. Finger-joint blocks are produced from planer mill trim ends; they are defect trimmed, sorted, and graded, are 8" to 24" long and are used in the manufacture of finger-jointed studs and dimension lumber. Weldwood claims that these products are covered under HTSUS 4418.90.4090. The reason for the exclusion would be due to the fact that these products are highly specialized and constitute trivial export volumes. The petitioners point out the there is no corroboration from Customs on the classification presented by the requester.(547) The petitioners also add that it is unclear that there is commercial demand for door jacks and triple corners, because door framing and corner framing is generally done on site. While pre-manufactured housing might be an exception, the requester did not indicate that this is where the products will be used. Concerning finger-joint blocks, the petitioners state that these blocks are only short pieces of dimension lumber used to make finger-jointed lumber, which is expressly included in the scope. Department's Position: Door jacks and triple corners are permanently assembled products, which are not covered under the scope of these investigations. Generally, they would be classified under HTSUS 4418.90.40.40 or 4418.90.40.90, as stated by the requester. While we understand the concern of the petitioners with regard to potential loopholes, the drawings of these two products show that the assembly of door jacks and triple corners is fairly elaborate and would not lend itself to easy separation of the components without damage to the parts. On the other hand, we agree with the petitioners that finger-jointed blocks are dimension lumber and are included under the scope. Therefore, we are not granting this exclusion. 7. Angle-cut lumber for trusses and sheds Alliance Forest Products Inc. (Alliance) requests an exclusion from the scope of these investigations for angle-cut lumber for trusses and sheds.(548) Alliance describes these products as angle-cut roof truss components and boards with one or both ends cut at an angle other than 90 degrees, used to construct the side walls and roofing of sheds. Alliance provides Customs rulings stating that both products are classifiable under 4418.90.40.90. The requester also points out that both products were not covered by the Softwood Lumber Agreement. The petitioners challenge Alliance's assertion that Customs "consistently classified such angle-cut roof truss components" under HTSUS 4418.(549) The petitioners maintain that Customs issued specific rulings regarding unassembled wood trusses classified under HTSUS 4418, applicable only if the trusses met specific requirements. The petitioners further assert that Alliance's written description and drawings of its products do not conform to an industry standard definition for a truss, and that these products do not appear to be "shed kits." On that basis, the petitioners conclude that Alliance's angle-cut lumber does not meet the requirement of being a component of a specific truss; it is just generic softwood lumber which is covered by the scope of these investigations. Department's Position: The Department preliminarily determined that trusses and truss kits, properly classified under HTSUS 4418.90, are excluded from the scope (See AD Prelim). With regard to truss components, the Department stated in its Amended Prelim that truss components are covered by these investigations and added 4418.90.4090 to the list of HTSUS subheadings under which truss components may be classified. The requester has provided no new facts that would require the Department to revisit its prior determinations. With regard to angle cut lumber which may not be truss components, angle cut lumber is specifically mentioned in the petitions as being included in the scope. The petitioners do not agree to the exclusion of angle cut lumber. This requester did not present any "overarching" reason to consider the exclusion of angle cut lumber from the scope. Therefore, we are not granting the exclusion of angle cut lumber for trusses and sheds. 8. Garage door core 9. Laminating blanks 10. Edge glue blanks Bridgeside requests the exclusion of garage door core, described as "finger jointed stock, machined to very tight tolerances" and produced to customer's specifications.(550) This product is designated as an industrial component which is shipped to a manufacturer to be assembled into garage door panels. Bridgeside states that the HTSUS classification is 4407. Bridgeside requests its exclusion from the scope on the following grounds: 1) the volume of imports is low; 2) domestic supply is limited; 3) selling price is higher than the price of structural lumber; 4) due to its grading characteristics, is not interchangeable with the domestic stock; the only alternate input supply for this product is from South America. The petitioners respond that finger-jointed lumber is within the scope of these investigations.(551) Sundance requests the exclusion of laminating blanks and edge glue blanks, but did not provide a description of these products.(552) It provides 4407 as the HTSUS classification. The requester adds that the product is sold in varying degrees of finished state and asks for the exclusion of rough, semifinished, and finished products. The petitioners respond that, based on the information provided, "laminating blanks" are simply lumber boards used for particular applications and "edge glue blanks" are simply lumber used for manufacturing edge-glued lumber.(553) Both products are clearly within the scope. Department's Position: The scope of these investigations includes all products classified under HTSUS category 4407. The petitioners do not agree to the exclusion of these products. There are no "overarching" reasons for the exclusion. Therefore, we are not granting the exclusion of these products. 11. Stair part turning squares Cahan Wood Products Ltd. (Cahan) states that this product is an industry- specific item that is produced in a range of restricted sizes due to the limitations imposed by local building codes, which require that stair systems be produced to a certain height.(554) Stair-part turning squares are kiln-dried clear Western hemlock molded smooth on all four faces, with square edges or 1/8" radius eased edges, depending on customer specifications. The product is precision-end trimmed to designated sizes which are packaged by size and length. The petitioners respond that Cahan's turning squares are just small square pieces of softwood lumber in lengths ranging from 31" to 42" without defects, that are likely to be used to manufacture stair balusters.(555) The petitioners assert that these products are stair-part stock, a type of softwood lumber product that is included the scope of these investigations Department's Position: Based on the information on record, we accept the petitioners' assessment that this product appears to be stair-part stock and would be classified under HTSUS 4407.10. The scope of these investigations includes all products classified under this subheading. The petitioners do not agree to the exclusion of this product. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting the exclusion of these products. 12. 3/4" and 5/16" interior tongue and grooved wall claddings Greenwood Forest Products, Ltd. (Greenwood) describes this product as a continuously molded product.(556) The wall claddings have a profiled face and a rough back face, and tongue and groove edges. The length is between 32" and 96". Greenwood states that both products are primarily used in the aftermarket by do-it-yourself homeowners on existing wall structures. They are not interchangeable with any other softwood lumber product and domestic availability is limited. They are exported to the United States under HTSUS 4409.10.90.40 and 4409.10.90.20. The petitioners respond that both products are siding and clearly fall within one of the HTSUS classifications identified in the petitions and listed in the scope description.(557) Department's Position: The scope description clearly covers all products classified under HTSUS 4409.10.90. The petitioners do not agree to the exclusion of this product. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion. 13. Fascia and trim boards 14. RealTrim(TM) exterior molding and trimboard system The exclusion of fascia and trim boards was requested by Sundance.(558) The requester does not provide a description of the product nor the pertinent HTSUS classification. Sundance indicates that the product is sold in varying degrees of finished state and asks for the exclusion of rough, semifinished, and finished products. The exclusion of "RealTrim," was requested by Woodtone.(559) Woodtone describes "RealTrim" as an ornamental exterior molding used around windows, doors, gable ends, etc., to improve the appearance of a home. "RealTrim" is manufactured from high-grade spruce; it is molded and then coated with a primer. It is manufactured in custom sizes that are not produced by any other manufacturer in Canada or the United States. "Real Trim" is currently classified under HTSUS 4407.10.0015; however, Woodtone contends that this classification is incorrect. Woodtone states that it is applying for a binding Customs ruling for "RealTrim" to be classified under 4409.10.4500. With regard to generic fascia and trim boards, the petitioners respond that fascia and trim boards are simply lumber boards used for particular applications and they are within the scope.(560) As for "Real Trim," the petitioners assert that "RealTrim" is primed fascia board, properly classified under HTSUS 4407, and, therefore, covered by the scope of these investigations. The petitioners further state that Woodtone's claim that "RealTrim" is like interior moldings is misleading. The petitioners contend that all information available, including information on Woodtone's web site, confirms that "RealTrim" is "simply a board to be used as fascia or exterior trim" and not a molding.(561) Woodtone responds that there is a difference between "actual fascia" and "so-called fascia." "Actual fascia" is lumber which has been molded, primed, and is actually used in exterior molding applications. In contrast, "so-called fascia" is lumber that is purported to be used as fascia, but is actually used for framing purposes. Woodtone contends that "actual fascia" should not be denied a scope exclusion because "so-called fascia" is causing U.S. producers to lose framing lumber sales. Woodtone provides definitions of "fascia" and "molding" from several sources and concludes that "RealTrim" can be used as fascia; however, that doesn't preclude it from being defined as a piece of molding, since it meets all definitions of a molding in both physical dimensions and use.(562) In rebuttal, the petitioners claim that the scope of these investigations includes boards such as "RealTrim."(563) As to the claim that "RealTrim" is a molding, the petitioners respond that "RealTrim" is "neither a molding nor other builders' joinery and carpentry of wood." The petitioners maintain that the evidence on the record demonstrates that "RealTrim" meets the literal terms of HTSUS 4407.1000 and is included in the scope. With regard to the assertion that "RealTrim" is not correctly classified, the petitioners note that the company can avail itself of statutorily-provided procedures for challenging that classification. The petitioners also refute Woodtone's claim that "RealTrim" or a like product is not available in the United States by contending that "RealTrim" competes directly (and indirectly) with softwood lumber boards produced in the United States. Department's Position: The Department is not in a position to determine whether the product is a board or a molding. For this reason we rely on Customs' expertise and take into account Customs' classification. If Woodtone believes that the current classification is inappropriate, it may want to pursue appropriate procedures with Customs to obtain a new ruling. Furthermore, it appears that the arguments presented by Woodtone specifically address "Real Trim" and not fascia and trim boards in general. In examining products for purposes of scope exclusion, the Department considers generic products, without regard to manufacturers or name brands. To the extent that the product is currently classified under HTSUS 4407.10, "Real Trim" and all fascia and trim board products are covered under the scope. Because the petitioners do not agree to the exclusion of this product and no "overarching" reasons were presented for the exclusion, we are not granting the exclusion of fascia and trim boards from the scope of these proceedings. 15. Flooring and siding Weldwood asked for the exclusion of 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 (including re-sawn bevel siding) and 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.(564) The reasons for the exclusion would be based on the fact that these products are highly specialized and constitute trivial export volumes. The petitioners respond that flooring and siding are expressly covered by HTSUS 4409.(565) Flooring and siding compete with other types of softwood lumber products arguing, for example, that fascia is softwood lumber within the scope, but that it could just as well be called siding. Department's Position: Flooring and siding are covered in the scope. The petitioners do not agree to the exclusion of these products. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion. 16. Guard rails Weldwood describes guard rails as rough, full-sawn timbers measuring 6"x8" in 5' and 7' lengths. They have an angle-cut top and pre-drilled bolt holes, and they are used to support the metal barrier of a highway guard rail.(566) The petitioners respond that "guard rails" are large pieces of lumber and note that Weldwood did not claim that these products are classified under an HTSUS heading outside the scope of these investigations. The petitioners assert that guard rails share the same general characteristics as all softwood lumber products that are covered by these investigations.(567) Department's Position: The information on the record is insufficient for the Department to make a determination. Therefore, we are not granting this exclusion. 17. Cedar shingle blocks Shakertown 1992, Inc. (Shakertown) requested that the Department exempt certain specialty cuts of Western red cedar imported from Canada.(568) Shakertown purchases Western red cedar material cut from shingle blocks on shingle saws in nominal lengths of 18, 15, 12 and 9 inches. Shakertown provided the grading standards for the specialty cut material it purchases and indicated then the purchased boards are currently classified under HTSUS 4407 and are subject to the investigations. Department's Position: The Department examined the grading standards and noted the other information on the record, including the tariff classification and dimensions of the boards purchased. Based on that information, we have determined that, had Customs considered that the specialty cuts constituted a shake or shingle, these products would have been classified under the HTSUS 4418.50.00, articles of shingles and shakes, which are not covered by the scope of these investigations. However, due to the fact that Customs classifies the specialty cut products under HTSUS 4407, which is within the scope of the investigations, and because the Department has determined that Western red cedar products under that HTSUS subheading cannot be excluded from the investigations. We have not excluded these products from the scope of the investigations. C. Components/parts of finished products 1. Furniture parts; furniture blanks 2. Display fixtures parts Alberta provided detailed design and technical descriptions of the furniture parts it manufactures.(569) Copies of invoices which show that the parts in question are not generic, but are earmarked to be used in a specific piece of furniture. Some of the parts appear to require minor finishing operations when assembled, such as planing, trimming to exact length, and finish sanding. Alberta and Sundance provide an HTSUS item number under which they claim their products are covered (HTSUS 9403), but do not submit actual entry documentation (with Customs classification) or an official Customs' ruling to support their statements. Sundance indicates that the furniture parts and blanks are value-added non- construction type products. They are delivered in varying degrees of finished state. Sundance asks that all rough, semifinished, and finished products be excluded. Alberta also requested the exclusion of display fixtures parts and included in its request pictures of retail shelving units incorporating softwood components. The components are described as "pine staves that are approx. 15/16" thick by 4 ½" wide by 48", 45", or 36" long (length ratio is 85-10-5)." Alberta Spruce claims that shelving staves are classified under HTSUS 9403.60.80.80, but no documentation is provided. The petitioners point out that the information provided by Alberta Spruce and Sundance does not clearly indicate that the companies produce finished furniture components.(570) In fact, based on the information provided, the petitioners believe that both companies may produce components that, after importation, are used to make parts of furniture that are then assembled into finished furniture. According to the petitioners, these are simply softwood lumber products within the scope of these investigations. Neither company has submitted Customs rulings indicating that these products are indeed classified as finished furniture components. With respect to the display fixtures parts, the petitioners conclude, based on the description provided, that these parts are simply softwood lumber (boards) of particular dimensions that are likely to be used to manufacture shelving, and are within the scope of the investigations.(571) Department's Position: To the extent that the product exported to the United States is a furniture part, Customs will classify that merchandise under HTSUS 9403, which provides for furniture (other than medical) and parts thereof. In this case, there is no need for an exclusion. If instead the furniture parts that are being exported are at a processing stage where they have not yet assumed the unique characteristics of a component of a specific item of furniture, they may still be considered generic softwood lumber products and be covered by the scope of these investigations. We are not granting this exclusion. 3. Recreational vehicle product 4. Refrigerator stock These requests were submitted by Bridgeside Higa.(572) Recreational vehicle product is finger-joined SPF or hemlock stock produced to exact specifications. This product is shipped to a manufacturer of recreation vehicles and is not useable for any kind of structural application. After importation into the United States, the product may be used as is or may be cut to length for cabinet construction. Refrigerator stock is also finger-joined stock, 1 ½" thick, 3 ½" wide, and 16 feet in length, and is also subject to specific quality requirements. It is used in the manufacture of walk-in refrigerators. It is not clear whether additional operations are necessary in the United States to incorporate this product in refrigerators. The requester claims that its refrigerator stock is classified under HTSUS 4407; the classification of the recreational vehicle stock is unclear. The reasons for the exclusion requests are the following: 1) low import volumes; 2) inadequate domestic supply, although the price is attractive; 3) not interchangeable with domestic species, such as Southern yellow pine; 4) this product is transacted in the recreational vehicle/refrigerator manufacturing market, not the lumber market; 5) these products do not lend themselves to mass production. The petitioners, however, contend that finger-joined stock, whether used in recreational vehicles or as flooring for refrigerators, is covered under HTSUS 4407 and is included in the scope.(573) Department's Position: Finger-joined stock is covered in the scope. The petitioners do not agree to the exclusion of these products. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion. 5. Trellis stock Bridgeside Higa describes this product as a small cross-sectional piece of SPF (11/16" x 13/16").(574) Each purchase order has a specific number of pieces cut to specific lengths for each different model of trellis. In any one shipment, a set amount of trellises can be produced. Trellises are constructed in accordance with customer's specifications. The stock is shipped to a manufacturer who assembles the pieces into a finished product. Once cut to the size required by the construction of trellises, the stock is not resalable. Trellis stock cannot be used for any kind of structural applications. Import volume is low and domestic supply is limited, notwithstanding an attractive price. Domestic species (such as Southern yellow pine) are not good substitutes. Trellis stock does not compete with lumber, since its price is determined by the demand for trellises. This product does not lend itself to mass production. The HTSUS classification is 4407. The petitioners claim that this product is covered under the scope, since the dimensions provided indicate that this is softwood lumber over 6 mm in thickness.(575) Department's Position: The scope of these investigations includes all products classified under HTSUS 4407.1000. The petitioners do not agree to the exclusion of trellis stock. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion. 6. Turb-o-Web Truss Webs Tembec claims that Turb-O-Web truss webs are not included in the scope of these investigations.(576) This product is a supporting member connecting the top and bottom members of a roof truss. They are radius cut at both ends and are precisely cut according to specific truss design requirements. They are imported ready for assembly. Tembec provides reference to a Customs ruling, in which Turb-O-Web components are classified under subheading 4418.90.4090, provided that the truss components adhere to specific dimension requirements and were sold to truss manufacturers. The petitioners claim that the Customs' ruling was specifically limited to truss components meeting certain specific requirements and claim that Tembec is now asking the Department to exclude Turb-O-Web truss components regardless of whether they meet those requirements.(577) The petitioners state that what Tembec seeks to describe as "Turb-O-Web" here is nothing more than softwood lumber, clearly within the scope of this investigation. Department's Position: As we have already stated with regard to "Real Trim," the Department only considers generic products for purposes of exclusion, not brand name products. The Department has already preliminarily determined that complete trusses (assembled and unassembled) are excluded from the scope(578) and that truss components are included under the scope.(579) Tembec has not provided any new information requiring the reexamination of these decisions. 7. Cable reel staves Universal Reel & Recycling Inc. asked for the exclusion of contoured reel staves.(580) Staves are less than 48" long and are a component of cable reels. Staves are sold to reel manufacturers. They are classified under HTSUS 4409.10.9040. The petitioners respond that this subheading is expressly covered in the petition; therefore, the staves are within the scope.(581) The requester has not presented any information that would lead to the conclusion that they should be classified elsewhere in the tariff schedule. Department's Position: The scope of these investigations includes all products classified under HTSUS 4409.1090. The petitioners do not agree to the exclusion of contoured staves. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion 8. Box parts/crating parts/vegetable box components Sundance requests the exclusion of box parts and crating parts. It does not provide a description of the product.(582) It provides HTSUS 4415 as the proper tariff classification, with no corroboration from Customs. It indicates that the product is sold in varying degrees of finished state and asks for the exclusion of rough, semifinished, and finished products. The petitioners respond that the tariff classification provided is not corroborated by Customs documentation and that "lumber pieces to make boxes are not classified under HTSUS 4415.(583) Without a technical description, the product is simply a piece of softwood lumber that may be used to manufacture boxes, and thus within the scope. Weldwood requested the exclusion of vegetable box components.(584) The product is described as SPF lumber measuring 1 ½" by 1 1/4" in PET specified lengths, to be used as components for the construction of vegetable crate ends. No support is provided for the request, except for a generic statement that it is a highly specialized product and constitutes trivial export volume. The petitioners state that these "vegetable box components" are just short pieces of lumber.(585) The requester does not claim that they will be imported in complete kits or sets, with all necessary parts to assemble the vegetable box. Department's Position: Box parts, crating parts and vegetable box components, based on the description provided are generic pieces of lumber, generally classified under HTSUS 4407. Such products are covered under the scope of these investigations. The petitioners do not agree to the exclusion of these products. No "overarching" reasons were presented for the exclusion. Therefore, we are not granting this exclusion. Recommendation Based on our analysis of the comments received, we recommend adopting the positions described above. If these recommendations are accepted, we will publish in the Federal Register the final determination of the investigation and the final weighted-average dumping margins. Agree ______ Disagree ______ __________________ Faryar Shirzad Assistant Secretary for Import Administration _________________ Date ______________________________________________________________________ footnotes: 1. See Notice of Preliminary Determination of Sales at Less than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada, 66 FR 56062 (November 6, 2001) (Preliminary Determination). 2. The two respondents who filed allegations of ministerial errors in the preliminary determination are Canfor Corporation and Slocan Forest Products Ltd. See letters from Kaye Scholer, LLP and Baker and McKenzie, respectively, to the Department (November 13, 2001). 3. See Ministerial Error Allegations Memorandum from Christopher Smith and Taija Slaughter, Case Analysts, to Bernard Carreau, Deputy Assistant Secretary, Group 2 (January 11, 2002). 4. The petitioners are the coalition for Fair Lumber Imports Executive Committee; the United Brotherhood of Carpenters and Joiners; and the Paper, Allied-Industrial, Chemical and Energy Workers International Union. 5. In addition, case briefs were received from the American Consumers for Affordable Housing (ACAH), "an alliance of 17 organizations, representing the sectors that account for over 95% of American consumption of softwood lumber," an interested party as defined by section 777(h) of the Act; the Idaho Timber Corporation; and the provinces of New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, the Maritime Lumber Bureau, and lumber producers located in those provinces (the Maritimes). Case and rebuttal briefs were received from the British Columbia Trade Council (BCLTC) and its Constituent Associations, the Cariboo Lumber Manufacturers' Association, the Coast Forest & Lumber Association, the Interior Lumber Manufacturers' Association, and the Northern Forest Products Association; and the Ontario Forest Industries Association and Ontario Lumber Manufacturers Association (OFIA/OLMA). 6. A group of products that were excluded from the scope as classified was listed in the preliminary determinations as Group A. This list remains applicable as we determined , through our review of the petition and factual information submitted, and consultations with the parties, that the products were outside the scope of the investigations. Group A. Softwood lumber products excluded from the scope: 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 7. Weyerhaeuser also argues that the Department should not be conducting an investigation, but for different reasons. According to Weyerhaeuser, there are "legitimate issues that need to be addressed due to the differences in the structure and practices in the two countries," but the antidumping law is not the way to address the issues (Weyerhaeuser case brief at 1). Instead, Weyerhaeuser contends that the parties and governments should reach an agreement regarding the "appropriate conditions of competition that should govern trade in these products" (Id. at 2). Weyerhaeuser argues that the use of the antidumping law in this situation will lead to a mismanagement of resources, not achieve a level playing field, penalize consumers, and distort the U.S. market. 8. See BCLTC case brief at 2; See also Antidumping Agreement, Article 5.8. 9. See the petitioners' general issues rebuttal brief at 51; See also section 351.202(b) of the Department's regulations. 10. For support, the petitioners cite to Initiation-Certain Cold-Rolled Steel Sheet Products from Various Countries, Statement of Reasons, No. 4258-115, AD/1265 (Canadian Customs and Revenue Agency (CCRA) March 12, 2001); Initiation-Certain Hot-Rolled Carbon Steel Sheet from Various Countries, Statement of Reasons, No. 4218-12/CV94, 4258-114/AD1262 (CCRA January 19, 2001)(same); Initiation-Corrosion-Resistant Steel Sheet from Various Countries, Statement of Reasons, No. 4218-11/CV92 4258-113/AD-1258 (CCRA December 4, 2000). See petitioners' general issues rebuttal brief at note 136. 11. See the petitioners' general issues rebuttal brief at 54. 12. Id. 13. See Notice of Initiation of Antidumping Duty Investigation: Certain Softwood Lumber Products From Canada, 66 FR 21328, April 30, 2001 (Initiation Notice); See also AD Investigation Initiation Checklist: Certain Softwood Lumber Products from Canada (April 23, 2001) (Initiation Checklist). 14. Gilmore Steel Corp. v. United States, 585 F. Supp. 670 (Ct. Int'l Trade 1984). 15. H.R. Doc. No. 103-316 at 860 (1994). 16. See, e.g., "Issues and Decision Memorandum for the Final Determination in the Antidumping Duty Investigation of Certain Non-Frozen Apple Juice Concentrate from the People's Republic of China" from Richard W. Moreland, Deputy Assistant Secretary, Group I, Import Administration, to Joseph A. Spetrini, Acting Assistant Secretary for Import Administration, April 6, 2000, Comment 9. 17. See ACAH case brief at 2; Abitibi case brief at 5; Canfor case brief at 5; Slocan case brief at 1; Tembec case brief at 5; Weyerhaeuser case brief at 2; West Fraser case brief at 1; 18. See Canfor case brief at 6; See also Agreement on Implementation of Article VI of the General Agreement on Tariffs and Trade 1994, Article 2.4, (Antidumping Agreement). 19. See OFIA/OLMA case brief at 5. 20. The petitioners cite Canadian trade publications to provide numerous examples of these distortions. See the petitioners' case brief regarding Abitibi at 2-4. 21. See the petitioners' case brief regarding Abitibi at 5-6. 22. See Abitibi rebuttal brief at 2; Canfor rebuttal brief at 4; Slocan rebuttal brief at 2; Tembec rebuttal brief at 3; West Fraser rebuttal brief at 2; Weyerhaeuser rebuttal brief at 1; BCLTC rebuttal brief at 2; 23. Again, the parties note that during the POI, Canadian softwood lumber prices (either on average or as charged by the respondent companies) were higher in the U.S. than in Canada. Furthermore, the respondents recovered their costs and were profitable during the POI. Weyerhaeuser specifically argues that, as a U.S. company, it has more sales in the United States than in Canada; therefore, it would be illogical for the company to sell its products in the United States at less than fair value. 24. 19 CFR 351.206(h)(2)(i). The statute requires that a "relatively short period" be used as the basis for the finding of massive imports. See section 733(e)(1)(B) of the Act. 25. See the GOC rebuttal brief at 12, citing Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars from Turkey, 62 FR 9737 (March 4, 1997). 26. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Polyester Staple Fiber from the Republic of Korea, 65 FR 16880 (March 30, 2000). 27. GOC cites, among other determinations, Concrete Reinforcing Bars from Turkey, supra. 28. There have been no previous antidumping cases involving softwood lumber from Canada. 29. Each of the mandatory respondent's preliminary determination dumping margin or corrected preliminary determination dumping margin was below the 25 percent threshold for export price sales and below the 15 percent threshold for constructed export price sales. 30. In this investigation, the USITC made a preliminary determination of threat of material injury. The Department does not find a threat of material injury a sufficient basis for imputing knowledge of material injury. The U.S. Court of International Trade has upheld this practice. See The Coalition for the Preservation of American Brake Drum and Rotor Aftermarket Manufacturers v. United States, 44 F. Supp. 2d 229, 253 (1999). 31. See Tembec case brief at 15. 32. See Abitibi case brief at 2. 33. Id. at 14; The respondents claim that by using an average cost per MBF for certain cost elements for the preliminary determination, the Department compared a cost that represented an average of multiple products with sales prices which were specific to each product. 34. Id. at 21. 35. Id. at 22. 36. See Idaho Timber case brief at 1. 37. See West Fraser case brief at 3. 38. See Slocan case brief at 32. 39. See Canfor case brief at 19. 40. See West Fraser case brief at 5. 41. Chemical Products v. United States 645 F. Supp. 289, 297 (Ct. Int'l Trade1986). 42. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Canned Pineapple Fruit from Thailand (Thai Pineapple) 60 FR 29553, 29560 (June 5, 1995). 43. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Polyvinyl Alcohol from Taiwan (PVA from Taiwan), 61 FR 140064, 14072 (March 29, 1996). 44. See West Fraser case brief at 11-13. 45. See Slocan case brief at 41. 46. Id. at 41. 47. See Canfor case brief at 13. 48. Id. at 2. 49. See Idaho Timber case brief at 2-3. 50. Net realizable value is the selling price of an inventory item less the cost incurred after the split-off point for joint products. A joint production process occurs when a single process yields two or more products simultaneously. Sixth Edition Cost Accounting, A Managerial emphasis, Charles T. Horngren/George Foster, p. 478. 51. IPSCO Inc. v. United States, 965 F.2d 1056 (CAFC 1992) (IPSCO). 52. See West Fraser case brief at 3. 53. See Idaho Timber case brief at 6. 54. Id. at 3. 55. Id. at 7. 56. See West Fraser case brief at 9. 57. The point in a joint production process where joint products become separately identifiable. 58. The conversion costs incurred prior to the split-off point and the cost of the input logs are mutual to all grades of product cut from the logs. Thus, we consider it appropriate to allocate the sum of these costs to the various grades of lumber produced using the same cost allocation method. Management Accountants' Handbook, Fourth Edition, Keller, Bulloch, and Shultis at 11.5. 59. For financial reporting purposes, the respondents value inventory at the lower of the average cost per MBF or market price. 60. We consider it inappropriate to incorporate dimensional differences into the value-based methodology. While differing qualities/grades of wood are inherent in a log, dimensional differences are primarily the result of production decisions by the producer. Companies do not attempt to produce the largest possible dimensions from a given log. Instead, they produce the dimensions necessary to meet market demand. In addition, the different dimensions of lumber within a given grade category are composed of the same part of a given log, thus utilizing a homogeneous input. Lastly, the Department believes that value-based cost allocations should only be used as a means for allocating costs to broad product groups that differ significantly in value. We do not consider it appropriate to use a value- based cost allocation method for allocating different costs to a large number of varying products with only minor physical differences (e.g., the hundreds or even thousands of differing combinations of dimensions and grade of lumber cut from logs) and no clear significant differences in value. Where minor differences in values occur among products having minor physical differences and are inconsistent due to frequent and inconsistent price fluctuations, any resulting cost differences would be artificial and meaningless. Using broader product ranges results in a more meaningful allocation of costs because it captures the distinct, significant differences in values. 61. Random Lengths publication is a widely circulated and respected source of information for the wood products industry. It tracks softwood lumber prices for all major producing regions of the U.S. and Canada. 62. See Memorandum to Neal M. Halper, Director, Office of Accounting from Robert B. Greger, Senior Accountant: Analysis of Grade-Specific Period of Investigation (POI) Versus Pre-POI Relative Prices, (March 21, 2002). 63. It had been suggested that the Department might consider the allocation of sawmill costs on the basis of number of pieces of lumber produced at the sawmill. Every respondent objected to this approach, arguing that joint costs cannot be traced to different end products. While the petitioners stated that a per-piece cost allocation method might be reasonable, they did not provide support for this approach. Accordingly, we decided not to pursue this option and instead determined that a value- based cost allocation method would be more appropriate for allocating the sawmill costs. See comment 4 above for further discussion. 64. Tembec and Abitibi did not provide a cost data set based on a value allocation. 65. To support this approach Abitibi cites Notice of Final Determination of Sales At Less Than Fair Value: Fresh Cut Roses from Colombia, 60 FR 6980, 6990 (February 6, 1995) as an example of where the Department has compared average costs to average prices. 66. To support this approach Abitibi cites Daewoo Electronics Co., Ltd. v. United States, 712 F. Supp. 931, 941-942 (Ct. Int'l Trade 1989) as an example of where the Department has accepted that sales below cost can be made in the ordinary course of trade. 67. See e.g., Notice of Final Determination of Sales At Less Than Fair Value: Stainless Steel Sheet and Strip in Coils from the United Kingdom, 64 FR 30688, 30691 (June 8, 1999) and Mitsubishi Heavy Industries, Ltd. v. United States, 15 F. Supp. 2d 807, 826-827 (Ct. Int'l Trade 1998). 68. See Notice of Preliminary Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes from Canada, 66 FR, 51,010, 51,013 (October 5, 2001) and Notice of Preliminary Determination of Sales at Less Than Fair Value: Fresh Tomatoes from Mexico, 61 FR, 56,607, 56613-14, (November 1,1996). 69. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Stainless Steel Bar from France, 66 FR, 40201, 40205 (August 2, 2001). 70. See Notice of Preliminary Determination of Sales At Less Than Fair Value: Greenhouse Tomatoes from Canada, 66 FR 51010, 51013 (October 5, 2001). 71. See General Issues - Comment 4, value-based cost allocation methodology, above. 72. See also Notice of Final Determination of Sales At Less Than Fair Value: Stainless Steel Bar From France 67 FR, 3143 (January 23, 2002) referencing "Issues and Decision Memorandum" from Richard W. Moreland, Deputy Assistant Secretary for Import Administration to Faryar Shirzad, Assistant Secretary for Import Administration, dated January 23, 2002 at comment 1. 73. See SAA at 832. 74. See Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Bar From France, 67 FR, 3143, January 23, 2002, referencing "Issues and Decision Memorandum" from Richard W. Moreland, Deputy Assistant Secretary for Import Administration to Faryar Shirzad, Assistant Secretary for Import Administration, at comment 2 75. See 62 FR 27296. 76. See 62 FR 27296, 27361. 77. See, e.g., Preliminary Determination of Sales at Less than Fair Value, Live Cattle from Canada, 64 FR 36848, 36851 (July 8, 1999), and Final Determination of Sales at Less Than Fair Value: Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, From Japan, 61 FR 38139, 38145 (July 23, 1996). 78. See BCLTC case brief at 15; Slocan at 46; Tembec at 7; and, Weyerhaeuser at 42. 79. See Gustafon v. Alloyd Co., Inc., 513 U.S. 561,570 (1995) (citing the "normal rule of statutory construction" that "identical words used in different parts of the same act are intended to have the same meaning.); Sullivan v. Stroop, 496 U.S. 478,484 (1990). 80. See Abitibi's case brief at 25; BCLTC at 17; Slocan 45; Tembec at 8; West Fraser at 30; and, Weyerhaeuser at 44. 81. See Slocan case brief at 53. 82. See BCLTC case brief at 8; Slocan at 36; and, Weyerhaeuser at 36. 83. See BCLTC case brief 10. 84. See SAA at 840. 85. See Slocan case brief at 54; Tembec case brief at 13; and, Weyerhaeuser case brief at 42. 86. Floral Trade Council v. United States 41 F. Supp. 2d 319 (Ct. Int'l Trade 1999). 87. See West Fraser rebuttal brief at 14. 88. SKF II. 89. See petitioners' case brief at 32. 90. See petitioners' general issues rebuttal brief at 33 and note 76. 91. See section 773(e)(2)(A) of the Act and the SAA at 840. 92. See section 771(15) and 773(b)(1) of the Act. 93. See section 771(15) of the Act. 94. Final Results of Antidumping Duty Administrative Reviews; Antifriction Bearings (Other Than Tapered Roller Bearings) and Parts Thereof From France, Germany, Italy, Japan, Romania, Singapore, Sweden, and the United Kingdom, 63 FR 33320, 33332 (June 18, 1998). 95. See SAA at 840. 96. See also, Mitsubishi Heavy Industries, Ltd. v. United States, 275 F.3d 1056, 1063-66 (Ct. Int'l Trade 2001) (In this case, the CIT determined that the Department's decision to use CV rather than price-to- price comparisons did not mean that home market merchandise could not reasonably be compared to exported goods. Therefore, home market merchandise was the "foreign like product" for the purposes of calculating CV profit.) 97. In particular, the SAA states that the alternative statutory CV profit and SG&A methods under section 773(e)(2)(B) of the Act apply "where the method described in section 773(e)(2)(A) cannot be used, either because there are no home market sales of the foreign like product or because all such sales are at below cost prices." SAA at 840. 98. SAA at 833. 99. RHP Bearing Ltd. v. United States, 83 F. Supp. 2d 1322 (Ct. Int'l Trade 1999). 100. See Abitibi case brief at 24. 101. See Abitibi case brief at 24, see also Slocan case brief at 17 and 19 and BCLTC case brief at 13. 102. See Abitibi case brief at 29, see also Slocan case brief at 15, Weyerhaeuser case brief at 45, West Fraser case brief at 18 and 19. 103. See Abitibi case brief at 29. 104. See Weyerhaeuser case brief at 44; see also 19 U.S.C. 1677(a)(1)(A). 105. See Weyerhaeuser case brief at 45. 106. See West Fraser case brief at 18, quoting Argentina - Definitive Antidumping Measures on Imports of Ceramic Floor Tiles from Italy, WT/DS189/R, at ¶ 6.116 (September 28, 2001). See also BCLTC case brief at 14. 107. See Final Determination of Sales at Less Than Fair Value: Greenhouse Tomatoes From Canada, 67 FR 8781 (February 26, 2002). 108. See the petitioners' case brief regarding West Fraser at 10; see also the petitioners' case brief regarding Canfor at 10, the petitioners' case brief regarding Slocan at 9, the petitioners' case brief regarding Abitibi at 10, the petitioners' case brief regarding Weyerhaeuser at 10 and the petitioners' case brief regarding Tembec at 10. 109. See the petitioners' case brief regarding regarding West Fraser at 12 and 15, the petitioners' case brief regarding Abitibi at 10, the petitioners' case brief regarding Weyerhaeuser at 10, the petitioners' case brief regarding Tembec at 11, the petitioners' case brief regarding Canfor at 10 and the petitioners' case brief regarding Slocan at 10. 110. See Slocan rebuttal brief at 5; see also Canfor rebuttal brief at 5, Tembec rebuttal brief at 7, West Fraser rebuttal brief at 5, Weyerhaeuser rebuttal brief at 5, BCLTC rebuttal brief at 5 and 6. 111. See West Fraser rebuttal brief at 6. 112. See Abitibi rebuttal brief at 16. 113. See Abitibi rebuttal brief at 17; see also West Fraser rebuttal brief at 9 and 10, BCLTC rebuttal brief at 6 and 7. 114. See Abitibi rebuttal brief at 12. 115. See Abitibi rebuttal brief at 13; see also West Fraser rebuttal brief at 8 and 9. 116. See Abitibi rebuttal brief at 13. 117. See the petitioners' case brief regarding common issues at 3. 118. Certain respondents had already submitted databases containing data for similar merchandise, while others had not. Among those respondents that had submitted data for similar merchandise, some had reported all similar sales, while others had reported only selected similar sales. In order to ensure consistency across all respondents, the Department instructed all companies to submit home market sales on a uniform basis. 119. Abitibi case brief at 30. 120. U.H.F.C. v. United States, 916 F.2d 689 (Fed Cir. 1990). 121. Weyerhaeuser case brief at 47. 122. Abitibi case brief at 32. 123. E.g., Tembec case brief at 37-38, including note 40; Slocan case brief at 22-24. 124. If comparison market prices are not used because they may be outside the ordinary course of trade, the Department would never be able to calculate value-based difmers. See Abitibi case brief at 35. 125. Id. at 34; Tembec case brief at 37; West Fraser case brief at 23; and Weyerhaeuser case brief at 50. 126. Abitibi case brief at 35. 127. Abitibi case brief at 37; see also Weyerhaeuser case brief at 49. 128. Abitibi case brief at 38; see also Slocan case brief at 22; and Weyerhaeuser rebuttal brief at 5. 129. Weyerhaeuser case brief at 48. 130. Id. at 49. 131. West Fraser case brief at 27. 132. Slocan case brief at 25. 133. Slocan case brief at 28 - 29. 134. Slocan case brief at 29. 135. Slocan case brief at 30, note 12. 136. Slocan case brief at 31. 137. Abitibi rebuttal brief at 18. 138. Id. 139. The petitioners' rebuttal brief regarding common issues at 8, characterizing the Preliminary Determination (66 FR 56062, 56066). 140. The petitioners' rebuttal brief regarding common issues at 8; see also Notice of Final Determination of Sales at Less Than Fair Value: Nepheline Syenite from Canada, 57 FR 9237, 9240 (March 17, 1992). 141. Id. at 12. 142. Id. at 7. 143. The petitioners' rebuttal brief regarding common issues at 9. 144. The petitioners' rebuttal brief regarding common issues at 10; see also Preliminary Determination at 57 FR 56062, 56066. 145. The petitioners' rebuttal brief regarding common issues at 9. 146. Id. at 11. 147. Id. at 9. 148. Slocan rebuttal brief at 19. 149. Canfor rebuttal brief at 6. 150. See Department of Commerce, Differences in Merchandise; 20% Rule, Policy Bulletin 92.2 (July 29, 1992). 151. See Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27296, 27370 (May 19, 1997) and section 351.411(b) of the Department's regulations. 152. The parties agreed that it was not appropriate to compare across species. 153. Abitibi rebuttal brief at 7. 154. See, e.g., Certain Cut-to-Length Steel from Finland, 62 FR 18468, 18473 (April 1997). 155. See Nepheline Syenite, 57 FR at 9240. 156. See Abitibi case brief at 70; West Fraser Case Brief at 40; See also Notice of Agreement; Monitoring and Enforcement Pursuant to Sections 301 and 306: Canadian Exports of Softwood Lumber, 61 FR 28626 (June 5, 1996) (SLA). 157. See Abitibi case brief at 71; Weyerhaeuser case brief at 55; See also SLA. 158. See Abitibi case brief at 70; West Fraser case brief at 40; See also First Submission of the United States, December 30, 1998 at 8. 159. See Abitibi case brief at 71. 160. See Weyerhaeuser case brief at 56; See also Certain Cotton Yarn Products from Brazil, 55 FR 3442 (February 1, 1990). 161. See the petitioners' general issues rebuttal brief at 42; See also SLA. 162. SLA Article I.1. 163. We note that, in Cotton Yarn Products from Brazil, we offset the net countervailable subsidy rate by the amount of export taxes because the taxes were specifically intended to offset the subsidies received. 164. A board foot is any piece of wood that is 144 cubic inches in volume, usually described as a piece of wood 12 inches long by 12 inches wide by 1 inch thick. 14.7 billion board feet = 34,692,000 cubic meters. 165. See Floral Trade Council v. United States, 41 F. Supp. 2d 319, 322 n.4 (Ct. Int'l Trade 1999) and FAG Italia v. United States, Ct. No. 97-02- 00260-S, slip-op. 00-154, (Ct. Int'l Trade 2000). 166. Notice of Final Determination of Sales at Less Than Fair Value: Pure Magnesium from Israel 66 FR 49349 (September 27, 2001) referencing "Issue and Decision Memorandum " from Richard W. Moreland, Deputy Assistant Secretary for Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, September 14, 2001, comment 6. 167. See Notice of Final Determination of Sales At Less Than Fair Value: Pure Magnesium from Israel, 66 FR, 49349 (September 27, 2001) referencing "Issues and Decision Memorandum" from Richard W. Moreland, Deputy Assistant Secretary for Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, comment 6. 168. See Memorandum to Neal M. Halper through Michael P. Martin from Taija Slaughter: Verification Report on the Cost of Production and Constructed Value Data Submitted by Canfor Corporation; (February 4, 2002) at 27-28. 169. See Final Results of Antidumping Duty Administrative Review: Certain Cold-Rolled and Corrosion-Resistant Carbon Steel Flat Products from Korea 62 FR 18404,18430 (April 15, 1997). 170. See U.S. Department of Commerce Internal Memorandum from Peter S. Scholl to Neal M. Halper, Case No. A-122-838 at 24-25 (January 29, 2002)("Cost Verification Report"). 171. See ACAH case brief at 3. 172. See BCLTC case brief at 20; OFIA/OLMA case brief at 7; Canfor case brief at 11; and Weyerhaeuser case brief at 53. 173. See Tembec case brief at 27. 174. See West Fraser case brief at 37, see also Abitibi case brief at 89. 175. See BCLTC case brief at 20; Abitibi case brief at 91; Canfor case brief at 10; and Weyerhaeuser case brief at 51. 176. See Abitibi case brief at 91. 177. See Tembec case brief at 26; see also Abitibi case brief at 90. 178. See BCLTC case brief at 20, and cite to Rust. v. Sullivan, 500 U.S. 173, 187 (1991); see also West Fraser case brief at 39, and cite to Cinsa, S.A. de C.V. v. United States, 966 F. Supp. 1230, 1238 (Ct. Int'l. Trade 1997). 179. See BCLTC case brief at 21, and cite to section 773(a) of the Act. 180. See OFIA/OLMA case brief at 8. 181. The terms European Community and European Union are used interchangeably. 182. See ACAH case brief at 2; BCLTC case brief at 20; OFIA/OLMA case brief at 7 and 8; Abitibi case brief at 87; Canfor case brief at 10; Slocan case brief 56; Tembec case brief at 25; West Fraser case brief at 37and 38; and Weyerhaeuser case brief at 51. 183. See Abitibi case brief at 87and 88; Canfor case brief at 10; and West Fraser case brief 38. 184. See OFIA/OLMA case brief at 8. 185. See BCLTC case brief at 20 and 21; OFIA/OLMA case brief at 8; Abitibi case brief at 92; and Slocan case brief at 56. 186. See BCLTC case brief at 21, and cite to Murray v. Schooner Charming Betsy, 6 U.S. 64, 118 (1804); OFIA/OLMA case brief at 16 and 17; Abitibi case brief at 92; West Fraser case brief at 38; and Weyerhaeuser case brief at 51. 187. See OFIA/OLMA case brief at 8. 188. See the petitioners' rebuttal brief at 43. 189. See Id. at 45. The SAA addresses the effect of the report issued under the WTO Dispute Settlement Understanding by the WTO Dispute Settlement Panel and the Appellate Body. 190. See Id. 191. See Id. at 43; and cites to Section 735(c)(1)(B)(i)(I) and Sections 771(35)(A) and (B )of the Act. 192. See Id. at 44, and cite to Issues and Decision Memorandum for Hot- Rolled Carbon Steel Flat Products from the Netherlands, 66 Fed. Reg. 50,408 (final, 2001) (Netherlands Hot-Rolled Decision Memo). 193. See the petitioners' rebuttal brief at note 116. 194. See Id. 195. See Id; see also Erie Railroad v. Tompkins, 304 U.S. 64 (1938). 196. See the petitioners' rebuttal brief at 46; see also Netherlands Hot- Rolled Decision Memo and Porcelain-on-Steel Cookware From Mexico: 13th Administrative Review, No. USA-MEX-01-1904-02 (NAFTA Bi-national Panel Review), at 53-54 (September 7, 2001). 197. See 926 F. Supp. 1138, 1150-51 (Ct. Int'l Trade 1996). 198. For a list of recent cases where the Department has applied its zeroing practice see the petitioners' general issues rebuttal brief at note 118. 199. See Maritime case brief at 1. 200. See Id. at 2; see also Notice of Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada,66 FR 43186, 40229 (August 17, 2001). 201. See Maritime case brief at 6. 202. See Id. 203. See Id. at 7 and 8. 204. See the petitioners' general issues rebuttal brief at 48. 205. See Id. at 49; see also 19 CFR 351.204(e). 206. See Abitibi rebuttal brief at 26. 207. See Section 731 of the Act. 208. See Section 732(a) of the Act. 209. See Notice of Final Determination at Sales of Less than Fair Value: Certain Pasta from Italy, 61 FR 30326 (June 14, 1996). 210. See Abitibi case brief at 79. 211. See Id. at notes 146, 148; See also Status International S.A. v. M&D Maritime Ltd, 994 F. Supp. 182, 186 (S.D.N.Y. 1988); United States v. Bestfoods (Bestfoods), 524 U.S. 51, 61 (Supreme Court 1998). In the Bestfoods decision, Abitibi notes, the Supreme Court determined that "'{i}n order to abrogate a common-law principle, the statute must speak directly to the question addressed by the common law.'" 212. See Abitibi case brief at 80. 213. See Id. at 81; See also Nextwave Personal Communications Inc. v. Federal Communication Commission, 254 F.3d 130, 133 (D.C. Cir. 2001). 214. See Abitibi case brief at 81. 215. See Id. at 82. 216. See Id. at 82-83; See also FAG Kugelfischer Georg Schafer KgaA v. United States, 932 F. Supp. 315, 322-4 (Ct. Int'l Trade 1996); Nihon Cement Co. v. United States, 17 CIT 400, 1993 WL 185208 (Ct. Int'l Trade 1993). 217. See Abitibi case brief at note 158; See also section 733(a)(1)(A)(ii) of the Act and 351.222(b)(2)(i)(C) of the Department's regulations. 218. See Abitibi case brief at note 159; See also section 771(7)(F)(ii) of the Act and Amended Regulation Concerning the Revocation of Antidumping and Countervailing Duty Orders, 64 FR 51236, 51238 (September 22, 1999). 219. See Id. at 84. 220. See Id. at 85; See also Abitibi's November 29, 2001 submission at 027. 221. Abitibi notes that SSL pays Abitibi to perform some of its planing and drying operations at an Abitibi mill, but Abitibi contends that the Department's major input rule ensures that this arrangement does not enable production or cost manipulation. 222. The petitioners cite Queen's Flowers de Colombia v. United States, 881 F. Supp. 617, 622 (Ct Int'l Trade 1997) and Steel Concrete Reinforcing Bars from the Republic of Korea, Issues and Decision Memorandum, 66 FR 33526 (June 2001). See the petitioners' rebuttal brief regarding Abitibi at 2. 223. The petitioners cite to the preamble to the Department's regulations (62 FR 27296, 27345) for support. See the petitioners' rebuttal brief regarding Abitibi at 3. They also note that, subsequent to the promulgation of the Department's "potential manipulation" standard, the CIT has upheld the Department's decision to collapse two entities. See Koenig & Bauer-Albert AG v. United States, 90 F. Supp. 2d 1284, 1286-87 (Ct. Int'l Trade 2000); See also AK Steel Corp. v. United States, 34 F. Supp 2d 756, 764 (Ct. Int'l Trade 2998), aff'd in part, rev'd in part, 203 F.3d 1330(Fed. Cir. 2000). 224. See the petitioners' rebuttal brief regarding Abitibi at 5. 225. See Memorandum from Amber Musser and Chris Riker to Bernard Carreau: Collapsing of Respondent Abitibi-Consolidated Inc. with Scierie Saguenay Ltee. (July 18, 2001). 226. We note that our decision, with respect to the issue of affiliation, in this investigation is consistent with our decision in Certain Hot- Rolled Carbon Steel Flat Products from Taiwan (Hot Rolled). In Hot Rolled, we found that China Steel Corporation (China Steel) and Yieh Loong Enterprise Co. (Yieh Loong) were affiliated based on a significant potential for manipulation and specifically noted that the Department's regulations do not require past manipulation of prices or production to have occurred. See Notice of Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products from Taiwan, 66 FR 49618, September 28, 2001. Furthermore, despite the fact that China Steel only had a minority interest in Yieh Loong, we found they were affiliated due to the fact that China Steel was the largest shareholder in Yieh Loong, China Steel's officers were two of the three members of Yieh Loong's board of directors, and the operations of the two companies are closely intertwined. See "Issues and Decision Memorandum for the Antidumping Investigation of Certain Hot-Rolled carbon Steel Flat Products from Taiwan" from Joseph A. Spetrini, Deputy Assistant Secretary, Enforcement Group 3, to Faryar Shirzad, Assistant Secretary for Import Administration, September 17, 2001, Comment 1. Thus, we find that determining affiliation in these types of investigations is a highly fact dependent process and not one completely controlled by the Act or the Department's regulations, although these sources provide guidance. 227. For support, Abitibi cites sections 773(e)(2)(A) and 773(b)(3)(B) of the Act; Issues and Decision Memorandum for the Antidumping Investigation of Honey from Argentina (October 4, 2001) (Honey from Argentina); and Notice of Final Determination of Sales at Less Than Fair Value: Extruded Rubber Thread from Indonesia, 64 FR 14690 (March 26, 1999). 228. See Issues and Decision Memorandum for the Antidumping Duty Administrative Reviews on Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Germany (February 26, 2001) (LNPPs from Germany); Silicon Metal From Brazil: Final Results of Antidumping Duty Administrative Review and Determination Not To Revoke in Part, 62 FR1970 (January 14, 1997); Issues and Decision Memorandum fro the Administrative Review of Circular Welded Non-Alloy Steel Pipe from the Republic of Korea (April 11, 2001); Issues and Decision Memorandum for the Administrative Review of Brass Sheet and Strip from Canada (June 15, 2000); and Notice of Final Results and Partial Rescission of Antidumping Duty Administrative Review: Certain Pasta From Turkey, 63 FR 68429 (December 11, 1998). 229. See E.I. Dupont De Nemours & Company v. the United States, Slip 98-7 at 16 (Ct. Int'l Trade 1998). 230. See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Certain Hot-Rolled Carbon Steel Flat Products From Kazakhstan, 66 FR 50397 (October 3, 2001). 231. See section 773(f)(1)(A) of the Act. 232. See Notice of Final Determination of Sales at Less Than Fair Value: Fresh Atlantic Salmon From Chile, 63 FR 31411, (June 9, 1998) (Salmon from Chile) and Final Determination of Sales at Less Than Fair Value: New Minivans From Japan, 57 FR 21937 (May 26, 1992). 233. See, Memorandum from LaVonne Jackson to Neal Halper, Verification Report on the Cost of Production and Constructed Value Data Submitted by Abitibi Consolidated Inc., January 22, 2001, pp. 8, and 32 ("Cost Verification Report"). 234. See, footnote 3 of Abitibi's audited consolidated financial statements, appendix A-12 of Abitibi's June 22, 2001 section A response. 235. See Honey from Argentina and Salmon from Chile. 236. See, e.g., LNPPs from Germany. 237. See, e.g., Salmon from Chile. 238. See Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan ("SRAMs from Taiwan"), 63 FR 8909 (February 23, 1998). 239. See Issues and Decision Memorandum from the Administrative Review of Stainless Steel Bar from Japan ("Stainless Steel Bar from Japan"), (March 14, 2000). 240. See Aramid Fiber from the Netherlands: Cost of Production Analysis for Final Results of Review Memorandum (September 25, 1996). 241. See Issues and Decision Memorandum for the Antidumping Duty Administrative Review of Persulfates from the People's Republic of China (August 14, 2001) and Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Wire Rod From Sweden, 63 FR 40449 (July 29, 1998). 242. See Aramid Fiber Formed of Poly Para-Phenylene Terephthalamide From the Netherlands; Final Results of Antidumping Administrative Review ("Aramid Fiber from the Netherlands"), 64 FR 61822 (November 15, 1999). 243. See e.g., SRAMs from Taiwan, and Porcelain-on-Steel Cookware From Mexico: Notice of Final Results of Antidumping Duty Administrative Review (POS Cookware from Mexico), 62 FR 25908 (May 12, 1997). 244. See SRAMs from Taiwan, POS Cookware from Mexico, and Final Determination of Sales at Less Than Fair Value: Oil Country Tubular Goods from Austria, 60 FR 33551 (June 28, 1995). 245. See Dupont De Nemours & Company v. United States, Slip Op. 99-47 (Ct. Int'l Trade 1999). 246. See E.I. Dupont De Nemours & Company v. the United States, Slip 98-7 at 16 (Ct. Int'l Trade 1998). 247. See the petitioners' case brief regarding Canfor at 24 and 25. 248. See Id. at 23 for specific Federal Register cites used by the petitioners to support the use of adverse facts available. 249. See Canfor rebuttal brief at 14, and cite to the Department's simplified reporting requirements letter to Kaye Scholer LLP from Gary Taverman, Office Director, Group II, Office V (June 26, 2001). 250. See Canfor rebuttal brief at 11. 251. See Id. at 13. 252. See Id. at 15. 253. See Id. 254. See Id. at 17; see also Notice of Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Countervailing Duty Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada, 66 FR 43186 (August 17, 2001) (CVD Prelim). 255. See Canfor rebuttal brief at 17. 256. See Id. at 19, see also Antidumping Questionnaire at B-7. 257. See Canfor rebuttal brief at 19. 258. See Id. at note 12. 259. See Id. at 16, and cite to Canfor's section A response at Exhibit A- 16, page 31 (June 22, 2001); see also Canfor's November 19, 2001 submission at Exhibit A-16, page 27. 260. See Kaye Scholer LLP's submission on behalf of Canfor dated May 3, 2001, at 10; see also Kaye Scholer LLP's submission on behalf of Canfor dated May 21, 2001, at 3; Kaye Scholer LLP's submission on behalf of Canfor dated June 8, 2001, at 3; and Kaye Scholer LLP's submission on behalf of Canfor dated June 20, 2001. 261. See the petitioners' submission of May 11, 2001 at 16. 262. See the petitioners' submission of June 8, 2001 at 14. 263. See Kaye Scholer LLP's submission on behalf of Canfor dated June 25, 2001, at 9-11. The petitioners objected to that request in their submission of July 2, 2001. The Department met with Canfor on July 3, 2001, to discuss its exclusion requests for fascia, furring strips and trim blocks, and on July 17, 2001, the Department denied Canfor's request to exempt those products from reporting. 264. See the petitioners' case brief at 31, see also Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Sheet and Strip in Coils From Germany, 64 FR 30,740 (June 8, 1999) (Stainless Coils from Germany). 265. See Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 1998); see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737 (March 4, 1997); and Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Round Wire from Taiwan, 64 FR 17336 (April 9, 1999). 266. See Asociacion Colombiana de Exportadores de Flores v. United States, 6 F. Supp. 2d 865, 879 (Ct. Int'l Trade 1998) and Notice of Final Determination of Sales At Less Than Fair Value: Steel Concrete Reinforcing Bars from Korea, 66 FR 33526 (June 22, 2001) referencing "Issues and Decision Memorandum from Bernard Carreau, Deputy Assistant Secretary for Import Administration to Faryar Shirzad, Assistant Secretary for Import Administration, at comment 7. 267. See, e.g. Notice of Final Results of Antidumping Duty Administrative Review of Silicon Metal from Brazil, 64 FR 6305, 6311 (February 9, 1999). 268. See the petitioners' case brief regarding Canfor at page 31. 269. See the petitioners' case brief regarding Canfor at page 31. 270. See Canfor's rebuttal brief at page 26. 271. S ee Canfor's rebuttal brief at page 26. 272. See Slocan case brief at 67. 273. See the petitioners' rebuttal brief regarding Slocan at 6. 274. See the petitioners' rebuttal brief regarding Slocan at 6 and 7; see, also 19 CFR 351.401(c) (2001). 275. See the petitioners' rebuttal brief regarding Slocan at 8. 276. See the petitioners' case brief regarding Slocan at 22. 277. See the petitioners' case brief regarding Slocan at 23; see also Florex v. United States, 705 F. Supp. 582, 588, 13 CIT 28, 33 (Ct. Int'l Trade 1988) and Persico Pizzamiglio v. United States, 16 CIT 299(Ct. Int'l Trade 1994). 278. See Slocan rebuttal brief at 10. 279. See Slocan rebuttal brief at 10. 280. See the petitioners' case brief regarding Slocan at 25; see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 62 FR 61747 (November 19, 1997). 281. See Slocan rebuttal brief at 13. 282. See Slocan rebuttal brief at 13. 283. See the petitioners' case brief regarding Slocan at 26; see also the Department's sales verification report at 2. 284. See the petitioners' case brief regarding Slocan at 25 and 26. 285. See Slocan rebuttal brief at 13. 286. See petitioners' rebuttal brief regarding Slocan at 2. 287. See petitioners' rebuttal brief regarding Slocan at 4. 288. See Memorandum from Christopher Smith to Bernard Carreau, Deputy Assistant Secretary, Group II, regarding ministerial error allegations, at 2 (January 11, 2002). 289. See Final Results of Antidumping Duty Administrative Review: Certain Preserved Mushrooms from Indonesia, 66 FR 36754 (July 13, 2001) referencing " Issues and Decision Memorandum" from Richard Moreland, Deputy Assistant Secretary for Import Administration to Bernard Carreau, fulfilling the Duties of Assistant Secretary for Import Administration, comment 8. 290. Tool Steel from the Federal Republic of Germany; Correction to Early Determination of Antidumping Duty, 51 FR 10071, 10072 (March 24, 1986) and Final Results of Antidumping Duty Administrative Review of Solid Urea from the Former German Democratic Republic, 62 FR 61271 (November 17, 1997). 291. Notice of Final Determination of Sales at Less than Fair Value; Certain Hot-Rolled Carbon Flat Products from the Netherlands, 66 FR 50408 (October 3, 2001). 292. Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909, 8930 (February 23, 1998). 293. See Notice of Final Results of Antidumping Duty Administrative Review: Oil Country Tubular Goods from Mexico, 66 FR 15832 (May 15, 2001), referencing "Issues and Decision Memorandum" from Joseph A. Spetrini, Deputy Assistant Secretary for Import Administration, to Bernard T. Carreau, fulfilling the duties of Assistant Secretary for Import Administration, comment 5; Notice of Final Determination of Sales At Less Than Fair Value; Certain Hot-Rolled Carbon Steel Flat Products from Thailand, 66 FR 49622 (September 28, 2001), referencing "Issue and Decision Memorandum " from Joseph A. Spetrini, Deputy Assistant Secretary for Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, comment 7; Notice of Final Determination of Sales at Less Than Fair Value; Stainless Steel Round Wire from Canada, 64 FR 17324, 17333 (April 9, 1999); and Notice of Final Determination of Sales at Less Than Fair Value; Fresh Atlantic Salmon from Chile, 63 FR 31411, 31433 (June 9, 1998). 294. See Notice of Final Determination of Sales at Not Less Than Fair Value; Low Enriched Uranium from the United Kingdom, Germany and the Netherlands 66 FR 65886 (December 21, 2001) referencing "Issue and Decision Memorandum " from Bernard T. Carreau, Deputy Assistant Secretary for Import Administration, to Faryar Shirzad, Assistant Secretary for Import Administration, comment 23. 295. See West Fraser case brief at 42-43. 296. See Id. at 44. 297. See Id. at 44-45. 298. See West Fraser sales verification report (January 22, 2002) at 24- 27. 299. See the petitioners' case brief regarding West Fraser at 22. 300. See Id., at 23. 301. See Id., at 24. 302. See West Fraser sales verification report, Document 9 of verification Exhibit 1 and verification Exhibit 13. 303. See Weyerhaeuser case brief at 58. 304. See the petitioners' case brief regarding Weyerhaeuser at 25. 305. See the Department's verification agenda at 2. 306. See the petitioners' case brief regarding Weyerhaeuser at 26. 307. See Weyerhaeuser rebuttal brief at 16. 308. See Weyerhaeuser rebuttal brief at Exhibit 1. 309. See the petitioners' case brief at 29-30, citing the Department's sales verification report at 42. 310. See Id. at 30. 311. See Id. at 30-31. 312. See Weyerhaeuser rebuttal brief at 20 and 21. 313. See Id. 314. See Id. at 38. 315. See the petitioners' case brief at 31-32. 316. See Id. at 32-33. 317. See Weyerhaeuser's Second Supplemental Response at 17. 318. See Weyerhaeuser case brief at 78; see also Weyerhaeuser's rebuttal brief at 29. 319. See the petitioners' case brief regarding Weyerhaeuser at 35. 320. See Id. at 36. 321. See Id. 322. See Weyerhaeuser's rebuttal brief at 29. 323. See Id. at 27. 324. See Id. at 28. 325. See Id. 326. See Id. 327. See Id. at 29. 328. See Id. 329. See the petitioners' case brief regarding Weyerhaeuser at 37. 330. See Weyerhaeuser rebuttal brief at 30. 331. We note that section 776(a) of the Act directs the Department to use facts available if: (1) necessary information is not available on the record, or (2) an interested party or any other person (A) withholds information that has been requested by the administering authority or the Commission under this title, (B) fails to provide such information by the deadlines for submission of the information or in the form and manner requested, subject to subsections (c)(1) and (e) of section 782, (C) significantly impedes a proceeding under this title, or (D) provides such information but the information cannot be verified as provided in section 782(i). 332. See Weyerhaeuser sales verification report at 42. 333. See Notice of Final Results of Antidumping Duty Administrative Review: Certain Forged Steel Crankshafts From the United Kingdom (October 21, 1996). 334. See the Department's Sales Verification Report regarding Weyerhaeuser at page 28. 335. See Weyerhaeuser's second supplemental B and C questionnaire, dated December 5, 2001 at page 14. 336. See Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 1998); see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737 (March 4, 1997); and Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Round Wire from Taiwan, 64 FR 17336 (April 9, 1999). 337. See the petitioners' case brief regarding Weyerhaeuser at 21-23. 338. See January 18, 2002 letter to the Department. 339. See the petitioners' cite to Mitsui & Co. v. United States, 18 C.I.T. 185, 201 (Ct. Int'l Trade 1994) for the proposition that "parties mus be given a reasonable and meaningful opportunity to participate ...." 340. See the petitioners' case brief at 23. 341. Note the differentiation between WBM-U.S., located in the United States, and WBM, located in Canada. 342. See the petitioners' case brief regarding Weyerhaeuser at 34. 343. See Id. at 33 and 34. 344. See Id. at 34, see also cites to the Final Determination of Certain Cold-Rolled Carbon Steel Flat Products from Korea, 63 Fed. Reg. 781, 802 (1998) (Cold-Rolled from Korea) and Fabrique De Fer Charlerois S.A. v. United States, Slip-Op 01-140 at 11 (Ct. Int'l Trade) (December 4, 2001) (Fabrique). 345. See Weyerhaeuser rebuttal brief at 25; see also cite to February 4, 2002 Weyerhaeuser Sales Verification Report at 38 and 56. 346. See Id. at 26. 347. See Id. 348. See Weyerhaeuser rebuttal brief at 27. 349. See Miller & Chevalier's section B and C questionnaire response on behalf of Weyerhaeuser, dated July 23, 2001, at C-36. 350. See Final Determination of Certain Cold-Rolled Carbon Steel Flat Products from Korea, 63 Fed. Reg. (1998). 351. See the petitioners' case brief regarding Weyerhaeuser at 40. 352. See Weyerhaeuser rebuttal brief at 31. 353. See Notice of Final Determination of Sales at Less Than Fair Value: Static Random Access Memory Semiconductors From Taiwan, 63 FR 8909 (February 23, 1998); see also Notice of Final Determination of Sales at Less Than Fair Value: Certain Steel Concrete Reinforcing Bars From Turkey, 62 FR 9737 (March 4, 1997); and Notice of Final Determination of Sales at Less Than Fair Value: Stainless Steel Round Wire from Taiwan, 64 FR 17336 (April 9, 1999). 354. See the February 4, 2002 Weyerhaeuser Verification Report at 49; see also Exhibits F-8 and F-9. 355. See Weyerhaeuser case brief at 78. 356. See Id. at 77. 357. See the petitioners' case brief at 27, quoting Florex v. United States, 705 F. Supp. 582, 588 (Ct. Int'l Trade 1988). 358. See the petitioners' cite to Notice of Final Determination of Sales at Less Than Fair Value: Certain Cut-to-Length Carbon Steel Plate from South Africa, 61 FR 61731, as precedent. 359. See Weyerhaeuser case brief at 79; see also February 4, 2002 Weyerhaeuser Sales Verification Report at 45. 360. Cost Verification Report at page 3. 361. See Stainless Steel Bar From India, 65 Fed. Reg. 48965 (Dep't Commerce 2000), that practice was recently affirmed in AK Steel Corp., 34 F. Supp.2d at 765 ; see also section 773(b)(3) of the Act (costs include material costs used in producing the foreign like product). 362. See, e.g., Koyo Seiko Co. v. United States 92 F.3d 1162, 1165 (Fed. Cir. 1996); Cultivos Miramonte, S.A. v. United States 980 F. Supp. 1268, 1270 (Ct. Int'l Trade 1997). 363. See Memorandum to: Neal Halper, Director, Office of Accounting - Verification Report on the Cost of Production and Constructed Value Data Submitted by Weyerhaeuser Company Ltd. and attached cost verification exhibit 52. 364. Id. at 3. 365. See Intermediate Accounting, Welsch, Zlatkovich, and Harrision, 6th Edition (1982) at 414. 366. Gray Portland Cement and Clinker from Mexico (Gray Portland Cement and Clinker from Mexico, 58 Fed. Reg. 47253, 47257 (Dep't Commerce 1993) (final)), they argue that the Department calculated an amount for depletion stating: "{I}n this case, following Mexican GAAP would result in an inaccurate measurement of cost since the mine depletion expenses would not be included as part of COP, yet all costs incurred must be reflected in COP." 367. See Weyerhaeuser's Section A response at exhibit A-15, pages 53 and 63 of Annual Report. 368. See, e.g., Issues and Decision Memorandum for the Final Results of the Antidumping Duty Administrative Review and Final Determination Not to Revoke in Part: Canned Pineapple Fruit from Thailand, 65 Fed. Reg. 77851, Comment 12 (December 13, 2000) (cost included in G&A should arise from the company's operations at issue); Issues and Decision Memorandum for the Final Determination in the Antidumping Duty Investigation of Expandable Polystyrene Resins From the Republic of Korea, 65 Fed. Reg. 69284, Comment 7 (November 16, 2000) (Department excluded certain selling expenses because these costs do not relate to the cost of production); and Issues and Decision Memorandum for the 1998-1999 Administrative Review of Oil Country Tubular Goods from Mexico: Final Results of Antidumping Duty Administrative Review, 66 Fed. Reg. 15832, Comment 5 (March 21, 2001) ("there is no bright-line definition in the Act of what a G&A expense is or how the G&A expense rate should be calculated, the Department has, over time, developed a consistent and predictable practice for calculating and allocating G&A expenses. This consistent and predictable method is to calculate the rate based on the company-wide G&A costs incurred by the producing company"). 369. See, e.g., Brass Sheet and Strip from Canada: Final Results of Antidumping Duty Administrative Review, 65 FR 37520 (June 15, 2000) (the Department found that respondent's allocation of an appropriate portion of its corporate parent's G&A expenses to the production of subject merchandise was reasonable and representative. The Department further explained that it used consolidated cost of sales to allocate the parent G&A expenses.); Porcelain-on-Steel Cookware from Mexico, 66 Fed. Reg. 12,926 (March 1, 2001) (Final AR) (Department stated that "Our preferred methodology, as set out in section 773(e) of the Act, is to base the G&A factor on the actual amounts incurred and realized by the specific exporter or producer being examined in the review." The Department also explained that would double-count costs if it included subsidiary G&A expenses that had already been accounted for elsewhere.). 370. See Weyerhaeuser's Section A Response, Exh. A-15, page 53 of Annual Report. 371. See, e.g., Pasta from Italy: Final Results of Antidumping Duty Administrative Review, 65 FR 77852 (December 13, 2000) (the Department stated that "When calculating ratios, the denominator in the ratio and the amount to which the ratio is applied must be on the same basis. To do otherwise misstates the results.). 372. See, e.g., Fresh Cut Roses From Colombia, 60 Fed. Reg. 6980, 7016 (Dep't Commerce 1995) (final); and Certain Cut-to-Length Steel Plate From Germany, 61 Fed. Reg. 13834, 13837 (Dep't Commerce 1996) (final). 373. See Weyerhaeuser's Section A Response, Exhibit A-15, page 53 of Annual Report. 374. See Steel Wire Rod From Canada, 63 Fed. Reg. 9182, 9190 (Dep't Commerce 1998) (final). 375. See, e.g., Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada, 62 Fed. Reg. 18448, 18465 (Dep't Commerce 1997) (final). 376. See, e.g., Certain Corrosion-Resistant Carbon Steel Flat Products and Certain Cut-to-Length Carbon Steel Plate From Canada, 62 Fed. Reg. 18448, 18465 (Dep't Commerce 1997) (final). 377. See Id. 378. See, e.g., Certain Preserved Mushroom from Indonesia, 66 Fed. Reg. 36,754, Comment 6 (July 13, 2001) (Final AR) (Department stated that "other income" consisted of overpayment of sales, income from mushrooms "repeat" (scrap), income from sales of scrap compost, fees from production, and reimbursement ("finality") from employee. Consistent with past reviews, we consider this type of income to be of a general nature, arising from the company's operations. Therefore, we have continued to allow it as an offset to G&A."). 379. The Department bases its determination of whether the merchandise, as described in the petition, constitutes a single class or kind of merchandise on an evaluation of the criteria set forth in Diversified Products Corp. v. United States (Diversified Products), which look to differences in the: (1) general physical characteristics of the merchandise, (2) the expectations of the ultimate purchaser, (3) ultimate uses of the merchandise, (4) channels of trade in which the merchandise moves, and (5) manner in which the product is advertised or displayed. 572 F. Supp. 883, 889 (CIT 1983) (codified in the Department's Regulations at 19 CFR 351.225 (2001)). 380. See Memorandum to Bernard T. Carreau, Deputy Assistant Secretary, Group II, Class or Kind Determinations and Consideration of Certain Scope Exclusion Requests, March 12, 2002 (March 12 Scope Memo) at 2. See e.g., case brief regarding scope and class or kind issues from Abitibi (March 15, 2002) (Abitibi's scopebrief) at 8, case brief regarding scope and class or kind issues from Tembec (March 15, 2002) (Tembec's scope brief) at 1-2 (noting that Tembec incorporated by reference its earlier submissions on scope issues), case brief regarding scope and class or kind issues from Weyerhaeuser (March 15, 2002) (Weyerhaeuser's scope brief) at 8. The Department notes that other parties submitted briefs on this issues which contained similar arguments. 381. See March 12 Scope Memo at 2-4. 382. See Id. at 3. 383. Sections 702(c)(2) and 732(a)(1) of the Act. 384. Section 731(1) of the Act. The relief sought would apply to all subject merchandise that is within the scope of the investigations. See Section 731(2) of the Act. 385. See 19 CFR 351.225(k)(1) (2001). See also Eckstrom Industries, Inc. v. United States, 254 F.3d 1068, 1071-72 (Fed. Cir. 2001) (citing Smith Corona Corp. v. United States, 915 F.2d 683, 685 (Fed. Cir. 1990)). 386. See generally Final Determination of Sales at Less Than Fair Value: Certain Carbon Alloy Steel Wire Rod from Japan, Comment 1, 59 FR 5987, 988- 989 (Feb. 9, 1994). 387. Minebea Co. v. U.S., 782 F. Supp. 117, 120 (CIT 1992); see also Sundstrand Corporation v. U.S., 890 F. Supp. 1100 (CIT 1995)("The determination as to whether a product is covered by an antidumping duty investigation is one which the ITA must make with ample deference to the intent of the petition."); Mitsubishi Electric Corp. v. U.S., 700 F. Supp. 538, 555 (CIT 1988) aff'd, 898 F.2d 1577, 1583 (Fed. Cir. 1990) ("The ITA has the authority to define and/or clarify what constitutes the subject merchandise to be investigated as set forth in the petition containing the intent of petitioner expressed in as specific and definite terms, descriptions, and language as reasonably expected of petitioner. . . .") 388. See Notice of Initiation of Antidumping Duty Investigations: Spring Table Grapes From Chile and Mexico, 66 FR 26831, 26833 (2001). See also 19 C.F.R. § 351.225(k) (2001). 389. See Torrington Co. v. U.S., 745 F. Supp. 718 (CIT 1990)(The Department's determination to segregate the merchandise, i.e., antifriction bearings, into five classes or kinds was supported by substantial evidence); see also, High Information Content Flat Panel Displays and Display Glass Therefor from Japan: Final Determination; Recission of Investigation and Partial Dismissal of Petition, 56 FR 32376 (July 1991) (Department determined that the petitioner's characterization of all high information content flat panel displays as a single class or kind was overly broad and, thus, the Department segregated the flat panel displays into four separate classes or kinds based on the type of technology). 390. Notice of Final Determination of Sales at Less Than Fair Value: Large Newspaper Printing Presses and Components Thereof, Whether Assembled or Unassembled, from Japan, 61 FR 38139, 38140 (July 1996); Notice of Preliminary Results of Antidumping Duty Administrative Review; Cellular Mobile Telephones and Subassemblies from Japan, 53 FR 19318 (May 1988). 391. See Notice of Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada (CVD Prelim), 66 FR 43186-43188 (August 17, 2001); Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada (AD Prelim), 66 FR 56062, 56078 (November 6, 2001); and Amendment to Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada; Amendment to Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada (Amended Prelim), 67 FR 6230 (February 11, 2002). See also Memorandum to Bernard T. Carreau from Maria MacKay, on Antidumping and Countervailing Duty Investigations on Softwood Lumber from Canada: Amendment to the Language of the Scope Description (January 18, 2002); Memorandum to Bernard T. Carreau from Maria MacKay, Gayle Longest, David Layton on Scope Clarification in the Antidumping and Countervailing Duty Investigations on Softwood Lumber from Canada (October 30, 2001); Memorandum to Bernard T. Carreau from Maria MacKay on Scope Exclusions in the Antidumping and Countervailing Duty Investigations on Softwood Lumber from Canada (August 9, 2001) which are on public file in the CRU, room B- 099 of the main Commerce building. 392. For example, Weyerhaeuser submitted arguments that Western red cedar constitutes a separate class or kind of merchandise and should be excluded from the investigations. See joint case brief from Weyerhaeuser and USRCMA (March 15, 2002) (Weyerhaeuser and USRCMA joint scope brief) at 18. As discussed in the March 12 Scope Memo where we presented our preliminary class or kind findings, the WRC arguments are illustrative of the different individual arguments proffered by the parties based upon the Diversified Products criteria. Other products argued on this basis were, Eastern white cedar, Eastern white pine, shop and better grade lumber, Southern yellow pine, and yellow cedar. This list is not exhaustive. 393. See March 12 Scope Memo. 394. See Id., Appendices I and II. An example of how we analyzed scope exclusion request is illustrated by looking at WRC. 395. See Notice of Initiation of Antidumping Duty Investigation: Certain Softwood Lumber Products from Canada, 66 FR 21328, 329 (Apr. 30, 2001). 396. See Memorandum to Bernard T. Carreau from Maria MacKay, Gayle Longest, David Layton, Scope Clarification in the Antidumping and Countervailing Duty Investigations on Softwood Lumber from Canada (October 30, 2001). 397. The Department acknowledges that Abitibi, Tembec, the Governments of Canada and Quebec, the Ontario Lumber Association and others raised similar concerns with respect to process and the adequacy of the proceedings. 398. See 19 U.S.C. 1673b(c)(1) (section 731(c)(1) of the Act). See also 19 C.F.R. § 351.205(b)(2). 399. See Weyerhaeuser's and USRCMA's joint brief at 3-4. 400. See Weyerhaeuser's and USRCMA's joint brief at 1. 401. NEC Corp. v. United States, 151 F.3d 1361, 1370 (Fed Cir. 1998). 402. See rebuttal brief on scope and class or kind issues from the petitioners (March 18, 2002) (petitioners rebuttal scope brief) at 2. 403. See Id. at 2-3. 404. See Id. at 2. 405. See Id. at 2. The Department notes that the record for new factual information related to scope closed on January 7, 2002. 406. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada, 66 FR 56062, 56063 (Nov. 6, 2001). 407. See Amendment to Preliminary Determination of Sales at Less Than Fair Value: Certain Softwood Lumber Products from Canada; Amendment to Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Countervailing Duty Determination with Final Antidumping Determination: Certain Softwood Lumber Products from Canada, 67 FR 6230, 6231 (Feb 11, 2002), (408) 408. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada, 66 Fed Reg 56062, 56063 (Nov. 6, 2001). 409. Unfortunately, due to statutory deadlines, the Department could not grant the requests of some parties to extend the briefing and hearing period. 410. See section 774 (a)(1) of the Act. 411. See Section 774 (b) of the Act. See also 19 C.F.R. § 351.301(The Department recognizes that the regulations state that a hearing will 'ordinarily . . . be held two days after scheduled date for submission of rebuttal briefs' (19 C.F.R. § 351.310(d)(1)), but in the present investigations because the deadline for submitting factual information had passed and the fact that parties extensively briefed the scope issues, the Department deviated from its ordinarily followed procedure). 412. See Section 782(g) of the Act. 413. See January 30, 2002 Letter from IA Office Director to Interested Parties on antidumping briefing schedule. 414. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada, 66 FR 56062, 56078 (Nov. 6, 2001). 415. See Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada, 66 FR 56062, 56078 (Nov. 6, 2001). 416. See factual information deadline letter. 417. See January 30, 2002 Letter from IA Office Director to Interested Parties on antidumping briefing schedule. 418. See generally March 12 Scope Memo. 419. See Id. 420. For several products, the requesters were seeking separate class or kind treatment on the basis of marketing channels and price. See Id at 33. 421. See, Kerr-McGee Chemical Corp. v. United States, 985 F. Supp. 1166, 1179-181, aff'd without opinion, 185 F.3d 884 (Fed. Cir. 1999)(finding that changing the source of the surrogate value for determining normal value between the preliminary and final determinations did not violate procedural process), Taiyuan Heavy Machinery Import and Export Corp. v. United States, Slip Op. 99-103, 1999 Ct. Int'l. Trade Lexis 138 at 8 (CIT Oct. 6, 1999) (finding that irregularities in the Department's enforcement of its regulations does not violate and procedural benefits afforded, unless a party can demonstrate that it was substantially prejudiced by the Departments actions), Comment 1- Brake Rotors From the People's Republic of China: Final Results and Partial Rescission of Fourth New Shipper Review and Rescission of Third Antidumping Duty Administrative Review, 66 FR 27063 (May 16, 2001) (finding that the Department did not violate 'due process' when it failed to disclose to parties evidence used to select certain entries for purposes of verification by Customs). But see, Nippon Steel Corp. v. United States, 118 F. Supp. 2d 1366, 1371-1373 (CIT 2000)(finding that the Department did violate due process when it violated the terms of the statute by failing to place on the record ex parte memoranda discussing ex parte meetings between the Department and the petitioner until 'on or about the day of the final determination' and thereby denied the respondents an opportunity to examine and comment on the factual data contained in the memoranda before the final decision- making was complete), Wieland-Werke AG, Langenberg Kupfer v. United States, 4 F. Supp. 2d 1207 (CIT 1998)(finding that the Department obtained factual information after the record closed and used such information in its decision-making for the final determination without allowing the parties to comment on it). Neither of these situations exist in the present case because the Department provided the parties with ample time to consider and respond to arguments raised by the parties, present oral argument on these topics, and did so before the final determination. We disagree with any parties arguing that the Department's action in the present case are similar to Nippon Steel, where the CIT determines that the Department violated the statute by failing to place evidence of ex parte memoranda on the record until the day of the final determination, Nippon Steel is distinguishable from the Softwood Lumber investigations for two reasons. First, unlike in Nippon Steel, the Department complied with the terms of the Act, which required that the Department hold a hearing before the final, provide notice to the parties, and stop accepting factual information in a reasonable period of time before the final so that parties could comment on the information prior to the final.(422) 422. See Section 782(g) of the Act. (423) 423. See FR notice stating last day for factual information. [insert date]. ' ' 424. See e.g. Koyo Seiko Co., Ltd. v United States, 834 F. Supp. 1401, 1403 (CIT 1993) 425. See case brief regarding scope and class or kind issues from the Government of Canada (March 15, 2002) (GOC scope brief) at 1. 426. See Torrington Co. v. U.S., 745 F. Supp. 718, 722 (CIT 1990). 427. See March 12 Scope Memo at 2-5. 428. March 12 Scope Memo at 24. 429. See Weyerhaueser and USRCMA joint scope brief. The source cited is Josefina Gonzalez, Growth, Properties and Uses of Western Red Cedar, Forintek Canada Corp. Special Publication No. SP-37 (1997) at 23. An extract of this publication is provided in a letter from Weyerhaeuser (May 21, 2001) (Weyerhaeuser 5/21/01 letter) at Exhibit 3. 430. Weyerhaueser and USRCMA joint scope brief at 10. 431. See letter from the petitioners, June 18, 2001 at 9 and letter from Weyerhaeuser (July 20, 2001) (Weyerhaeuser 7/20/01 letter) at 4-5. 432. Weyerhaueser and USRCMA joint scope brief at 10. 433. Weyerhaueser and USRCMA joint scope brief at 6. 434. Petitioners rebuttal scope brief at 24. 435. Id. at 25. 436. Weyerhaeuser 5/21/01 letter at 9 and 11 and Weyerhaeuser 7/20/01 letter at 15 and 16. 437. March 12 Scope Memo at 25-26. 438. Id. at 26. 439. Id. 440. Id. 441. Id. at 27. 442. Id. 443. See Id. and Weyerhaeuser and USRCMA joint scope brief at 15. 444. Petitioners rebuttal scope brief at 26 and Exhibit 1,"Uses of Various Species of Softwood Lumber." See also letter petitioners, December 6, 2001 (petitioners 12/6/01 letter) at 3. 445. Petitioners 12/6/01 letter at 3. 446. See Weyerhaeuser 5/21/01 letter at 15-17 and Weyerhaeuser 7/20/01 letter at 16 and attachment 10. 447. Petitioners rebuttal scope brief at 27. See also petitioners 12/6/01 letter at 3. 448. See attachment to letter from the petitioners, October 24, 2001. 449. Petitioners 12/6/01 letter at 3. 450. See e.g. Weyerhaueser and USRCMA joint scope brief at 8. 451. Hearing Transcript, March 19, 2002, at 35, 38-39. 452. Weyerhaueser and USRCMA joint scope brief at 12. 453. March 12 Scope Memo at 25-26. 454. Weyerhaeuser 5/21/01 letter at attachment 3. 455. Letter from the Government of Quebec, May 21, 2001 (GOQ 5/21/01 letter), at 11and attachments 1 and 2. 456. Petitioners 6/18/01 letter at 17. 457. Id. 458. See e.g. GOQ 5/21/01 letter at 14-16. 459. The Government of Canada also supports a finding of a separate class or kind for EWC, but does not claim that it should be excluded from the scope of the investigations on that basis. See case brief regarding scope and class or kind issues from the Government of Canada, March 15, 2002 (GOC scope brief) at 5, 7-8. The QLMA requested that EWC be excluded from the scope of the investigations but did not request a determination for a separate class or kind of merchandise. See case brief regarding scope and class or kind issues from the QLMA (March 15, 2002) (QLMA scope brief). 460. See case brief regarding scope and class or kind issues from the Government of Quebec, (March 15, 2002) (GOQ scope brief) at 12. 461. See Id. at 13. 462. See Id. at 15. 463. See petitioners rebuttal scope brief at 33-35. 464. See Id. at 34. 465. See March 12 Scope Memo at 28-29. 466. The QLMA also requests that EWP be excluded from the scope of the investigations (QLMA scope brief). However, the question of a separate class or kind for this species is not briefed in that submission. Furthermore, the QLMA requests that three additional softwood lumber species be excluded from the scope of these investigations: Eastern Hemlock, red pine, and larch. The QLMA argues that there is a "lack of intent" on the part of the petitioners to include these species in the scope, "evidenced by their failure to specifically address them" in the petition. (QLMA scope brief at 6) The petitioners claim that these species were specifically included in the scope under HTSUS Heading 4407.10.00. (Petitioners rebuttal scope brief at 17) In its March 12 Scope Memo, the Department determined that all of these species were in the scope of the investigations and that a single class or kind encompassed all of the subject merchandise. (March 12 Scope Memo at 6) In the absence of any further justification on the part of the requesters since the preliminary determination, the Department stands by that decision in this final determination. 467. See Tembec scope brief at 2-3 and OFIA/OLMA scope brief at 2. 468. See GOQ scope brief at 19. See also Tembec scope brief at 7 and the case brief regarding scope and class or kind issues from OFIA and OLMA (March 15, 2002) (OFIA/OLMA scope brief) at 6. 469. See letter from Tembec regarding scope and class or kind, March 12, 2002, at 6. 470. See OFIA/OLMA scope brief at 7-8, Tembec scope brief at 9, and GOQ scope brief at 13. 471. See GOQ scope brief at 18-19. 472. See petitioners rebuttal scope brief at 21-22. 473. See Id. at 29-32. 474. See Id. at 29-30. 475. See March 12 Scope Memo at 29-31. 476. See the petitioners 6/18/01 letter at attachment 15 (U.S. Customs Ruling HQ960703 (Aug. 26, 1997)). 477. See, e.g., Id. at 41 fn. 150. 478. See Abitibi's May 21, 2001 letter at Annex 4. 479. Id. 480. Id. 481. Id. 482. March 12 Scope Memo at 32. 483. See Tembec scope brief at 6 fn 5. 484. See 19 U.S.C. 1671a(b)(1) or 1673a(b)(1) respectively 485. The petitioners response is to Tembec and Abitibi since Tembec's response represents the views of both themselves and Abitibi. See footnote 8. 486. See letter from Tembec, May 21, 2001 (Tembec 5/21/01 letter). 487. Anderson also presents several arguments in support of a scope exclusion for used railroad ties. Anderson argues that used railroad ties should be excluded because they were exempt from quotas and fees under the SLA and because new railroad ties were exempt under the SLA. (Anderson Case Brief, March 6, 2002 at 16-21) Regardless of whether these assertions, which the petitioners strongly question, actually were the case, the scope of the current proceedings is not in any way tied to the scope under the now expired SLA. (Petitioners letter, October 23, 2001 at 4-5) Anderson also contends that the petitioners did not intend to include used railroad ties in its petition. (Anderson Case Brief, March 6, 2002 at 24-26) The petitioners state that this is untrue and the Department has found no evidence on the record that would support Anderson's contention. (Petitioners letter, October 23, 2001 at 6) With specific regard to the countervailing duty case, Anderson also suggests that the original manufacture of the used railroad ties may have predated the alleged subsidies because they were produced in the 1950's and 1960's. (Anderson Case Brief, March 6, 2002 at 26) However, the petitioners counter that Canadian subsidies date from the beginning of the 20th century. (Petitioners letter, December 6, 2001 at 6) Finally, Anderson claims that used railroad ties should be excluded from the scope of these investigations because they should be reclassified as wood, waste and scrap (HTSUS 4401.30.40) and because they should be consistent with new railroad ties (HTSUS 4406), both of which are outside the scope. (Anderson Case Brief, March 6, 2002 at 14-16, 27) If Anderson believes that the current classification for used railroad ties is inappropriate, it may wish to follow the appropriate procedures in pursuing new rulings from the U.S. Customs Service. To the extent that the product is currently classified under HTSUS 4407.10.00, all used railroad ties are covered under the scope of these investigations. Because the petitioners do not agree to the exclusion of this product and no "overarching" reasons were presented for the exclusion, we determined that used railroad ties remain within the scope of these proceedings. 488. Letter from Lindal, July 9, 2001. 489. Letter from Lindal, November 14, 2001. 490. Letter from Lindal, March 15, 2002. 491. Letter from the petitioners, December 6, 2001 at 8. 492. Petitioners scope rebuttal at 36. 493. See letter from ISPA and Sinclar, dated December 3, 2001. 494. See petitioners 12/6/01 letter. 495. See letter from John Durant, Director, Commercial Rulings Division, to Melissa Skinner, Director, Office VI, dated October 30, 2001. 496. See letter from GOQ on Scope and Class or Kind Comments in the Antidumping and Countervailing Duty Investigations: Certain Softwood Lumber Products from Canada, dated March 15, 2002. Jones & Jones, L.L.C (J&J)(497) 497. See letter from Jones & Jones LLC, dated September 24, 2001. - 498. See petitioners rebuttal scope brief at 36. 499. See Id. at 5-10. See also petitioners scope brief at 3. 500. See Memorandum to Bernard T. Carreau from Maria MacKay, Gayle Longest, David Layton on Scope Clarification in the Antidumping and Countervailing Duty Investigations on Softwood Lumber from Canada (October 30, 2001). 501. See QLMA scope brief at 3. 502. See Abitibi scope brief at 8. 503. See Tembec scope brief at 10 and fn 11. 504. See Id. at 10-12. 505. See Id. At 10 and OFIA/OLMA scope brief at 8. 506. See Id. 507. See Id. 508. See section 732(c)(4)(E) of the Act. 509. March 12 Scope Memo at 4. 510. See case brief regarding scope and class or kind from The Government of Canada, the Canadian Provinces and Territories, and Canadian industry associations (March 15, 2002) at 8. 511. See Id. at 10-11. 512. 19 C.F.R. 351.255(k). The petition also met the petition requirements under 19 C.F.R. 351.202. 513. Id. 514. See 19 C.F.R. 351.202(b)(5). 515. See Id. 516. See Notice of Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada (CVD Prelim), 66 FR 43186-43188 (August 17, 2001); Notice of Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada (AD Prelim), 66 FR 56062, 56078 (November 6, 2001); and Amendment to Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada; Amendment to Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada (Amended Prelim), 67 FR 6230 (February 11, 2002); Notice of Correction to Amendment to Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Certain Softwood Lumber Products From Canada; Amendment to Preliminary Affirmative Countervailing Duty Determination, Preliminary Affirmative Critical Circumstances Determination, and Alignment of Final Determination With Final Antidumping Duty Determination: Certain Softwood Lumber Products From Canada, 67 FR 8227 (February 22, 2002). 517. See March 12 Scope Memo. 518. See March 12 Scope Memo. 519. See letter from Deringer Logistics Consulting Group (December 6, 2001). 520. See petitioners' letter, December 20, 2001. 521. See letter from Dakwakada Forest Products, dated June 4, 2001. 522. S ee petitioners' letter, June 27, 2001, at 68. 523. See letter from Shibley Righton dated May 18, 2001. 524. See petitioners' letter, June 27, 2001, at 48. 525. See letter by Cando Contracting Ltd. to the Department, dated May 17, 2001. 526. See letter from Deringer Logistic Consulting Group, dated November 29, 2001. 527. See petitioners' letter, June 8, 2001, at 6. 528. See petitioners' letter, December 6, 2001, at 6. 529. See letter (undated) received by the Department on May 21, 2001; and letter dated August 16, 2001. 530. See petitioners' letter, June 27, 2001 at 65, October 1, 2001 at 16. 531. See letter by the Brightwood Corporation dated November 30, 2001. 532. BWI claims that only "after the antidumping ruling was announced, one domestic supplier offered to produce a small volume at 20% above the prevailing price." See BWI letter, November 30, 2001. 533. See Weldwood letters, May 21, 2001 and August 17, 2001. 534. See petitioners' letter, June 27, 2001, at 36 and 44. 535. See Weldwood letter, May 21, 2001, at 3. 536. See petitioners' letter, June 27, 2001, at 38. 537. See letter from Sundance Forest Industries, Ltd., May 29, 2001. 538. See petitioners' letter, June 27, 2001, at 76. 539. See Louisiana Pacific Corporation letters of May 21 and July 3, 2001. 540. See petitioners' letters, June 27, 2001, at 49-50 and July 17, 2001, at 3-4. 541. See Comment 52, Class or Kind of Products in this memo. 542. See Letter from Alberta Spruce Industries, Ltd. dated May 21, 2001. See also Letter from Sundance Forest Industries, Ltd. dated May 29, 2001. 543. Letter from Sundance Forest Industries, Ltd. dated May 29, 2001. 544. See Petitioners' letter, June 27, 2001, at 69 and 71, and October 1, 2001, at 16. 545. See comment 53 of this memorandum. 546. See Weldwood letter, May 21, 2001. 547. See Petitioners' letter, June 27, 2001 at 39-40, 43 and September 13, 2001, at 19-20. 548. See letters from Alliance Forest Products Inc., May 21, 2001, at 5-6 and August 17, 2001, at 2-3. 549. See petitioners' letter, June 27, 2001, at 30 and September 13, 2001, at 13. 550. See letters from Bridgeside Higa dated May 21, 2001and September 10, 2001. 551. See petitioners' letter, June 27, 2001, at 64 and October 1, 2001 at page 16. 552. See letter from Sundance Forest Industries and SunPlus Specialty Wood undated (received by the Department on May 29, 2001). 553. See petitioners' letter, June 27, 2001 at 73. 554. See letter from Cahan Wood Products Ltd, September 6, 2001. 555. See petitioners' letter, October 1, 2001, at 17. 556. See letter from Greenwood Forest Products dated May 17, 2001. 557. See petitioners' letter, June 8, 2001 at 7. 558. See letter from Sundance Forest Industries and SunPlus Specialty Wood undated (received by the Department on May 29, 2001). 559. See Woodtone submissions dated May 21, 2001, June 11, 2001, and August 16, 2001. 560. See petitioners' letter, June 27, 2001 at 73. 561. See petitioners' letter, September 13, 2001 at 7-8. 562. See Id. at pages 3-5. 563. petitioners' submission dated October 23, 2001 at page 10. 564. See Weldwood letter, dated May 21, 2001. 565. See Weldwood letter, June 27, 2001 at 37. 566. See Weldwood submission, May 21, 2001, at 3. 567. See petitioners' letter, June 27, 2001, at 41. 568. See letters from Shakertown 1992, Inc., dated September 20, 2001 and an October 15, 2001. 569. See letter (undated) received by the Department on May 21, 2001 and letter (undated) received by the Department on August 16, 2001. See also letter from Sundance, undated (received by the Department on May 29, 2001). 570. See petitioners' letter June 27, 2001 at 69, October 1, 2201, at 13, and October 23, 2001, at 3. 571. See petitioners' letter, June 27, 2001 at 69 and October 1, 2001, at 15. 572. Undated submission received by the Department on May 21, 2001; additional submission dated August 16, 2001. 573. See petitioners' letter, June 27, 2001, at 66-67 and October 1, 2001, at 16. 574. Undated submission received by the Department on May 21, 2001; additional submission dated August 16, 2001. 575. See petitioners' letter June 27, 2001, at 67. 576. See letter from Tembec, dated May 21, 2001 at 19. 577. See petitioners' letter, letter dated June 27, 2001at 23. 578. AD Prelim at 56063. 579. Amended Prelim at 6231. 580. See letter from Universal Reel and Recycling Inc., dated May 18, 2001. 581. See petitioners' letter June 27, 2001 at 69. 582. See letter from Sundance Forest Industries and SunPlus Specialty Wood undated (received by the Department on May 29, 2001). 583. See petitioners' letter June 27, 2001 at 72. 584. See letters from Weldwood dated May 21, 2001 and August 17, 2001. 585. See petitioners' letter, June 27, 2001 at 43.