[Federal Register Volume 66, Number 246 (Friday, December 21, 2001)]
[Notices]
[Pages 65877-65886]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-31509]



[[Page 65877]]

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DEPARTMENT OF COMMERCE

International Trade Administration

[A-427-818]


Notice of Final Determination of Sales at Less Than Fair Value: 
Low Enriched Uranium From France

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

ACTION: Notice of final determinations of sales at less than fair 
value.

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EFFECTIVE DATE: December 21, 2001.

FOR FURTHER INFORMATION CONTACT: Victoria Schepker or Edward Easton, at 
(202) 482-1756 or (202) 482-3003, respectively; AD/CVD Enforcement, 
Office 5, Group II, Import Administration, Room 1870, International 
Trade Administration, U.S. Department of Commerce, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

SUPPLEMENTARY INFORMATION:

The Applicable Statute

    Unless otherwise indicated, all citations to the statute are 
references to the provisions effective January 1, 1995, the effective 
date of the amendments made to the Tariff Act of 1930 (the Act) by the 
Uruguay Round Agreements Act (URAA). In addition, unless otherwise 
indicated, all citations to Department of Commerce (Department) 
regulations refer to the regulations codified at 19 CFR part 351 (April 
2000).

Final Determination

    We determine that low enriched uranium (LEU) from France is being 
sold, or is likely to be sold, in the United States at less than fair 
value (LTFV), as provided in section 735 of the Act. The estimated 
margins of sales at LTFV are shown in the Continuation of Suspension of 
Liquidation section of this notice.

Case History

    The preliminary determination in this investigation was published 
on July 13, 2001. See Notice of Preliminary Determination of Sales at 
Less Than Fair Value and Postponement of Final Determination: Low 
Enriched Uranium from France, 66 FR 36743 (July 13, 2001) (Preliminary 
Determination). The petitioners \1\ and the respondent, Eurodif, S.A. 
(Eurodif), the sole producer of the subject merchandise, and its owner, 
Compagnie Generale des Matieres Nucleaires (Cogema) (collectively, 
Cogema/Eurodif or the respondent), filed case briefs on antidumping 
methodological issues on September 28, 2001, and rebuttal briefs on 
October 9, 2001. A rebuttal brief was also filed by the Ad Hoc 
Utilities Group (Ad Hoc Utilities Group or AHUG).\2\ A public hearing 
on the antidumping methodological issues was held on October 23, 2001.
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    \1\ The petitioners in this investigation are USEC, Inc., and 
its wholly-owned subsidiary, United States Enrichment Corporation 
(collectively USEC); and the Paper Allied-Industrial, Chemical and 
Energy Workers International Union, AFL-CIO, CLC, Local 5-550 and 
Local 5-689 (collectively PACE).
    \2\ The members of the Ad Hoc Utilities Group are: Arizona 
Public Service Co., Carolina Power & Light Co., Dominion Generation, 
Duke Energy Corp., DTE Energy, Entergy Services, Inc., Exelon 
Corporation, First Energy Nuclear Operating Co., Florida Power 
Corp., Florida Power and Light Co., Nebraska Public Power District, 
Nuclear Management Co. LLC ( on behalf of certain member companies), 
PPL Susquehanna LLC, PSEG Nuclear LLC, South Texas Project, Southern 
California Edison, Southern Nuclear Operating Co., Union Electric 
Company, and Wolf Creek Nuclear Operating Corp.
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    On October 22 and 23, 2001, the petitioners, respondent, and the Ad 
Hoc Utilities Group filed briefs on common scope issues in the 
antidumping and countervailing duty investigations of low enriched 
uranium from France, Germany, the Netherlands and the United Kingdom. 
Rebuttal briefs on these common scope issues were filed on October 29, 
2001, and a public hearing on the common scope issues was held on 
October 31, 2001. In response to a September 28, 2001 submission by the 
European Commission to Mr. Grant Aldonas, Under Secretary for 
International Trade, regarding the antidumping duty (AD) and 
countervailing duty (CVD) investigations of LEU from France, Germany, 
the Netherlands, and the United Kingdom, and Mr. Aldonas' November 7, 
2001 reply to this letter and the November 22, 2001 submission from the 
European Commission, the petitioners, respondent and the Ad Hoc 
Utilities Group filed briefs that addressed the content of this 
correspondence.
    This final determination was originally scheduled to be issued on 
November 26, 2001. On November 6, 2001, the Department tolled the final 
determination deadlines, until December 13, 2001, to accommodate a 
delayed verification and briefing and hearing schedule in the companion 
countervailing duty investigation, due to the events of September 11, 
2001.

Amended Scope of Investigation

    For purposes of this investigation, the product covered is all low 
enriched uranium (LEU). LEU is enriched uranium hexafluoride 
(UF6) with a U\235\ product assay of less than 20 percent 
that has not been converted into another chemical form, such as 
UO2, or fabricated into nuclear fuel assemblies, regardless 
of the means by which the LEU is produced (including LEU produced 
through the down-blending of highly enriched uranium).
    Certain merchandise is outside the scope of this investigation. 
Specifically, this investigation does not cover enriched uranium 
hexafluoride with a U\235\ assay of 20 percent or greater, also known 
as highly enriched uranium. In addition, fabricated LEU is not covered 
by the scope of this investigation. For purposes of this investigation, 
fabricated uranium is defined as enriched uranium dioxide 
(UO2), whether or not contained in nuclear fuel rods or 
assemblies. Natural uranium concentrates (U3O8) 
with a U\235\ concentration of no greater than 0.711 percent and 
natural uranium concentrates converted into uranium hexafluoride with a 
U\235\ concentration of no greater than 0.711 percent are not covered 
by the scope of this investigation.
    Also excluded from these investigations is LEU owned by a foreign 
utility end-user and imported into the United States by or for such 
end-user solely for purposes of conversion by a U.S. fabricator into 
uranium dioxide (UO2) and/or fabrication into fuel 
assemblies so long as the uranium dioxide and/or fuel assemblies deemed 
to incorporate such imported LEU (i) remain in the possession and 
control of the U.S. fabricator, the foreign end-user, or their designed 
transporter(s) while in U.S. customs territory, and (ii) are re-
exported within eighteen (18) months of entry of the LEU for 
consumption by the end-user in a nuclear reactor outside the United 
States. Such entries must be accompanied by the certifications of the 
importer and end user.
    The merchandise subject to this investigation is classified in the 
Harmonized Tariff Schedule of the United States (HTSUS) at subheading 
2844.20.0020. Subject merchandise may also enter under 2844.20.0030, 
2844.20.0050, and 2844.40.00. Although the HTSUS subheadings are 
provided for convenience and customs purposes, the written description 
of the merchandise subject to this proceeding is dispositive.

Scope Clarification

    For further details, see Comment 2 of the ``Issues and Decision 
Memorandum for the Antidumping Duty Investigation of Low Enriched 
Uranium from France'' (Decision Memorandum) from Bernard T. Carreau, 
Deputy Assistant Secretary

[[Page 65878]]

for Import Administration, to Faryar Shirzad, Assistant Secretary for 
Import Administration, dated concurrently with this notice.

Goods Versus Services

Applicability of AD/CVD Law

The Preliminary Determination

    In the preliminary determinations in the LEU investigations, we 
determined that all LEU entering the United States from Germany, the 
Netherlands, the United Kingdom, and France is subject to the AD and 
CVD investigations on LEU regardless of the way in which the sales for 
such merchandise were structured. See, e.g., Notice of Preliminary 
Determination of Sales at Less Than Fair Value: Low Enriched Uranium 
from Germany and the Netherlands; and Postponement of Final 
Determinations, 66 FR 36748, 36750 (July 13, 2001). We based our 
preliminary determinations on several factors. First, we found, and no 
party disputed, that LEU entering the United States constitutes a good, 
the tangible yield of a manufacturing operation. Moreover, under the 
U.S. Customs regulations, we recognized that any item within a tariff 
category for the Harmonized Tariff System constitutes merchandise for 
customs purposes. See 19 CFR 141.4 (2000). In this case, LEU is 
normally classified under HTSUS 2844.20.0020, but also satisfies three 
other HTSUS classifications described as enriched uranium compounds, 
enriched uranium, and radioactive elements, isotopes, and compounds.
    Second, in our preliminary determinations we found it to be a well-
established fact that the enrichment process is a major manufacturing 
operation for the production of LEU, and that enrichment is a required 
operation in order to produce LEU. We found that no party disputes that 
the enrichment process constitutes substantial transformation of the 
uranium feedstock. We, therefore, preliminarily concluded that the LEU 
enriched and exported from Germany, the Netherlands, the United Kingdom 
and France are products of those respective countries, and are subject 
to these investigations.
    Third, we found that there are significant volumes of LEU sold 
pursuant to contracts that expressly provide separate prices for SWU 
and feedstock (i.e., contracts for enriched uranium product (EUP)), and 
that no party disputes that such sales constitute sales of subject 
merchandise. Rather, it is only those transactions in which utility 
companies obtain LEU through separate purchases of SWU and feedstock 
from separate entities that the Ad Hoc Utilities Group (AHUG) contends 
cannot be subject to the antidumping law. We preliminarily determined 
that there was little substantive commercial difference between the two 
types of transactions. We found that, simply because an unaffiliated 
customer purchases subject merchandise through two transactions, 
instead of a single transaction, does not mean that the merchandise 
entering the United States is not subject to the antidumping law.
    Fourth, we preliminarily determined that, contrary to respondents' 
arguments, the tolling regulation does not provide a basis to exclude 
merchandise from the scope of an investigation. Rather, we found that 
the purpose of the tolling regulation is to identify the seller of the 
subject merchandise for purposes of establishing export price, 
constructed export price, and normal value. Thus, under the tolling 
regulation, the issue is not whether the LEU in question is subject to 
the antidumping law, but rather who is the seller of the subject 
merchandise for determining U.S. price and normal value or, more 
specifically, what is the appropriate way in which to value subject 
merchandise and foreign like product. To the extent that sales of 
subject merchandise are structured as two transactions, we stated that 
we would combine such transactions to obtain the relevant price of the 
subject merchandise.
    Fifth, we preliminarily determined that enrichers are the sellers 
of LEU in both types of transactions--either as an exchange of SWU and 
uranium feedstock for cash, or as an exchange of SWU for cash and a 
swap of uranium feedstock. We preliminarily determined that regardless 
of whether the utility company pays in cash or in kind for the natural 
uranium content, the LEU is delivered under essentially the same 
contract terms, including warranties and guarantees pertaining to the 
complete LEU product. Second, enrichers do not use the uranium 
feedstock provided by the utility companies. Instead, the natural 
uranium is typically delivered shortly before, or even after, delivery 
of the LEU, making the delivery of such uranium a payment in kind for 
the natural uranium component of the LEU. Third, the utility company 
does not have control over the process used to produce the LEU that the 
utility company receives. Rather, the enricher controls the manufacture 
of LEU, as demonstrated by the fact that the product assay under the 
contract (transactional assay) differs from the product assay produced 
and delivered by the enricher (operational assay). The enricher makes 
the decision of the particular product based upon its own operational 
requirements and inputs costs. We preliminarily determined that, taken 
together, these facts indicate that enrichers are in effect selling LEU 
under both types of contractual arrangements.

Discussion

    For these final determinations, we have concluded that all LEU from 
the investigated countries entering the United States for consumption 
is subject to the AD and CVD laws. We have carefully considered all 
comments received on this issue in response to our preliminary 
determinations and, for the reasons stated below, do not find 
persuasive the arguments that the LEU at issue is exempt from the AD 
and CVD laws.
    For these final determinations, respondents and AHUG are joined by 
the EC in raising again the issue of whether the AD and CVD laws can be 
applied to goods sold pursuant to contracts for the provision of 
enrichment. Respondents and AHUG contend that, under such contracts, 
LEU is not sold to, or in, the importing country. Respondents contend 
that, for these transactions, enrichment companies sell enrichment 
services, which is a component of LEU. Accordingly, for those entries 
of LEU, sold pursuant to SWU contracts, these parties assert that the 
AD and CVD laws are not applicable because respondents are not selling 
subject merchandise and because there is no sale of subject merchandise 
in the United States.
    In our view, respondents and AHUG have confused fundamental 
concepts concerning the application of the unfair trade laws. The AD 
and CVD laws were enacted to address trade in goods. Thus, respondents 
and AHUG have confused what is being sold in a particular transaction 
with what is being introduced into the commerce of the United States. 
The Department finds that the issue of whether merchandise entering the 
United States is subject to the AD and CVD laws depends upon whether 
the merchandise produced in, and exported from, a foreign country is 
introduced into the commerce of the United States.
    In particular, the language of section 735(a)(1) of the Act states 
that ``the administering authority shall make a final determination of 
whether the subject merchandise is being, or is likely to be, sold in 
the United States at less than fair value.'' See also section 731(1) of 
the Act. We have consistently interpreted these provisions to pertain 
to merchandise from the investigated

[[Page 65879]]

country, and not to companies. See Jia Farn Mfg. Co. v. United States, 
817 F. Supp. 969, 973 (CIT 1993) (``LTFV determinations and antidumping 
duty orders are rendered upon the subject merchandise from a certain 
country under the investigation.''). In other words, AD and CVD cases 
proceed in rem (i.e., against the good as entered), rather than in 
personam (i.e., against the parties to the import transaction).
    Similarly, in conducting countervailing duty investigations, 
section 701(a)(1) of the Act requires the Department to impose duties 
if, inter alia, ``the administering authority determines that the 
government of a country or any public entity within the territory of a 
country is providing, directly or indirectly, a countervailable subsidy 
with respect to the manufacture, production, or export of a class or 
kind of merchandise imported, or sold (or likely to be sold) for 
importation, in the United States.'' We believe the statute is clear 
that, where merchandise from an investigated country enters the 
commerce of the United States, the law is applicable to such imports.
    In these investigations, no party disputes that the LEU entering 
the United States constitutes merchandise. As the product yield of a 
manufacturing operation, the Department continues to find that LEU is a 
tangible product. Second, it is well established, and no party 
disputes, that the enrichment process is a major manufacturing 
operation for the production of LEU, and that enrichment is a required 
operation in order to produce LEU. Thus, we find that the enrichment 
process constitutes substantial transformation of the uranium 
feedstock. We continue to find, therefore, that the LEU enriched in and 
exported from Germany, the Netherlands, the United Kingdom and France 
is a product of those respective countries.
    Finally, we find, and no party disputes, that the LEU at issue 
enters into the commerce of the United States. Thus, the question of 
whether enrichers sell enrichment processing, as compared to LEU, is 
not relevant to the issue of whether the AD and CVD law is applicable. 
Rather, it is only relevant in these investigations for purposes of 
determining how to calculate the dumping margin and how to determine 
who is the producer/seller of subject merchandise.
    In seeking to equate what is being sold with a service that is 
beyond the scope of the AD and CVD laws, respondents and AHUG assert 
that the enrichment of uranium is akin to the cleaning of a suit.\3\ 
They contend that a person who takes a suit to a cleaner and picks up a 
clean suit is merely paying for the service of cleaning. In the case of 
enrichment, they assert, a person provides natural uranium to an 
enricher who returns enriched uranium and is paid for the services.
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    \3\ See Respondents' Joint Case Brief, at 38, 39; see also 
Petitioners' Rebuttal Brief at 26.
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    We agree that a cleaner merely provides a service for which one is 
paid. However, we disagree with the appropriateness of the analogy used 
for purposes of understanding what is occurring in these cases. In the 
case of cleaning services, the cleaner merely returns to its customer a 
cleaned suit; no substantial transformation takes place, and no 
merchandise is being produced. Enrichment of uranium, however, is a 
critical step in the production of nuclear fuel. The production of 
uranium in the nuclear fuel cycle consists of five stages: mining, 
milling, conversion, enrichment, and fabrication. A distinct product is 
produced at each stage. Milled uranium is converted into uranium 
hexafluoride. Uranium hexafluoride is used to produce enriched uranium. 
Enriched uranium is used to produce fuel rods. And fuel rods are used 
in nuclear-generating facilities to produce electricity. In the case of 
enrichment, it is uncontested that enrichment results in the production 
of two separate products: low enriched uranium and uranium tails (or 
depleted uranium which can be re-enriched to produce enriched uranium).
    Respondents' and AHUG's reference to the term ``services'' in their 
arguments mischaracterizes the nature of the enrichment operations, and 
attempts to place a major manufacturing operation which produces 
merchandise squarely outside the realm of trade in goods, based solely 
upon the way in which particular sales of such merchandise are 
structured. We find, however, that regardless of whether the sale is 
structured as one of enrichment processing or LEU, in all cases the 
trade in LEU is a trade in goods, as the transactions in question 
result in the introduction of LEU into the commerce of the United 
States. Accordingly, the Department determines that all LEU produced in 
the investigated countries and entering the United States for 
consumption is subject to these investigations.
    AHUG and respondents insist that the AD and CVD laws can only be 
applied where the sale of LEU occurs in a specific way (i.e., where the 
merchandise is sold in a single transaction). AHUG further insists that 
the law is inapplicable because the utility companies cannot be 
considered the sellers of subject merchandise since they do not sell 
LEU, but instead sell electricity to U.S. consumers. Accordingly, AHUG 
and respondents conclude that the law cannot apply because no entity 
sells the subject merchandise.
    We disagree. It does not matter whether the producer/exporter sold 
subject merchandise as subject merchandise, or whether the producer/
exporter sold some input or manufacturing process that produced subject 
merchandise, as long as the result of the producer/exporter's 
activities is subject merchandise entering the commerce of the United 
States. The first, and threshold, question we must ask is whether the 
merchandise entering the United States is subject merchandise. All else 
flows from this. The second question is what transaction does the 
Department look at to determine export price.
    Further, we believe Congress intended the law to be applicable 
where the subject merchandise enters the commerce of the United States, 
even where the transaction for such merchandise does not take the form 
of a simple, single chain of commerce involving a solitary 
manufacturer/exporter, a single sales price, and a single unaffiliated 
purchaser in the United States. Congress enacted specific provisions 
that demonstrate a clear intent to make merchandise entering the United 
States subject to the law even though the sale by the exporter to the 
first unaffiliated purchaser is not a sale of subject merchandise. In 
constructed export price transactions involving further manufacturing, 
for example, subject merchandise enters the United States, but through 
a process of further manufacturing, is often sold to the first 
unaffiliated purchaser in the form of non-subject merchandise. The form 
of the sale, however, does not prohibit the application of the law. To 
the contrary, to address those situations Congress enacted special 
provisions that require the Department to determine whether there are 
dumping margins and to apply duties, as appropriate, to such 
merchandise. See section 772(b) of Act. Even where the first sale to an 
unaffiliated purchaser is far removed from the subject merchandise that 
enters the commerce of the United States, such merchandise is covered 
under the law, and Congress enacted a specific provision establishing a 
basis for calculating export price. For example, where rollerchain 
constitutes the subject merchandise and enters the United States, but 
the first sale to an

[[Page 65880]]

unaffiliated purchaser is the sale of a motorcycle that contains the 
rollerchain, the law is applicable to such entries of rollerchain. See 
section 772(e). See also SAA at 825.
    While there is no specific statutory provision that dictates how 
the Department is to calculate the value of subject merchandise and the 
export price in the circumstances in these LEU investigations, the 
absence of such a provision does not render the law inapplicable where 
the facts demonstrate that the product in question enters into the 
commerce of the United States, as in this case.

Use of the Term ``Enrichment Services'' in Other Legal Contexts

    In seeking to demonstrate that for the transactions at issue the 
enrichment companies provide enrichment services, perform a value-added 
service, and do not sell the subject merchandise, respondents contend 
that the U.S. government has advocated on behalf of USEC before U.S. 
domestic courts that enrichment contracts are contracts for services, 
and accordingly, that the Uniform Commercial Code (UCC), which only 
pertains to goods, does not apply to such contracts. Moreover, the 
parties contend that U.S. courts have ruled in USEC's favor, finding 
that the UCC did not apply to such transactions because they were sales 
contracts for services, not for goods. The parties conclude, therefore, 
that because the U.S. government has recognized that the sales in 
question are sales of services, to be consistent, the Department cannot 
apply the AD or CVD law to these transactions.
    We do not view those determinations as relevant to the issue of 
whether LEU that enters the commerce of the United States is subject to 
the AD and CVD laws. The respondents and AHUG are mixing two entirely 
different statutory regimes, which play different roles and have 
different purposes. Other legal or regulatory regimes are not 
determinative of how the Department is to treat such transactions under 
the AD and CVD laws. For example, the court's finding in Florida Power 
& Light Co. v. United States that the transfer of title of uranium 
feedstock ``does not rise to the level of `procurement' or `disposal' 
of property'' was made in the specific context of determining the 
applicability of the Contract Disputes Act to government contracts and 
is not relevant, much less binding, for purposes of the application of 
the AD and CVD laws.\4\ In Barseback Kraft AB and Empress Nacional Del 
Urnaio, S.A. v. United States, the court ruled that the UCC did not 
apply to the contracts at issue because the UCC does not apply to 
government contracts.\5\ Moreover, the UCC addresses the rights and 
obligations of the parties to a specific contract, and is therefore not 
determinative of whether the overall trade is one involving goods or 
services. As a general principle, different terms can have different 
meanings under different statutes, and parties are entitled to make 
their claims pursuant to the case law and precedent of the particular 
relevant statute, even where those claims appear to be at odds with 
other claims made pursuant to the case law and precedent of another 
statute that has an entirely different purpose.
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    \4\ 49 Fed. C1. 656 (2001) (No. 96-644C).
    \5\ 36 Fed. C1. 691 (1996), aff'd 121 F.3d 1475 (Fed. Cir. 
1997).
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Tolling

    Respondents and AHUG also seek to obtain an exemption under the law 
for the LEU at issue through the application of the Department's 
tolling regulation, set forth at 19 CFR 351.401(h).
    We disagree with respondents'suggested interpretation for several 
reasons. First, we do not interpret section 351.401(h) of the 
Department's regulations to be relevant or applicable in determining 
whether merchandise entering the United States is subject to the AD 
and/or CVD laws. Instead, section 351.401, including subsection (h) on 
tolling, was intended to ``establish certain general rules that apply 
to the calculation of export price, constructed export price and normal 
value,'' and not for purposes of determining whether the AD and/or CVD 
laws are applicable. See 19 CFR 351.401(a) (2000). Our interpretation 
that the tolling regulation is intended solely for purposes of 
calculating dumping margins is further supported by the absence of any 
parallel provision on tolling in the CVD regulations.
    Furthermore, in practice, we have never applied, nor relied upon, 
section 351.401(h) to exempt merchandise from AD proceedings, nor have 
we ever applied the provision in CVD proceedings. Moreover, our 
application of the tolling regulation in SRAMs from Taiwan does not 
support AHUG's or respondents' claim for exemption from the AD and CVD 
laws.\6\ In that case, we applied the tolling regulation, seeking to 
determine which party made the relevant sale of subject merchandise. We 
found that the U.S. design house made sales of subject merchandise to 
unaffiliated purchasers in the United States, and therefore based our 
determination of U.S. price and normal value upon the transactions made 
by the U.S. design house. In that case, we applied AD duties to all 
entries of SRAMs from Taiwan, regardless of whether the U.S. design 
house or the Taiwan exporter made the sale of subject merchandise. 
Therefore, our decision in SRAMs from Taiwan establishes no basis for 
excluding the LEU in question from these investigations. Further 
analysis of the tolling regulation in these antidumping investigations 
for purposes of determining EP, CEP and NV is provided below.
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    \6\ Static Random Access Memory Semiconductors From Taiwan: 
Redetermination on Remand, (May 2, 2000). The text of this 
determination can be found on the Department's Internet site at 
http://ia.ita.doc.gov/remands/00-48.htm.
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Temporary Import Bonds, Foreign Trade Zones, and American Goods 
Returned

    Respondents also cite the Department's treatment of subject 
merchandise entering the United States under Temporary Import Bonds 
(TIBs), into Foreign Trade Zones (FTZs), and as American Goods 
Returned, as examples of where subject merchandise enters the United 
States without being subject to duties, and to support their claim that 
the Department is not authorized to impose duties on subject 
merchandise unless there is a sale of such merchandise. However, these 
provisions cited by respondents are not instances in which the 
merchandise enters the United States for consumption without the 
imposition of AD and countervailing duties. By operation of law, goods 
entered under TIBs are prohibited from entering the United States for 
consumption. For FTZs, where the merchandise enters the United States 
for consumption, antidumping and countervailing duties are imposed. See 
15 CFR 400.33(b)(2)(2000). The Department's treatment of goods entering 
FTZs or under TIBs is, therefore, consistent with the practice that the 
AD and CVD laws apply to goods that enter the commerce of the United 
States.
    With respect to American Goods Returned (AGR), this provision is 
only applicable to merchandise that has not been substantially 
transformed in another country. AGR only applies to U.S. merchandise 
that is further manufactured in minor respects in another country, such 
that the product that is returned to the United States is not 
substantially transformed. As discussed below, this provision is not 
applicable in this case.

[[Page 65881]]

Substantial Transformation and Country of Origin

    Respondents also argue that the Department's country-of-origin 
rationale in this case is contrary to federal and international 
regulation of transactions involving uranium and enrichment services. 
Respondents state that the enrichment process does not wipe away the 
country of origin of the uranium; rather it remains the same for 
materials tracking purposes after enrichment as it was before 
enrichment. Respondents conclude that it is irrelevant that enrichment 
is a major manufacturing process and that the enrichment process 
constitutes substantial transformation of the uranium feedstock. 
Accordingly, respondents contend that the Department's conclusion as to 
the country of origin of the enrichment cannot be used to establish the 
country of origin of the unitary LEU, because LEU itself has two 
countries of origin, namely the country of origin of the uranium and 
that of the separative work unit.
    We disagree. The Department's country-of-origin determinations are 
made pursuant to the agency's authority to determine the scope of its 
investigations and AD/CVD orders. In contrast, the federal and 
international regulation of transactions in uranium referred to by 
respondents reflect requirements adopted for purposes of non-
proliferation. Thus, the Nuclear Regulatory Commission (NRC) tracks the 
origin of natural feedstock for the purpose of tracing the worldwide 
movement and ultimate disposition of the feedstock, while the U.S. 
Customs Service and the Department determine the country of origin for 
the merchandise entering the United States for purposes of tracking 
international commercial transactions and assessing duties. The NRC has 
no role in determining the country of origin for customs duty purposes. 
Moreover, the Department and the Customs Service make country-of-origin 
determinations for the product entering the United States, which in 
this case is LEU, not feedstock and SWU, as respondents suggest. 
Indeed, the Department has in the past determined in other proceedings 
covering uranium that the process of enrichment constitutes substantial 
transformation of the uranium, and therefore, that enrichment confers 
country of origin upon the product entering the United States for AD 
purposes.
    In the current case, petitioners have indicated, and no party has 
disputed, that the enrichment of uranium accounts for approximately 60 
percent of the value of the LEU entering the United States. We find 
that enrichment processing adds substantial value to the natural 
uranium and creates a new and different article of commerce and 
therefore confers a different country of origin upon the product for 
purposes of the AD and CVD law.
    As a final matter, the unfair trade laws must be applicable to 
merchandise produced through contract manufacturing, just as they are 
applicable to merchandise manufactured by a single entity. To do 
otherwise would contravene the intent of Congress by undermining the 
effectiveness of the AD and CVD laws, which are designed to address 
practices of unfair trade in goods, as well as have profound 
implications for the international trading system as a whole. To the 
extent that contract manufacturing can be used to convert trade in 
goods into trade in so-called ``manufacturing services,'' the 
fundamental distinctions between goods and services would be 
eliminated, thereby exposing industries to injury by unfair trade 
practices without the remedy of the AD and CVD laws.
    While the term ``enrichment services'' is common in the industry, 
the enrichment of uranium feedstock is no more a ``service,'' as that 
term is normally understood in the international trading community, 
than a production process that results in the manufacture of textiles, 
semiconductors, or corrosion-resistant steel. An importer of textiles 
who provides yarn to a textile manufacturer may view the transaction as 
nothing more than the purchase of ``weaving services.'' An importer of 
semiconductors who provides a patented design mask to a foundry to be 
pressed into a wafer for purposes of making a microchip may view such a 
transaction as nothing more than the purchase of ``pressing services.'' 
Similarly, an importer of corrosion-resistant steel who provides hot-
rolled steel to a rolling mill may view the transaction as nothing more 
than the purchase of ``rolling and coating services.''
    Yet, no matter what the purchaser chooses to call the transaction, 
and no matter what terms may be common in the industry, nothing can 
change the fundamental facts associated with all of these transactions. 
In each of these three cases, the purchaser has contracted out for a 
major production process that adds significant value to the input and 
that results in the substantial transformation of the input product 
into an entirely different manufactured product. We simply do not 
consider a major manufacturing process to be a ``service'' in the same 
sense that activities such as accounting, banking, insurance, 
transportation and legal counsel are considered by the international 
trading community to be services. Instead, we have always considered 
the output from manufacturing operations that result in subject 
merchandise being introduced into the commerce of the United States to 
be a good. The only questions we have grappled with in all these 
instances is who is the appropriate producer/seller of the merchandise 
and how to calculate export price and constructed export price.
    While respondents and AHUG note that the practice in the uranium 
industry with respect to the transactions at issue was established long 
before the Department initiated these investigations, in the 
Department's view, the issue we are addressing is unfair trade 
practices. In the Department's view, nothing in the statute in any way 
indicates that Congress did not intend the AD and CVD laws to be 
applicable to merchandise based upon the way in which parties structure 
their transactions for such goods entering the commerce of the United 
States.
    In sum, the application of the AD and CVD laws does not depend upon 
whether a producer/exporter sells an input to the subject merchandise, 
or the subject merchandise itself, but rather whether the activities of 
the producer/exporter result in the subject merchandise being 
introduced into the commerce of the United States.

Calculating Export Price, Constructed Export Price and Normal Value 
Comments of the Parties

    Respondents and AHUG contend that the Department must base its 
evaluation of dumping upon sales of the subject merchandise, which 
should reflect all elements of the merchandise's value. In terms of EP 
and CEP, these parties contend that the statute refers to the price at 
which the merchandise is sold by the producer or exporter. In addition, 
AHUG and respondents cite to the agency's decision in SRAMs from 
Taiwan, where the Department determined that the relevant sale under 
the tolling regulation must be the sale of subject merchandise 
reflecting the full value of such merchandise.
    AHUG and respondents contend that the principles for determining 
which sales are relevant, as embodied in the tolling regulation and 
applied in the SRAMs case, are directly pertinent to deciding whether 
the sale of enrichment services by the respondents, and sales of 
services in general, can be treated as relevant for purposes of the AD 
law.

[[Page 65882]]

These parties assert that the Department should determine that: (1) The 
enrichment companies do not produce or take title to the uranium 
feedstock; rather it is supplied to them in bailment; (2) the sale of 
enrichment does not constitute the relevant sale for purposes of 
determining EP and CEP because the sales in question do not reflect the 
full value of the subject merchandise; and (3) the respondents are not 
in a position to set the price of the product because such companies 
have no control over the full cost of LEU for the transactions at 
issue.
    Petitioners respond that the respondents and AHUG place heavy 
emphasis on the Department's ``relevant sale'' discussion in the SRAMs 
case, which petitioners contend was not intended to provide the guiding 
precedent in a case where the U.S. customer obtains the raw materials 
in one transaction and exchanges them for finished goods in another 
transaction, as in these investigations. The petitioners state that the 
respondents' and AHUG's position is erroneous in claiming that the 
Department's redetermination in SRAMs compels the conclusion that the 
enricher does not make the ``relevant sale'' because its price does not 
include all of the cost components of the finished product. Moreover, 
they add, even if SWU transactions were tolling transactions, the 
Department's tolling precedent does not establish that tolling 
transactions are outside the scope of the AD law.
    Petitioners further contend that the fact that enrichers have 
control over the production process used to produce LEU under SWU 
contracts is relevant to the Department's determination with respect to 
the relevant sale, and contrary to the arguments raised by respondents 
and AHUG. Petitioners add that the issue of who controls the production 
of the finished product is a key factor in determining whether a party 
is a producer or toller.
    With respect to the sales contracts, in their case brief, 
petitioners argued that the enrichers are actually sellers of LEU under 
both SWU and EUP contracts because in both arrangements the LEU is 
produced at an operating tails assay determined by the enricher, and 
therefore the enricher determines the amount of feed used, the amount 
of SWU actually applied, and the assay of the tails that will be 
produced. Petitioners further noted that, although a customer may 
designate a transactional tails assay in a SWU contract, but not in an 
EUP contract, there is not a significant difference. To illustrate this 
point, petitioners note that, by designating a transactional tails 
assay in a SWU contract, the customer determines only the amount of 
uranium feedstock it must provide to the enricher, and the amount per 
SWU the customer will pay. However, the customer's designation of the 
transactional tails assay does not determine the amount of uranium 
feedstock used by the enricher or the amount of SWU actually used by 
the enricher. Petitioners maintain that this is determined by the 
operational tails assay used by the enricher in the production of LEU. 
Petitioners assert that enrichers operate in essentially the same 
manner when they produce LEU under contracts where the customers supply 
the uranium feedstock as they do when they produce LEU from their own 
uranium feedstock.
    Respondents reject petitioners' assertion that enrichers are 
actually sellers of LEU based upon the utility's delivery of uranium 
feed material as a payment-in-kind of uranium for the natural uranium 
component of the LEU. Respondents contend that enrichment services 
contracts contain detailed payment terms, and establish a price for the 
enrichment services sold, but do not contain any provisions for a 
payment of uranium in any form. Respondents add that it is virtually 
impossible for a payment-in-kind to occur because title does not pass 
to the enricher while the uranium is being enriched. Moreover, they 
explain that if a payment of uranium were occurring, the enricher would 
have to recognize it as a payment in its financial statements, which 
they assert does not occur, as the Department verified. Finally, 
respondents note that, by adopting the payment-in-kind theory, the 
Department would create a contractual arrangement between parties that 
completely differs from the contract itself.
    Respondents further dispute the petitioners' conclusion that the 
enricher's return of different uranium rather than the exact material 
provided by the customer turns the transaction into a payment-in-kind. 
Respondents argue that, in determining whether a service is being 
performed, one must look at the essence of the transaction, and what 
the customer contracted to purchase, not what material is given back to 
the utility company. Furthermore, they state, because uranium is 
fungible, it makes no sense to require firms to identify each atom of 
uranium transported or processed. They note that, in a previous 
submission by the petitioners, USEC explicitly stated that uranium is a 
fungible commodity and that a fabricator may use its own inventory of 
enriched uranium or have enriched uranium delivered by other utility 
companies.
    In addition, respondents contend that the Department did not base 
its dumping margin calculations upon the number of SWUs or the price 
per SWU, but instead treated the sale as if it were a sale of LEU. 
Respondents note that the Department's price calculation is based upon 
the quantity of uranium and the quantity of SWUs involved, which has no 
correlation with the agreed upon price per SWU. Respondents contend 
that in doing so the Department is changing the material terms fixed on 
the date of sale into one in which the terms are not fixed until a 
later date, and then unilaterally, by notification from the customer. 
Respondents contend that this violates the statutory requirement that 
the Department base its calculation on the actual costs reflected in 
the respondent's books and records, ignores the long-standing practice 
of making AD comparisons on a production or process-neutral basis, and 
uses a methodology that is completely contrary to the date of sale 
methodology applied by the Department in the same cases.
    Respondents also note that the Department assigned a value to the 
natural uranium in the Preliminary Determinations where no price was 
provided, notwithstanding that the uranium provided by the utility 
company was not a cost to the enricher, and was not charged to the 
customer at all. Respondents contend that the surrogate uranium cost 
that the Department used violated the statutory requirement that it 
base its calculation on the actual costs incurred. They reiterate that 
the cost of the uranium to the enricher is zero. The respondents add 
that, although the uranium is processed, it is never paid for by the 
enricher, nor is it considered revenue, nor does it appear in the 
enricher's books. Therefore, they contend, uranium may not be treated 
as a cost when calculating constructed value.
    AHUG also contends that the SWU contracts are unequivocally 
contracts for services, arguing that the enrichers hold the LEU as 
bailees for their utility customers, and if a particular delivery of 
LEU does not contain the exact same physical feed as that delivered by 
the utility, it contains feed delivered to the enricher by another 
utility. Therefore, AHUG asserts, the fungibility of the feed does not 
alter the actual commercial terms of the contracts or the nature of the 
transaction.
    AHUG also disagrees with the Department's preliminary determination 
that there is little commercial difference between EUP and enrichment 
contracts. AHUG contends that enrichment

[[Page 65883]]

contracts require payment for enrichment services, and therefore, the 
contract does not reflect all elements of the value of the LEU 
delivered, as do the EUP contracts. Furthermore, AHUG contends that LEU 
production is usually arranged through three, not two transactions: the 
purchase of U3O8, a contract for conversion services, and a contract 
for enrichment services. In addition, AHUG argues that the Department 
proposes that U.S. utility contracts for the purchase of each of these 
components can be cumulated to derive an unfair price even in the 
absence of a sale of that LEU in the U.S. market that reflects all 
elements of its value. AHUG argues that this theory seems to state that 
when utility companies arrange for the production of LEU through these 
separate contracts, they are selling LEU to themselves. AHUG asserts 
that the Department is simultaneously attempting to attribute the 
utilities' transactions with the mining companies and the conversion 
service providers to the enrichers, even though the enrichers are not 
parties to those other transactions, have no control over the process, 
and receive none of the revenue from such sales. AHUG claims this 
theory cannot be supported.
    Petitioners respond that, contrary to respondents' and AHUG's 
contentions, the contractual obligation of a customer in a SWU 
transaction to supply converted uranium is properly viewed as part of 
the quid pro quo that the customer must provide in order to obtain LEU 
from the enricher. Petitioners add that there can be no question that 
provision of the natural uranium is like the payment of the cash price 
for the SWU, a contractual obligation that must be met by a utility 
purchaser under a SWU contract in order to acquire a wholly new 
product, i.e, LEU from the enricher.
    Petitioners note that, in the preliminary determinations, the 
Department identified three factors that petitioners had cited in 
support of its position. First, with respect to warranties and 
guarantees, LEU and EUP are delivered under essentially the same type 
contract. Second, the enrichers do not use the specific feedstock 
supplied by a particular customer to produce LEU for that customer. 
Third, the enrichers, not the utility companies, control the process 
used to produce the LEU under either type of contract. Petitioners 
state that, contrary to respondents' criticism of the ``essentially 
identical'' language in the preliminary determinations, the Department 
was not saying that SWU and EUP contracts were identical in every 
respect, nor is it necessary for the Department to so find.
    Respondents reject petitioners' arguments on whether the enricher 
controls the production process, arguing that the relevant question is 
not whether enrichers own and control the production process for LEU, 
but rather whether the customer is purchasing a service. Respondents 
add that, because the quantity of uranium feedstock to be supplied by 
the customer is set pursuant to the contract, for a specified tails 
assay, the customer, not the enricher, has the control over its cost of 
supplying uranium feedstock.

Discussion

    For these final determinations, we find that the enrichment 
companies are the only producers and exporters of the subject 
merchandise in these cases and, therefore, are the appropriate 
respondents for determining EP, CEP and NV. We will address the 
application of the Department's tolling regulation first, and then the 
nature and substance of the sales contracts at issue.\7\
---------------------------------------------------------------------------

    \7\ This discussion addresses the concepts of export price, CEP, 
and who is the producer/exporter of the subject merchandise--all 
issues that are relevant under the antidumping law. We note that, 
under the countervailing duty law, section 771(5)(E)(iv) defines as 
a benefit the purchase of goods for more than adequate remuneration. 
Because we have determined that SWU contracts involve the purchase 
of LEU, we determine that these transactions constitute the purchase 
of goods.
---------------------------------------------------------------------------

Tolling

    In establishing general rules for calculating EP, CEP and NV, we 
promulgated section 351.401(h) of our regulations to address the 
treatment of subcontractors and tolling operations under the AD law.\8\ 
The purpose of the regulation is to enable the Department to identify 
the appropriate seller of subject merchandise and foreign like product 
for purposes of calculating EP, CEP and NV. SRAMS from Taiwan (``The 
company that is the first ``price setter'' for subject merchandise is 
also the company that is the producer of the merchandise.''). To that 
end, the tolling regulation states that the Department will not 
consider a toller or subcontractor to be a manufacturer or producer 
where the toller or subcontractor (i) does not acquire ownership of the 
subject merchandise; and (ii) does not control the sale of subject 
merchandise. 19 CFR 351.401(h) (2000).
---------------------------------------------------------------------------

    \8\ Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 
27295, 27411 (May 19, 1997).
---------------------------------------------------------------------------

Department Precedents

    In SRAMs from Taiwan, the key case relied upon by the respondents 
and AHUG, we addressed the issue of whether producer status should be 
conferred upon the U.S. design house or the Taiwan foundry. In that 
case, the issue for the Department was which sale--the sale by the 
design house or the sale by the foundry--should be used to calculate EP 
and CEP. The Department stated that ``the ``relevant sale'' must be a 
sale by the company that owns the merchandise entirely, including all 
essential components, can dispose of the merchandise at its own 
discretion and, thus, controls the pricing of the merchandise and not 
merely the pricing of certain portions of production.'' Id. at 4.
    In making the distinction between the sale by the foundry and the 
sale by the U.S. design house, we examined the role played by the 
foundries and design houses in the production of subject SRAMs, as well 
as the nature of the product produced. We found that the design was not 
only an important component of the product, but in fact defined the 
essence of the finished product. Because the design house not only 
developed the design, but also controlled how it was used in production 
by the foundry and the way that the products incorporating it were 
distributed in the marketplace, the Department concluded that the 
design house directed the production of the subject merchandise. Id. at 
5. In our view, the role played by each entity as well as the nature of 
the product produced are important considerations in identifying the 
appropriate party as the producer of the subject merchandise.
    In addition, since the enactment of the tolling regulation, the 
Department has also recognized that the regulation ``does not purport 
to address all aspects of an analysis of tolling arrangements.'' 
Polyvinyl Alcohol from Taiwan: Final Results of Antidumping Duty 
Administrative Review, 63 FR 32810, 82813 (June 16, 1998). In that 
case, we acknowledged that, in assessing whether a company is a 
producer, we are not restricted to the four corners of the sales 
contract. Moreover, we emphasized that we will make our decision as to 
whether a party is a producer or manufacturer for purposes of 
determining EP, CEP and NV based upon the totality of the 
circumstances. Id. In Polyvinyl Alcohol from Taiwan, we further 
recognized that, while examining the production activities of a party 
may not be decisive in every case, whether a party has engaged directly 
or indirectly in some aspect of production is an important 
consideration in identifying the appropriate party as the producer. Id. 
at 32814.

[[Page 65884]]

Enrichment Companies Are Producers/Exporters of LEU

    In this case, we have determined that the enrichment companies are 
the producers and exporters of the subject merchandise for purposes of 
establishing EP, CEP and NV for several reasons. First, the enrichment 
process is such a significant operation that it establishes the 
fundamental character of LEU. Second, the enrichers control the 
production process to such an extent that they cannot be considered 
tollers in the traditional sense under the regulation. Third, utility 
companies do not maintain production facilities for the purpose of 
manufacturing subject merchandise. Finally, we find that the overall 
arrangement, even under the SWU contracts, is an arrangement for the 
purchase and sale of LEU. Each element is discussed further below. 
While no single factor is dispositive of our determination, on balance 
we have determined that the enrichment companies are the producers and 
exporters of the subject merchandise.
    First, in this case it is the enricher who creates the essential 
character of the LEU. The enrichment process is not merely a finishing 
or completion operation, but is instead the most significant 
manufacturing operation involved in the production of LEU. Enrichment 
raises to a specified assay the level of U235 contained in the product. 
While the types of advanced technology used to perform this operation 
vary, without the enrichment process, one would not be able to separate 
the molecules necessary to produce LEU. Like the design mask in SRAMs, 
the enrichment process establishes the essential features of the LEU, 
creating a clearly distinct product from uranium feedstock. Moreover, 
the enrichment process imparts the essential character of the product, 
LEU, and delineates the purpose for which the product is to be used. As 
noted above, LEU is a product for which there is virtually no 
alternative commercial use but as part of the nuclear fuel cycle. 
Without the enrichment of natural uranium, LEU could not be produced.
    There are currently two technologies in use to enrich feedstock, 
gaseous diffusion and centrifuge. Each method requires a huge financial 
investment in facilities and a technically skilled work force. In fact, 
the centrifuge technology has been years in the making and has required 
millions of dollars in research. So highly specialized is it, and so 
expensive to develop, that three major European governments combined 
their resources to develop the technology and create Urenco. While 
there are hundreds of nuclear facilities around the world that require 
LEU for fabrication into fuel rods in order to operate their reactors, 
there are only five major enrichers in the world. This underscores the 
technological sophistication and expense required to enrich uranium 
into LEU. Adding to the expense and complexity of establishing an 
enrichment operation is an intricate web of national and international 
regulatory regimes and oversight commissions.
    Enrichment facilities are similar to design houses in the 
semiconductor industry. It is the patented design of the mask that 
incorporates the intellectual property, accounts for a substantial 
portion of the value, and constitutes the essence of the microchip. The 
design is what makes the chip and what gives it its unique function: 
storing memory and thus enabling a computer to operate. Just as the 
design imparts the essential characteristics of a microchip, enrichment 
imparts the essential characteristics of LEU.
    Second, we find that enrichers not only have complete control over 
the enrichment process, but in fact control the level of usage of the 
natural uranium provided by the utility company. We are aware that SWU 
is universally defined as the standard measure of enrichment services. 
However, the definition of SWU further provides that it is the effort 
expended in separating a specified amount of feed into a specified 
amount of enriched uranium at a specified product assay and a specified 
amount of waste at a specified assay. In each of the contracts, while 
the amount of LEU being purchased is not expressly stated (unless it is 
an EUP contract) the product assay, tails assay, and number of SWU are 
specified. It is the precise combination of the product assay order and 
the number of SWUs specified in the SWU contract that results in an 
exact amount of LEU to be delivered over the life of the contract. The 
most important factor in determining whether the contract is fulfilled 
is whether the utilities receive the precise amount of LEU that results 
from the application of the SWU equation that is explicitly spelled out 
and agreed upon in the SWU contract. And it is this bottom line (i.e., 
a precise amount of LEU delivered over the life of the contract) that 
forms the fundamental nature of the agreement between buyer and seller 
in a SWU contract. With this understanding in mind, the enricher then 
has extraordinary leeway in determining the precise combination of SWU 
and feedstock to be used in the production of the LEU required by the 
SWU contract. The enricher's decision will depend upon such factors as 
the relative costs of electricity, feedstock, even the market price of 
``SWU,'' which, for all intents and purposes, trades like a commodity. 
As the record reflects, enrichers therefore run their facilities in a 
manner that they determine is most efficient.
    For example, an enricher, in fulfillment of a SWU contract, may 
actually use more or less natural uranium and more or less SWU than is 
provided for in the contract (and by the utility customer). The 
enricher has complete control over these important production 
decisions. The utility company, on the other hand, provides the 
specifications and receives a product, as specified in the contract 
through the application of the SWU equation. Thus, the utility company 
obtains no more control over the production process than any customer 
who orders custom-made merchandise would obtain. In our view, the 
enricher has extensive control over the production process, and 
complete control over the amount of SWU or feed to be used in any given 
transaction. The extensive control further demonstrates that the 
enricher is not acting in a tolling capacity for the transactions at 
issue.
    Third, in this case, the U.S. utility companies do not maintain 
production facilities for the purpose of manufacturing subject 
merchandise. Unlike the U.S. design house in SRAMs from Taiwan, but 
like the U.S. importer in Polyvinyl Alcohol from Taiwan, the U.S. 
utility companies perform no manufacturing function whatsoever with 
respect to the production of LEU. These companies have no LEU 
manufacturing operations; no capital investment in production 
facilities; no employees dedicated to manufacturing LEU; and add no 
value to the product through the performance of manufacturing 
operations. Most important, we find that the utility companies are the 
only purchasers of LEU and can only obtain LEU from enrichment 
companies. By contrast, enrichment companies' sole activity is to 
produce LEU for use by utility companies.
    Finally, we find that the overall arrangement under both types of 
contracts is, in effect, an arrangement for the purchase and sale of 
LEU. The parties have made a comprehensive comparison of the terms of 
the contracts for SWU and EUP, arguing that the terms of the contract 
demonstrate that the contracts designated as SWU sales are not, in 
fact, sales of LEU. While we recognize that the provision of uranium 
feedstock may not be a payment-in-kind in the formal sense under these

[[Page 65885]]

contracts, we maintain that the arrangement between buyer and seller in 
a SWU contract nonetheless is dedicated to the delivery of LEU, and 
critical to the trade in LEU. In reaching this conclusion, we have 
looked beyond the four corners of the contract and have examined the 
totality of the circumstances surrounding the transactions in deciding 
which sale is a valid representation of subject merchandise.

The Nature of the SWU Contract

    In this case, based upon the way in which the industry produces and 
sells LEU, we find that the overall arrangement between the parties 
indicates that enrichment companies are engaged in selling, and utility 
companies are engaged in purchasing, LEU. These transactions may be 
construed differently in other contexts, such as for purposes of 
taxation, or for purposes of establishing the liabilities of the 
parties to the contract. However, for purposes of calculating a price 
for LEU, based upon our examination of the overall circumstances of the 
arrangement under both types of contracts, we find that the contracts 
designated as SWU contracts are functionally equivalent to those 
designated as EUP transactions.
    First, both types of transactions have one fundamental objective--
the delivery of LEU at a specific time and location, with a specific 
product assay, as agreed upon in the contract, under the same 
warranties and guarantees that apply to all LEU delivered by 
respondents. Second, utility customers are not concerned with how LEU 
is produced or the amount of work expended (SWU) to produce such LEU. 
Instead, utility customers are interested in obtaining a specific 
quantity of a standardized product at a specified product assay. This 
pertains to both types of transactions. Indeed, SWU contracts are based 
upon a set formula that provides the utility company with a fixed 
quantity of LEU over the life of the contract.
    Further, under both types of contracts, because the LEU is produced 
at an operating tails assay determined by the enricher, the enricher 
ultimately determines how much uranium feed is used, the amount of SWU 
actually applied, and the assay of the tails that will be produced. 
Thus, it is clear that enrichers not only exercise the same level of 
control over the production process for both types of contracts, but 
also perform the exact same manufacturing operations, regardless of 
whether the sale was made under a SWU contract or an EUP contract.
    In addition, there are provisions in SWU contracts that further 
demonstrate that the underlying arrangement is designed to operate in 
much the same manner, regardless of the type of contract, and that 
whether the enricher or the utility company provides the uranium 
feedstock does not substantially alter that arrangement. These 
provisions are proprietary. See, e.g., Urenco Business Proprietary 
Section A Response, Volume 1, Tab B1, Contract section F.3. 
Furthermore, for both types of contracts ownership of the LEU is only 
transferred to the utility customer upon delivery of the LEU. 
Consistent with this provision, for both types of transactions, the 
enricher incurs the risk of loss with respect to the LEU. In light of 
the above, therefore, we believe, as a practical matter, that the 
arrangement between the utility company and the enricher under a SWU 
contract is functionally equivalent to the arrangement under an EUP 
contract for purposes of determining EP and CEP.
    Moreover, as discussed above, the enrichment companies engage in 
the most significant portion of the production of LEU, and thus the 
value of enrichment is beyond question the most significant element of 
value in determining the price of LEU. In addition, LEU, the subject 
merchandise, is the merchandise resulting from this production 
operation. Accordingly, we believe the pricing behavior of the 
enrichment companies in these transactions is relevant to the 
Department's determination of whether the LEU in question is introduced 
into the commerce of the United States at less than fair value.
    Therefore, because the pricing behavior of the enrichers in these 
transactions is relevant to the Department's determination and because 
the arrangement between the utility company and the enricher under a 
SWU contract is functionally equivalent to the arrangement under an EUP 
contract for purposes of determining EP and CEP, we have included these 
sales in our determination of EP and CEP in these investigations.
    In assigning a specific monetary value to the natural uranium 
component, we estimated the market value using the average price the 
enrichers charged their customers for natural uranium for LEU 
contracts. For SWU contracts, when comparing U.S. Price with Normal 
Value based on constructed value, we valued natural uranium using 
exactly the same value for both sides of the equation. For example, for 
any given shipment pursuant to a SWU contract we determined the 
quantity (i.e. kgs) of associated feed uranium by applying the industry 
standard formula for product and tails assay specified in the contract. 
We valued this quantity using POI average per-kg price for natural 
uranium charged by enrichers. This exact same amount was included in 
normal value.

Period of Investigation

    The period of investigation (POI) is October 1, 1999, through 
September 30, 2000. This period corresponds to the four most recent 
fiscal quarters prior to the month of the filing of the petition (i.e., 
December 2000).

Verification

    As provided in section 782(i) of the Act, we conducted verification 
of the sales information submitted by Cogema/Eurodif from July 23 
through July 27, 2001, in France, and from August 13 through August 16, 
2001, in the United States. We conducted verification of the 
constructed value (CV) information submitted by Cogema/Eurodif from 
July 30 through August 3, 2001. We used standard verification 
procedures including examination of relevant accounting and production 
records, and original source documents provided by the respondent.

Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties to 
this antidumping proceeding are listed in the Appendix to this notice 
and addressed in the Decision Memorandum for this investigation, dated 
December 13, 2001, which is hereby adopted by this notice. The Decision 
Memorandum for this case is on file in room B-099 of the main 
Department of Commerce building. In addition, a complete version of the 
Decision Memorandum can be accessed directly on the World Wide Web at 
http://ia.ita.doc.gov/frn/summary/list.htm. The paper and electronic 
versions of the Decision Memorandum are identical in content.

Changes Since the Preliminary Determination

    Based on our findings at verification and analysis of comments 
received, we have made adjustments to the calculation methodology in 
calculating the final dumping margins in this proceeding. These 
adjustments are discussed in detail in the Calculation Memorandum, 
dated December 13, 2001. For the final determination, we made the 
following revisions:
    (1) We adjusted the transportation insurance amounts to account for 
the respondent's clerical errors.
    (2) We adjusted movement expenses and U.S. duty charges for certain

[[Page 65886]]

deliveries to correct the respondent's clerical errors.
    (3) We revised the inventory carrying costs for various U.S. 
deliveries to account for the respondent's clerical errors.
    (4) We adjusted the total cost of manufacturing reported in the 
U.S. sales database to be consistent with changes made to the total 
cost of manufacturing in the constructed value (CV).
    (5) To reflect the opportunity cost of a particular contract 
provision exercised by one customer, we calculated an imputed expense 
and applied it to the indirect selling expense ratio of that customer, 
for all deliveries to the customer.
    (6) Based on the respondent's revised calculation from 
verification, we adjusted the home market indirect selling expense 
ratio used to calculate indirect selling expenses added to CV.
    (7) We recalculated the defluorination expenses included in CV 
based on the tails produced during the POI.
    (8) We excluded purchased LEU from the calculation of the weighted-
average cost of LEU produced in the POI.
    (9) We recalculated the financial expense rate based on the 
financial statements of CEA Industrie, the entity that consolidates 
Cogema's accounts.
    (10) We recalculated selling, general and administrative expenses 
to include certain research and development expenses.

Final Determination of Investigation

    We determine that the following weighted-average percentage dumping 
margins exist for the period October 1, 1999, through September 30, 
2000:

------------------------------------------------------------------------
                                                                 Margin
                    Manufacturer/exporter                      (percent)
------------------------------------------------------------------------
Cogema/Eurodif...............................................      19.57
All Others...................................................      19.57
------------------------------------------------------------------------

Continuation of Suspension of Liquidation

    Pursuant to section 735(c)(1)(B) of the Act, we are instructing the 
U.S. Customs Service to continue to suspend liquidation of all entries 
of LEU from France that are entered, or withdrawn from warehouse, for 
consumption on or after July 13, 2001 (the date of publication of the 
Preliminary Determination in the Federal Register). The Customs Service 
shall continue to require a cash deposit or the posting of a bond equal 
to the estimated amount by which the normal value exceeds the U.S. 
price as shown above. The suspension of liquidation instructions will 
remain in effect until further notice.

International Trade Commission Notification

    In accordance with section 735(d) of the Act, we have notified the 
International Trade Commission (ITC) of our determination. As our final 
determination is affirmative, the ITC will determine, within 45 days, 
whether imports of subject merchandise are causing material injury, or 
threaten material injury, to an industry in the United States. If the 
ITC determines that material injury or threat of injury does not exist, 
the proceedings will be terminated and all securities posted will be 
refunded or canceled. If the ITC determines that such injury does 
exist, the Department will issue an antidumping order directing Customs 
Service officials to assess antidumping duties on all imports of the 
subject merchandise entered, or withdrawn from warehouse, for 
consumption on or after the effective date of the suspension of 
liquidation.
    This determination is issued and published in accordance with 
sections 735(d) and 777(i)(1) of the Act.

    Dated: December 13, 2001.
Faryar Shirzad,
Assistant Secretary for Import Administration.

Appendix--Issues in Decision Memorandum

1. Common antidumping and countervailing duty scope issues
2. Amendment of the scope to exclude imported enriched uranium 
consumed in the conversion or fabrication of exported uranium
3. Double-counting the subsidy in the calculation of the dumping 
margin
4. Treatment of ``blended price'' contracts
5. Calculation of the less than fair value (LTFV) margin based on 
delivered and undelivered sales
6. Valuation of electricity as a component of low enriched (LEU)
7. Whether to collapse Eurodif and Cogema
8. Whether defluorination costs are at arm's length
9. Accrual for tails disposal
10. Calculation of a constructed export price (CEP) offset
11. Recalculation of inventory carrying costs
12. Imputing certain expenses to Cogema/Eurodif
13. Selling, general and administrative (SG&A) expenses
14. Financial expenses
15. Purchased product
16. Constructed value (CV) profit

[FR Doc. 01-31509 Filed 12-20-01; 8:45 am]
BILLING CODE 3510-DS-P