No. 07-1059
In the Supreme Court of the United States
UNITED STATES OF AMERICA, PETITIONER
v.
EURODIF, S.A., ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
PAUL D. CLEMENT
Solicitor General
Counsel of Record
JEFFREY S. BUCHOLTZ
Acting Assistant Attorney
General
THOMAS G. HUNGAR
Deputy Solicitor General
LEONDRA R. KRUGER
Assistant to the Solicitor
General
JEANNE E. DAVIDSON
PATRICIA M. MCCARTHY
STEPHEN C. TOSINI
Attorneys
Department of Justice
Washington, D.C. 20530-0001
(202) 514-2217
JOHN B. BELLINGER, III
Legal Adviser
Department of State
Washington, D.C. 20520
WILLIAM J. HAYNES II
General Counsel
Department of Defense
Washington, D.C. 20301
JOHN J. SULLIVAN
General Counsel
JOHN D. MCINERNEY
Chief Counsel for Import
Administration
QUENTIN M. BAIRD
Attorney
Department of Commerce
Washington, D.C. 20230
DAVID R. HILL
General Counsel
Department of Energy
Washington, D.C. 20585
QUESTION PRESENTED
Section 1673 of Title 19 of the United States Code provides that, when "a class or kind of foreign merchan dise is being, or is likely to be, sold in the United States at less than its fair value," to the detriment of a domestic industry, the Department of Commerce (Commerce) shall impose antidumping duties on entries of the for eign merchandise. The question presented is:
Whether the court of appeals erred in rejecting Com merce's conclusion that foreign merchandise is "sold in the United States" within the meaning of 19 U.S.C. 1673 when a purchaser in the United States obtains foreign merchandise by providing monetary payments and raw materials to a foreign entity that performs a major man ufacturing process in which substantial value is added to the raw materials, thereby creating a new and different article of merchandise that is delivered to the U.S. pur chaser.
PARTIES TO THE PROCEEDING
Petitioner is the United States of America.
Respondents who were Plaintiffs-Appellees below are Eurodif S.A., Compagnie Generale des Matieres Nu cleaires, and COGEMA, Inc.
Respondent who was the Plaintiff-Intervenor-Ap pellee below is Ad Hoc Utilities Group.
Respondents who were the Defendant-Intervenor- Appellant below are USEC Inc. and United States En richment Corporation.
In the Supreme Court of the United States
No. 07-1059
UNITED STATES OF AMERICA, PETITIONER
v.
EURODIF, S.A., ET AL.
ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
PETITION FOR A WRIT OF CERTIORARI
The Solicitor General, on behalf of the United States of America, respectfully petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the Federal Circuit in this case.
OPINIONS BELOW
The final judgment of the court of appeals (App., infra, 1a-7a) is reported at 506 F.3d 1051. The opinion of the court of appeals on interlocutory appeal (App., infra, 8a-28a) is reported at 411 F.3d 1355, and its order denying a petition for rehearing (App., infra, 29a-35a) is reported at 423 F.3d 1275. The opinion of the Court of International Trade from which interlocutory appeal was taken (App., infra, 36a-68a) is reported at 281 F. Supp. 2d 1334, and its initial remand order (App., infra, 178a-219a) is reported at 259 F. Supp. 2d 1310. The De
partment of Commerce's Notice announcing its final determinations in its antidumping investigation of low enriched uranium from France (App., infra, 220a-262a) is reported at 66 Fed. Reg. 65,877. Its decision on first remand from the Court of International Trade (App., infra, 69a-177a) is unreported.
JURISDICTION
The judgment of the court of appeals was entered on September 21, 2007. On December 12, 2007, the Chief Justice extended the time within which to file a petition for a writ of certiorari to and including January 19, 2008, and on January 14, 2008, the Chief Justice further ex tended the time to and including February 15, 2008. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1).
STATUTORY PROVISION INVOLVED
Section 1673 of Title 19 of the United States Code is reproduced in the appendix to this petition (App., infra, 263a).
STATEMENT
1. The antidumping-duty statute provides a remedy to domestic manufacturing industries harmed by unfair foreign competition, by imposing special duties when "foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value." 19 U.S.C. 1673(1). Antidumping duties are "the amount by which the normal value [i.e., the price when sold 'for consump tion in the exporting country'] exceeds the export price [i.e., the price when sold 'to an unaffiliated purchaser in the United States']" for the merchandise. 19 U.S.C. 1673, 1677a(a), 1677b(a)(1)(B)(i). That difference is known as the "dumping margin." 19 U.S.C. 1677(35)(A).
The imposition of antidumping duties requires two independent determinations. First, the Department of Commerce (Commerce) must determine that the subject merchandise was sold in the United States for less than fair value, or "dumped," during a period of investigation. 19 U.S.C. 1673(1); see 19 U.S.C. 1677(1). Second, the International Trade Commission (ITC) must determine that the domestic industry was materially injured or threatened with material injury by virtue of dumped imports. 19 U.S.C. 1673(2); see 19 U.S.C. 1677(2). If both final determinations are affirmative, Commerce is sues an antidumping-duty order directing United States Customs and Border Protection (Customs) to assess du ties in an amount equal to the dumping margin for the goods. 19 U.S.C. 1673d(c)(2), 1673e(a)(1).
An interested party may challenge final antidump ing-duty determinations before the Court of Interna tional Trade (CIT) pursuant to 19 U.S.C. 1516a(a)(2) and 28 U.S.C. 1581(c). Commerce's determinations must be sustained unless "unsupported by substantial evidence on the [administrative] record, or otherwise not in accor dance with law." 19 U.S.C. 1516a(b)(1)(B)(i).
2. In 2001, the Department of Commerce initiated an investigation into imports of low-enriched uranium (LEU) from France, as well as from a number of other European countries, based on information that foreign enrichers of uranium were selling LEU at less than fair value and thereby injuring a domestic industry. Low Enriched Uranium From France, Germany, the Neth erlands, and the United Kingdom, 66 Fed. Reg. 1080 (2001) (notice of initiation of antidumping investigation).
a. LEU is a critical component for the domestic production of nuclear power. It is typically produced by enriching natural uranium, which contains, by weight, approximately 0.711% of the fissionable isotope U235, through a process of isotope separation that increases the concentration of U235 to a desired level. Most nuclear utilities require fuel with a U235 concentration of between 3% and 5%. Once natural uranium is enriched to create LEU, the finished product is used to produce fuel rods, which are in turn used in nuclear reactors to generate electricity. App., infra, 181a-182a; 230a-231a.
Utilities in the United States generally acquire LEU in one of two ways: (1) by paying cash to an en richer for a quantity of LEU at a given U235 concentra tion; or (2) by delivering a quantity of unenriched ura nium (known as "feedstock") to an enricher, and paying the enricher for "separative work units" (SWUs), in ex change for a quantity of LEU at a given U235 concentra tion, or "assay." App., infra, 182a-184a. SWUs are a "measurement of the amount of energy or effort requi red to separate [i.e., increase the concentration of] a giv en quantity of feed uranium into LEU" at a specified concentration of U235. Id. at 183a.
b. Upon commencing its investigation into LEU imports from France, Commerce invited interested par ties to comment on the investigation's scope. 66 Fed. Reg. at 1080. Although no party disputed that LEU ac quired pursuant to purely cash transactions was poten tially subject to antidumping duties, respondent Ad Hoc Utilities Group, a group of U.S. utilities that purchase and consume both imported and domestic LEU, submit ted comments contending that imported LEU acquired pursuant to SWU transactions should be excluded from Commerce's antidumping investigation because SWU contracts "constitute the provision of services, not the production or sale of goods subject to the antidumping law." Low Enriched Uranium from France, 66 Fed. Reg. 36,744 (2001) (notice of preliminary determination of sales at less than fair value and postponement of final determination). Commerce preliminarily determined that, because "there is little substantive commercial dif ference" between cash-for-LEU contracts and SWU contracts, LEU acquired pursuant to both types of con tracts fell within the scope of its antidumping investiga tion, but invited further comments on the issue. Id. at 36,745-36,746.
In December 2001, Commerce issued its final deter mination that LEU from France was being sold, or like ly to be sold, in the United States at less than fair value. App., infra, 220a-262a. Commerce also concluded that all LEU from France is subject to the antidumping law, "regardless of whether the sale is structured as one of enrichment processing or LEU." Id. at 231a. Com merce found that "the enrichment of uranium accounts for approximately 60 percent of the value of the LEU entering the United States," and that "enrichment pro cessing adds substantial value to the natural uranium and creates a new and different article of commerce." Id. at 238a-239a. As Commerce explained, "it is the en richer who creates the essential character of the LEU. The enrichment process is not merely a finishing or com pletion operation, but is instead the most significant manufacturing operation involved in the production of LEU." Id. at 251a. Thus, "the enrichment process es tablishes the essential features of the LEU, creating a clearly distinct product from uranium feedstock." Ibid. Finding that "the enrichment process is a major manu facturing operation for the production of LEU" that results in "substantial transformation of the uranium feedstock," Commerce concluded that "the LEU en riched in and exported from Germany, the Netherlands, the United Kingdom and France is a product of those respective countries" subject to the antidumping law. Id. at 229a-230a.
Commerce considered and rejected the notion that a utility that acquires LEU pursuant to an SWU contract pays merely for enrichment "services" rather than for the purchase of merchandise. As Commerce explained,
the unfair trade laws must be applicable to mer chandise produced through contract manufacturing, just as they are applicable to merchandise manufac tured by a single entity. To do otherwise would con travene the intent of Congress by undermining the effectiveness of the [antidumping-duty and other] laws, which are designed to address practices of un fair trade in goods, as well as have profound impli cations 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 el iminated, thereby exposing industries to injury by unfair trade practices without the remedy of the [trade] laws.
App., infra, 239a.
Commerce determined that, "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." App., infra, 240a. When a "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," Commerce "simply do[es] not consider [such] a major manufactur ing process to be a 'service' in the same sense that activ ities such as accounting, banking, insurance, transporta tion and legal counsel are considered by the interna tional trading community to be services." Ibid. Rather, Commerce has "always considered the output from man ufacturing operations that result in subject merchandise being introduced into the commerce of the United States to be a good." Ibid.
Commerce also found "that the overall arrange ment, even under the SWU contracts, is an arrangement for the purchase and sale of LEU." App., infra, 250a- 251a. The clear nature and purpose of the SWU con tracts was for "an exact amount of LEU to be delivered [by the enricher to the utility] over the life of the con tract." Id. at 253a. "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 ag reement between buyer and seller in a SWU contract." Ibid.
Morever, nothing in the SWU contracts required or envisioned that the uranium feedstock provided by the utility would itself necessarily be used to produce the LEU delivered to the utility. To the contrary, "enrich ers not only have complete control over the enrichment process, but in fact control the level of usage of the natu ral uranium provided by the utility company." App., infra, 252a. Indeed, "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." Id. at 253a.
Accordingly, Commerce concluded that "the con tracts designated as SWU contracts are functionally equivalent to those designated as EUP transactions [i.e., traditional contracts for the sale of LEU]," and that "the overall arrangement under both types of contracts is, in effect, an arrangement for the purchase and sale of LEU." App., infra, 254a, 255a. "First, both types of transactions have one fundamental objective-the deliv ery of LEU at a specific time and location, with a spe cific product assay, as agreed upon in the contract." Id. at 255a. Second, under both types of transactions, "util ity customers are not concerned with how LEU is pro duced or the amount of work expended (SWU) to pro duce such LEU. Instead, utility customers are inter ested in obtaining a specific quantity of a standardized product at a specified product assay." Ibid. "Further, under both types of contracts, because the LEU is pro duced at an operating tails assay determined by the en richer, the enricher ultimately determines how much ur anium feed is used, the amount of SWU actually ap plied," and so forth. Id. at 256a. Finally, "for both types of contracts ownership of the LEU is only transferred to the utility customer upon delivery of the LEU. Consis tent with this provision, for both types of transactions, the enricher incurs the risk of loss with respect to the LEU." Ibid.
Commerce rejected respondents' arguments that a regulatory subsection concerning the treatment of sub contractors engaged in so-called "tolling" operations precluded application of the antidumping-duty statute to imported LEU obtained through SWU transactions. See 19 C.F.R. 351.401(h) (providing that Commerce will "not consider a toller or subcontractor to be a manufac turer or producer where the toller or subcontractor does not acquire ownership, and does not control the relevant sale, of the subject merchandise"). Commerce explained that the tolling provision is not "relevant or applicable in determining whether merchandise entering the Uni ted States is subject to" the antidumping law. App. in fra, 235a. Rather, the tolling provision is part of a regu lation that "was intended to 'establish certain general rules that apply to the calculation of export price, con structed export price and normal value,' and not for pur poses of determining whether the [antidumping or other trade] laws are applicable" in the first instance. Ibid. (quoting 19 C.F.R. 351.401(a) (2000)). Commerce ac knowledged that it had previously applied the tolling provision to classify a subsequent sale of the merchan dise by a tollee or contractor (i.e., the entity obtaining the tolled merchandise from the toller or subcontractor), rather than the sale made by the toller or subcontractor, as the relevant sale for purposes of calculating the dumping margin, but Commerce concluded that it had "never applied, nor relied upon, section 351.401(h) to exempt merchandise from [antidumping] proceedings." Ibid.
c. In February 2002, the ITC determined that an industry in the United States was materially injured by imports of LEU from France at less than fair value. Specifically, the ITC found that such imports had a sig nificant negative impact on respondents USEC Inc., and its subsidiary, United States Enrichment Corporation (collectively USEC), the only domestic enricher of ura nium. See United States Int'l Trade Comm'n, Pub. No. 3486, Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom (Feb. 2002) <http://hotdocs.usitc.gov/docs/pubs/701 731/pub3486. pdf> (determination and views of the Commission).
Shortly thereafter, Commerce issued an order di recting Customs to assess antidumping duties on LEU from France. Low Enriched Uranium from France, 67 Fed. Reg. 6680 (2002) (notice of amended final determi nation of sales at less than fair value and antidumping duty order).
3. Respondent Eurodif S.A., a French enricher of uranium, challenged Commerce's final determination, along with its owner, respondent Compagnie General des Matieres Nucleaires (COGEMA), and COGEMA's U.S. subsidiary, respondent COGEMA, Inc. The CIT remanded to Commerce for further explanation, focus ing in particular on Commerce's determination that its tolling regulation does not apply to SWU transactions. App., infra, 178a-219a. Although the CIT acknowledged that the tolling regulation does not "exempt merchan dise from [antidumping] proceedings," the court con cluded that the regulation is nevertheless relevant be cause "a determination that the enricher provides a toll ing service would mean that the price charged by the enricher to the utility for the enrichment cannot form the basis of the export price for the purpose of deter mining dumping margins." Id. at 206a. The court deter mined that the circumstances of this case resembled previous cases in which Commerce had examined tolling arrangements in which a tollee had provided raw materi als to a toller, which in turn produced and delivered a finished product to the tollee. Id. at 197a. Noting that Commerce had determined in those cases that the toll ing transaction is not a "relevant sale" for purposes of calculating the dumping margin, id. at 190a-192a & n.9, the CIT ruled that Commerce's decision not to apply the tolling regulation in this case "require[d] a more persua sive explanation than provided in the agency's determi nations." Id. at 207a.
In its determination on remand, App., infra, 69a- 177a, Commerce provided further explanation of its de termination that the tolling regulation does not apply to SWU transactions. Based on the "totality of the circum stances," Commerce concluded that the tolling regula tion did not apply for several reasons, including that "the enrichers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value." Id. at 126a. Commerce found that the SWU transactions were "relevant sales" because, among other things, "these sales represent the transfer of ownership in the complete LEU product for consideration." Id. at 131a.
Specifically, "[b]ased upon the contracts and other evidence of record," App., infra, 131a, Commerce found that "[t]he enrichers transfer ownership of, and title to, the LEU to the utilities upon delivery of the merchan dise for consideration." Ibid. By contrast, "utility cus tomers hold title to the natural uranium feedstock that they provide to the enrichers," and "[t]he contracts state that the enrichers transfer title to the LEU to the utili ties upon production and delivery of the LEU." Id. at 132a. Thus, it is only at the time of delivery that "title to the LEU is transferred to the customer, and [the cus tomer's] title to the feed material is extinguished." Ibid. Moreover, Commerce explained, because the enricher treats the natural uranium feedstock as fungible, prior to delivery of the LEU "[t]he customer does not hold title to the LEU, nor does she hold title to the feed ma terial contained within the recently produced LEU." Id. at 133a. As Commerce found, "LEU produced by the enricher cannot be identified as having been derived from the feedstock provided by any particular cus tomer." Ibid.
Indeed, "LEU delivered to a utility customer by an enricher under an enrichment contract may be produced before any natural uranium supplied by that customer could have been part of the production process for that LEU." App., infra, 133a (emphasis added). According ly, Commerce found that the operation of the SWU con tract scheme "mak[es] it impossible to conclude that the LEU produced and delivered by the enricher is in any way derived from the uranium supplied by the cus tomer." Ibid.
Based on those findings, Commerce concluded that, "between the time in which the LEU is produced and the time in which it is delivered as specified under the contract, the enricher holds title and holds ownership in the complete LEU product." App., infra, 133a. Com merce further found "that enrichers make a * * * sale when they transfer ownership of the complete LEU to the utilities through the delivery of such merchandise for consideration." Id. at 134a (citing NSK Ltd. v. Uni ted States, 115 F.3d 965, 973 (Fed. Cir. 1997)); see NSK Ltd., 115 F.3d at 975.
4. The CIT reversed. App., infra, 36a-68a. The court rejected Commerce's conclusion that enrichers ob tain ownership of LEU enriched under SWU contracts, finding that "although the enrichers obtain the right to use and possess the feedstock, and assume the risk of loss or damage, there is no evidence that they ever ob tain ownership of either the feed uranium or the final enriched product." Id. at 44a. The court determined that the transfer of LEU from the enricher to the utility therefore cannot constitute a "sale," id. at 45a (citing NSK Ltd., 115 F.3d at 975), and that Commerce's con trary determination was neither supported by substan tial evidence nor in accordance with law, id. at 46a. The court certified the question for interlocutory appeal un der 28 U.S.C. 1292(d). Slip op. No. 03-170 (Dec. 22, 2003).1
5. a. The court of appeals affirmed the CIT. App., infra, 8a-28a. The court concluded that SWU contracts are contracts for the provision of services, not for the sale of goods, and that LEU that enters the United States pursuant to SWU contracts therefore is not "mer chandise * * * sold" within the meaning of 19_U.S.C. 1673(1). App. infra, 17-24a. The court agreed with the CIT's conclusion that "the SWU contracts in this case do not evidence any intention by the parties to vest the enrichers with ownership rights in the delivered unen riched uranium or the finished LEU," and also its con clusion that the SWU transactions therefore cannot be said to constitute "sales" of merchandise for purposes of the antidumping statute. Id. at 20a.
The court of appeals found further support for its conclusion in its earlier decision in Florida Power & Light Co. v. United States, 307 F.3d 1364 (Fed. Cir. 2002), in which it had held that, although SWU contracts do not clearly constitute either contracts for services or for goods as they do "not fall neatly" into either cate gory, they are "best characterized" as a service contract for purposes of the Contract Disputes Act of 1978, 41 U.S.C. 601 et seq. App., infra, 20a-24a; see Florida Power & Light Co., 307 F.3d at 1373.2
b. While the government's petition for rehearing was pending, this Court issued its decision in National Cable & Telecommunications Ass'n v. Brand X Internet Services, 545 U.S. 967 (2005), which held that "[a] court's prior judicial construction of a statute trumps an agency construction otherwise entitled to * * * defer ence only if the prior court decision holds that its con struction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion." Id. at 982. The government brought the decision to the Court's attention, pointing out that the court of appeals' reliance on Florida Power & Light Co. was inconsistent with the principles of agency deference that the Court reaffirmed in Brand X. In an order denying rehearing, App., infra, 29a-35a, the court rejected that argument, stating that it had not considered itself "bound" by Flor ida Power, but had treated it only as "'persuasive' au thority" for the proposition that SWU contracts are con tracts for services, not goods. Id. at 32a. The court fur ther held that Commerce's construction of 19 U.S.C. 1673 did not, in any event, warrant deference under Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837 (1984), be cause "the antidumping duty statute unambiguously ap plies to the sale of goods and not services." App., infra, 33a.
Notwithstanding its previous acknowledgment that SWU contracts do "not fall neatly" into either the goods or services category, Florida Power & Light Co., 307 F.3d at 1373, the court of appeals also found that "it is clear that [the SWU] contracts are contracts for services and not goods." App., infra, 33a. The court based that conclusion on "the critical importance" of what it charac terized as "the indisputable fact that, pursuant to the contracts at issue in this case, enrichers never obtain ownership of either the feed (unenriched) uranium dur ing enrichment or the final low enriched uranium ('LEU') product." Ibid. In the court's view, "the ines capable conclusion flowing from this circumstance is that the enrichers do not 'sell' LEU to utilities pursuant to the SWU contracts at issue in this case." Id. at 33a- 34a.
6. On remand, the CIT determined that the court of appeals' decision required Commerce to rewrite the scope of its antidumping order with respect to future LEU entries, as well as to exclude past LEU entries covered by SWU contracts from its duty calculations. 431 F. Supp. 2d 1351, 1354-1355 (2006); 442 F. Supp. 2d 1367 (2006). The government appealed the CIT's conclu sion with respect to future entries of LEU. The court of appeals dismissed that appeal as non-justiciable. App., infra, 1a-7a.
REASONS FOR GRANTING THE PETITION
The Federal Circuit has incorrectly overridden the views of the expert agency responsible for administering and interpreting the antidumping-duty statute. By failing to defer to Commerce's reasonable statutory interpreta tion, the court has opened a potentially gaping loophole in the Nation's trade laws that will encourage domestic buy ers and foreign producers to structure their transactions as contracts for "services" in which title to the finished merchandise is not formally vested in foreign producers before passing to the domestic buyer. The Federal Circuit erred in fashioning an irrational exception to the coverage of the antidumping-duty law that permits industries to evade antidumping duties based on the form, rather than the substance, of their transactions. The court's construc tion of the statute is not compelled by its text and serves only to undermine the statutory scheme that Congress designed to protect domestic industry from unfair foreign competition.
The importance of the decision below extends far be yond the economic realm. By narrowing the effective reach of the antidumping law, the court's decision jeopar dizes the full implementation of an agreement between the United States and the Russian Federation, under which Russia has undertaken to supply the United States with LEU produced by diluting highly enriched uranium from nuclear weapons. The successful implementation of that agreement, which is a key element of this Nation's nuclear nonproliferation policy, depends on Commerce's ability to apply the antidumping-duty laws to restrict imports of less-expensive LEU produced through commercial enrich ment processes in Russia.
The decision below also endangers the financial viabil ity of the only domestic uranium enricher, USEC, which is the sole source of supply for certain types of nuclear fuel used for military purposes. USEC's continued survival is important to ensure the reliability of the Nation's nuclear arsenal and the availability of fuel for nuclear-power mili tary vessels, as well as to ensure national energy security. This Court's review is therefore warranted.
I. COMMERCE PERMISSIBLY CONCLUDED THAT LOW- ENRICHED URANIUM IMPORTED PURSUANT TO SEPA RATIVE WORK UNIT TRANSACTIONS IS SUBJECT TO THE ANTIDUMPING-DUTY STATUTE
This Court has long held that courts are to accord def erence to reasonable interpretations of a statute adopted by the agency that has been "charged with responsibility for administering the provision." Chevron U.S.A. Inc. v. NRDC, 467 U.S. 837, 865 (1984). The treatment of LEU purchased pursuant to SWU transactions under the anti dumping-duty statute is, as Commerce acknowledged from the outset of this proceeding, an "exceptionally complicated issue," 66 Fed. Reg. at 36,744, as to which the statute is silent. Under Chevron, Commerce's final determination should have been upheld.
1. Congress has conferred on Commerce the authority to administer the antidumping-duty law by investigating allegations that imports are being dumped in the United States, making final determinations regarding sales at less than fair value, and issuing orders to remedy such unfair trade practices. 19 U.S.C. 1673(1), 1673a(a)(1), 1673d(c)(2), 1673e(a)(1); see 19 U.S.C. 1677(1). As the Federal Circuit has long recognized, "[a]ntidumping investigations are complex and complicated matters in which Commerce has particular expertise." Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1379 (2001) (quoting Thai Pineapple Pub. Co. v. United States, 187 F.3d 1362, 1367 (Fed. Cir. 1999), cert. denied, 529 U.S. 1097 (2000)). Com merce's interpretations of the antidumping-duty statute, articulated in the course of antidumping proceedings, are for that reason entitled to Chevron deference. Id. at 1382.
2. The antidumping-duty statute applies to "foreign merchandise * * * sold in the United States." 19 U.S.C. 1673(1). The statute does not define the term "sold," nor does it speak directly to the question presented in this case: Whether a foreign entity that accepts a combination of monetary consideration and raw materials in exchange for providing substantially transformed, finished merchan dise to a U.S. customer has "sold" that merchandise within the meaning of Section 1673(1), such that the merchandise is subject to antidumping duties if it enters the United States at prices below its fair value.
Taking "the totality of the circumstances" into account, Commerce concluded that, for purposes of Section 1673, LEU that enters the United States pursuant to such trans actions is "foreign merchandise * * * sold in the United States." App., infra, 126a, 134a. That conclusion reflects a reasonable interpretation of the antidumping-duty stat ute. As Commerce found, the enrichment of uranium is a "major manufacturing process," id. at 240a, that both "adds substantial value to the natural uranium and creates a new and different article of commerce," id. at 239a. In that respect, Commerce reasoned, enrichment is not pure ly a "service" in the sense that "activities such as account ing, banking, insurance, transportation and legal counsel are considered by the international trading community to be services." Id. at 240a. Commerce accordingly conclud ed that LEU obtained pursuant to SWU contracts, like any "output from manufacturing operations" that "results in the substantial transformation of the input product into an entirely different manufactured product," is merchandise potentially subject to the antidumping law. Ibid.
Commerce further found, "[b]ased upon the contracts and other evidence of record," that the SWU transactions at issue in this case "represent the transfer of ownership in the complete LEU product for consideration." App., infra, 131a. Specifically, Commerce found that, in SWU con tracts, "the utility customers hold title to the natural ura nium feedstock that they provide to the enrichers," but that they do not have or receive title to the finished LEU immediately upon its production; rather, title to the LEU is transferred to the utilities only when the enricher deliv ers the LEU to them. Id. at 132a. Morever, because the enricher treats the natural uranium feedstock as fungible, prior to delivery of the LEU a utility "customer does not hold title to * * * the feed material contained within the recently produced LEU." Id. at 133a. Indeed, there is no necessary correspondence between the raw-material feedstock provided by a utility customer and the LEU ulti mately delivered to the customer; the operation of the SWU contract scheme "mak[es] it impossible to conclude that the LEU produced and delivered by the enricher is in any way derived from the uranium supplied by the cus tomer." Ibid.
In short, because utility customers that enter into SWU contracts gain ownership of the finished LEU solely as a result of the consideration they provide to an enricher, Commerce reasonably concluded that such transactions constitute the "sale" of "merchandise" for purposes of the antidumping laws. App., infra, 131a ("[T]hese sales repre sent the transfer of ownership in the complete LEU prod uct for consideration."), 134a ("[E]nrichers make a * * * sale when they transfer ownership of the complete LEU to the utilities through the delivery of such merchandise for consideration.") (citing NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997)).
Ultimately, Commerce explained, to draw distinctions between merchandise obtained strictly via cash exchange and merchandise obtained via "contract manufacturing," or what are in substance part barter, part cash sales, would "contravene the intent of Congress" and "expos[e] indus tries to injury by unfair trade practices without the remedy of" the antidumping law. App., infra, 239a. As Commerce concluded, "nothing in the statute in any way indicates that Congress did not intend the [antidumping] law[] to be ap plicable to merchandise based upon the way in which par ties structure their transactions for such goods entering the commerce of the United States." Id. at 240a.
II. THE FEDERAL CIRCUIT ERRED IN FAILING TO DEFER TO COMMERCE'S REASONABLE INTERPRETATION OF THE ANTIDUMPING-DUTY STATUTE
The Federal Circuit overrode Commerce's interpreta tion of the antidumping statute based on the court's own determination that the parties to SWU transactions do not intend to vest ownership of the raw materials or the fin ished merchandise in the enricher "during the relevant time periods that the uranium is being enriched." App., infra, 20a. The court concluded that, absent evidence of "any intention by the parties to vest the enrichers with ownership rights in the delivered unenriched uranium or the finished LEU," enrichers cannot be said to "sell" LEU to utilities pursuant to SWU contracts. Ibid. That conclu sion is incorrect.
As a preliminary matter, the Federal Circuit's determi nation is directly contrary to Commerce's own finding that, "between the time in which the LEU is produced and the time in which it is delivered as specified under the contract, the enricher holds title and holds ownership in the com plete LEU product." App., infra, 133a. Even leaving that agency finding aside, moreover, the Federal Circuit's de termination is at odds with the undisputed fact that utili ties do not receive title to the LEU until it is delivered to them. Id. at 132a ("The contracts state that the enrichers transfer title to the LEU to the utilities upon production and delivery of the LEU."); id. at 133a ("[A]t the point in time in which the enricher produces the LEU but before delivery is performed, the customer * * * does not hold title to the LEU."). The court of appeals, like the CIT be fore it, affirmed Commerce's finding on that point. Id. at 20a (explaining that "the utility retains title to the quantity of unenriched uranium that it supplies to the enricher," and that title in the feedstock "is only extinguished upon the receipt of title in the LEU for which [the utility] con tracted") (emphasis added); see id. at 44a (affirming that "title passes to the enriched product" only when "it is re turned in enriched form") (citation omitted). The court nevertheless dismissed Commerce's reasonable inference that, when title passes to the utility, it passes from the en richer, without so much as attempting to offer an alterna tive explanation for the identity of the party from whom title passes to the purchasing utility. Id. at 20a.
In any event, even assuming arguendo the correctness of the Federal Circuit's determination that the enricher never acquires title to the LEU, the judgment below rests on an erroneous interpretation of the antidumping-duty statute. The Federal Circuit reasoned that, even though the operation of the SWU contracts makes clear that title to the LEU passes to the utility upon delivery of the LEU (and not before), no "sale" of LEU occurs because the par ties' contracts evidence no intent to vest ownership in the enricher, and title therefore does not pass from the enrich er to the utility. See App, infra, 33a (referring to "the cri tical importance of the indisputable fact that * * * en richers never obtain ownership of the feed (unenriched) uranium during enrichment or the final low enriched ura nium") (emphasis added); id. at 20a (reasoning that no "sale" occurs because "the SWU contracts in this case do not evidence any intention by the parties to vest the en richers with ownership rights in the delivered unenriched uranium or the finished LEU") (emphasis added). Thus, the Federal Circuit squarely held that mere passage of title to the recipient of a finished product is insufficient to support a finding of a "sale" within the meaning of Section 1673(1); rather, title must first vest in the party that manu factures the finished merchandise, then pass from the man ufacturer to the recipient of the merchandise, in order for a "sale" to occur.
There is no basis in the text of Section 1673(1) for the Federal Circuit's mandate that title must vest in the manu facturer in order for a SWU-type contract to constitute a "sale" of "foreign merchandise," namely, finished LEU. For purposes of coverage under the antidumping-duty statute, the question is not whether a particular person has "sold" foreign merchandise; rather, the statute speaks in the passive voice, and asks only whether foreign merchan dise "is being * * * sold," without regard to the identity of the specific parties or entities from which title is passing. 19 U.S.C. 1673(1). As the court of appeals acknowledged, a "sale" typically occurs when ownership is conveyed in exchange for consideration. App., infra, 18a, 20a; see Web ster's New International Dictionary 2203 (2d ed. 1957). It is undisputed that, under a SWU-type arrangement, a util ity provides raw materials and monetary consideration to the enricher and, in exchange, receives delivery of and title to finished LEU that is not traceable to the particular lots of uranium feedstock supplied by the utility. App., infra, 20a, 131a-132a. Commerce was surely correct that the enricher was, in fact, the seller. See pp. 6-8, 11-12, supra. But whomever the courts below considered to be the seller, there is no question that what occurs is a sale. Whatever ambiguity might arise when the final product uniformly incorporates the raw material provided by that particular buyer, there is clearly a sale where, as here, the enricher supplies a finished product for combination of cash and feedstock, with no guarantee that the buyer will get its feedstock back. Here, the utility originally had title to a particular lot of raw materials (and to the requisite amount of monetary consideration) and, as a result of the SWU transaction, ended up with title to a different lot of finished merchandise. The utility has thus received title to LEU that it did not previously own in exchange for the payment of consideration; it was certainly reasonable for Commerce to conclude that such a transaction qualifies as a "sale."3
Even if the plain text of the statute could support the court of appeals' construction, the statute does not compel it. As this Court has repeatedly acknowledged, the term "sale" has different meanings in different contexts. This Court has accordingly affirmed reasonable agency inter pretations that focus on the substance of the transaction in order to effectuate the purposes of the relevant statutory scheme. See SEC v. National Sec., Inc., 393 U.S. 453, 466- 467 (1969) (affirming the SEC's construction of the statu tory term "purchase or sale of any security" to include a stock swap accomplished during a merger for purposes of the antifraud provisions of the securities laws, reasoning that, "[w]hatever the terms 'purchase' and 'sale' may mean in other contexts, here an alleged deception has affected individual shareholders' decisions in a way not at all unlike that involved in a typical cash sale or share exchange," and "[t]he broad antifraud purposes of the statute and the rule would clearly be furthered by their application to this type of situation"); United Gas Improvement Co. v. Continental Oil Co., 381 U.S. 392, 400 (1965) (holding that sales of leas es of land containing gas reserves constitute "'sales' of na tural gas in interstate commerce" for purposes of estab lishing Federal Power Commission jurisdiction under the Natural Gas Act, 15 U.S.C. 717 et seq., reasoning that "[a] regulatory statute such as the Natural Gas Act would be hamstrung if it were tied down to technical concepts of local law").
Commerce has reasonably construed the antidumping- duty statute to encompass transactions in which title to a newly produced good passes to a U.S. customer that has paid consideration in exchange for the finished product. That construction is clearly a permissible interpretation of the term "merchandise * * * sold," and moreover it serves to further the purpose of the statute in which that term appears: to protect domestic manufacturers from unfairly traded imports.
The court of appeals' decision, by contrast, effectively provides a roadmap for circumvention of the Nation's trade laws. The production of virtually all merchandise involves processing for which the parties could contract separately, in the same manner as SWU contracts. For example, steel could be obtained by supplying iron ore for "smelting and rolling services"; lumber could be obtained by supplying trees for "harvesting and milling services"; and semicon ductors could be obtained by supplying silicon for "pro cessing services." See App., infra, 239a-240a. If allowed to stand, the decision below threatens to permit numerous industries to escape antidumping duties by carefully draft ing their contracts to ensure that no contract provision evidences an intent to vest ownership of those items of commerce in the entities that produce them. The Federal Circuit's holding creates the potential for widespread eva sion of antidumping-duty orders and thus for eviscerating the protections that Congress intended to afford domestic industry by enacting the antidumping-duty statute. The plain language of the statute does not command that counterintuitive result, and this Court's review is war ranted to correct it.
III. THE DECISION BELOW THREATENS U.S. FOREIGN POLICY AND NATIONAL SECURITY INTERESTS
The consequences of the decision below go far beyond the substantial adverse effect on the effective administra tion of the trade laws. The decision below, in a truly un precedented manner for a trade case, threatens to under mine U.S. foreign policy and national security interests in the remarkably sensitive context of nuclear fuel, nonprolif eration, and ensuring domestic supplies for nuclear weap onry. Because enriched uranium is essential to nuclear power, the government's ability to regulate its entry into the United States is a matter of great significance. The court's decision in this case puts at risk full implementation of an international nuclear nonproliferation agreement and the continued survival of the only domestic source of nu clear materials for military uses. Those consequences fur ther justify this Court's intervention.4
1. First, the decision below threatens to undermine the United States' Highly Enriched Uranium (HEU) Agree ment with the Russian Federation, a key element of U.S. nuclear nonproliferation policy, which is dependent on the proper application of antidumping law to imported LEU.
Under the HEU Agreement, signed in 1993, the Rus sian Federation has undertaken by 2013 to convert 500 metric tons of weapons-grade HEU-enough for approxi mately 20,000 Russian nuclear warheads-into LEU for use in generating electricity in the United States. In re turn, the United States has agreed to purchase LEU downblended from 30 metric tons of weapons-grade HEU each year through 2013. See Agreement Concerning the Disposition of Highly Enriched Uranium Extracted from Nuclear Weapons, U.S.-Russ., Feb. 18, 1993, State Dep't No. 93-59, 1993 WL 152921. USEC, the sole domestic en richer of LEU, serves as the U.S. Executive Agent under the agreement. In that capacity, USEC purchases the downblended LEU, resells the material to U.S. utilities, and uses the proceeds to pay the Russian Government.
The foundation for the HEU Agreement was laid in 1992, when Commerce agreed to suspend an antidumping investigation into Russian uranium that had been promp ted by a surge of low-price Russian uranium imports into the United States. See Uranium from Kazakhstan, Kyrg yzstan, Russia, Tajikistan, Ukraine, and Uzbekistan, 57 Fed. Reg. 49,235 (1992) (notice of suspension of investiga tions and amendment of preliminary determinations). The antidumping suspension agreement restricts imports of Russian LEU produced through commercial enrichment processes, but exempts from those restrictions "any or all" HEU, and LEU produced through a process of downblen ding HEU "resulting from the dismantlement of nuclear weapons." Id. at 49,237.5 The suspension agreement, which was negotiated in parallel with the HEU Agreement, thus provides an important incentive for the Russian Fed eration to produce LEU for export through a process of downblending, rather than through the less costly (and hence more profitable) method of enriching natural ura nium through commercial processes.
The court of appeals' decision critically undermines the effectiveness of the antidumping suspension agreement as it affects enriched (as opposed to downblended) LEU, and thereby threatens the effectiveness of the HEU Agree ment as well. Suspension agreements apply only to mer chandise subject to the antidumping-duty law. See 19 U.S.C. 1673c(l) (limiting scope of suspension agreements with nonmarket economy countries to "merchandise under [antidumping] investigation"); see also 19 U.S.C. 1673c(c) (generally limiting scope of suspension agreements to "subject merchandise"); 19 U.S.C. 1677(25) (defining "sub ject merchandise" as, inter alia, "the class or kind of mer chandise that is within the scope of an [antidumping] inves tigation). If LEU purchased pursuant to SWU contracts is not subject to the antidumping-duty law, as the Federal Circuit has held, Russia will have a strong economic incen tive to avoid application of the antidumping suspension agreement by structuring transactions as the French en richers and utilities did in this case.
If such an effort is successful, Russia would have far less incentive to continue to produce LEU via the rela tively more expensive process of dismantling nuclear war heads, rather than producing LEU by commercial enrich ment. See Memorandum from Joseph A. Spetrini, Deputy Assistant Secretary for Policy and Negotiations, to David M. Spooner, Assistant Secretary for Import Administra tion, Issues and Decision Memorandum for the Sunset Re view of the Agreement Suspending the Antidumping In vestigation on Uranium from the Russian Federation 6 (June 6, 2006) <ia.ita.doc.gov/frn/summary/ RUSSIA/E6- 8758-1.pdf> (Sunset Review Memorandum); Final Results of Five-Year Sunset Review of Suspended Antidumping Duty Investigation on Uranium from the Russian Feder ation, 71 Fed. Reg. 32,517 (2006). Russia is the largest enricher of uranium in the world, and enriching natural uranium for commercial LEU sales is the most economi cally viable use of its vast enrichment capacity. Sunset Review Memorandum 6. Today Russia has substantially more enrichment capacity than necessary to supply its own domestic market, and other markets-notably in the Euro pean Union and Asia-have imposed restrictions on im ports of Russian uranium products. Ibid. Absent full im plementation of the antidumping suspension agreement, Russia would have a strong financial incentive to direct its enrichment capacity toward commercial enrichment of natural uranium for the U.S. market, rather than down blending weapons-grade uranium, for the same market at higher cost. Ibid. It might terminate the HEU Agreement after one year's notice, as permitted under the Agreement, or it might halt or slow its performance under the Agree ment, to the detriment of U.S. foreign policy and national security interests.
Even if Russia continued full performance under the HEU Agreement, the Agreement might still be threatened by a failure fully to implement the antidumping suspension agreement. Competition from commercially enriched Rus sian LEU would threaten USEC's ability to resell some or all of the downblended LEU that it is committed to pur chase in its capacity as the U.S. Executive Agent under the HEU Agreement, which would, in turn, threaten USEC's ability to continue to raise the revenue necessary to pur chase that material from Russia.
In short, successful implementation of the HEU Agree ment depends in significant part on the government's abil ity to use the antidumping laws to regulate the entry of LEU from foreign sources, so that downblending of wea pons-grade HEU remains commercially feasible. The deci sion below effectively obliterates a crucial part of the framework that underlies the HEU Agreement, and thus stands as an obstacle to accomplishing the Agreement's objective of converting Russian nuclear warheads to peace ful uses.
2. Second, the court of appeals' decision threatens the ongoing economic viability of USEC, the only domestic entity that enriches uranium. Because other countries generally require that their nuclear products and technol ogy be used only for peaceful purposes, USEC operates the only facility in the world that can produce nuclear ma terials for U.S. military use. Its continued survival is, ac cordingly, a matter of compelling importance to U.S. na tional security interests.
The government relies on USEC to supply enriched uranium for a variety of military purposes. USEC is the sole supplier of the LEU used to fuel the government- owned nuclear reactors that produce tritium, a radioactive isotope necessary to maintain the U.S. nuclear arsenal. USEC also supplies the enriched uranium required for the operation of the space nuclear program. In addition, the U.S. Navy's nuclear-powered submarines and aircraft car riers are fueled with HEU and rely upon its availability. When the current supply of that material is depleted, the Navy will require a sustainable domestic provider of HEU. Today, USEC is the only domestic provider of enrichment services.
USEC currently operates only one facility in the Uni ted States that can be used to produce enriched uranium for military purposes. That facility, which is located in Paducah, Kentucky, enriches uranium through gaseous diffusion, a process that is commercially obsolete at cur rent prices. USEC is presently planning to replace the Paducah facility with a new centrifuge facility to produce LEU in Piketon, Ohio, for which USEC must raise signifi cant capital in commercial markets. It will be difficult or impossible for USEC to raise that capital if investors do not view the U.S. market for enriched uranium as stable and profitable. If left unreviewed, the decision below would destabilize that market, threatening both the eco nomic viability of the facility that USEC already operates as well as its plans to replace that facility with updated and more cost-effective technology. As a result, the decision below, far from a garden-variety trade case, threatens the United States' ability to produce materials critical to mili tary operations.
3. Finally, by radically limiting domestic industry's protection from imports of dumped enriched uranium, the decision below threatens to increase the United States' dependence on foreign energy sources. If Russia enjoys unfettered access to the market for LEU in the United States, its vast capacity for enrichment will weaken finan cial support for expansion of domestic enrichment capacity and leave the Russian Federation as the predominant sup plier of enriched uranium for domestic electricity genera tion.
CONCLUSION
The petition for a writ of certiorari should be granted.
Respectfully submitted.
PAUL D. CLEMENT
Solicitor General
JEFFREY S. BUCHOLTZ
Acting Assistant Attorney
General
THOMAS G. HUNGAR
Deputy Solicitor General
LEONDRA R. KRUGER
Assistant to the Solicitor
General
JEANNE E. DAVIDSON
PATRICIA M. MCCARTHY
STEPHEN C. TOSINI
Attorneys
JOHN B. BELLINGER, III
Legal Adviser
Department of State
WILLIAM J. HAYNES II
General Counsel
Department of Defense
JOHN J. SULLIVAN
General Counsel
JOHN D. MCINERNEY
Chief Counsel for Import
Administration
QUENTIN M. BAIRD
Attorney
Department of Commerce
DAVID R. HILL
General Counsel
Department of Energy
FEBRUARY 2008
1 The CIT also rejected Commerce's determination that the tolling provision is altogether inapplicable in this case. App., infra, 50a-56a. The CIT held, however, that Commerce acted reasonably in declining to apply the tolling provision in determining the members of the affec ted domestic industry. Id. at 56a-59a.
2 The court of appeals did not consider the applicability of the tolling provision. App., infra, 9a, 27a.
3 Contrary to the court of appeals' assertions (App., infra, 20a-24a), there is no conflict between Commerce's final determination in this case and the government's position in Florida Power & Light Co., supra. In Florida Power & Light Co., the question was whether Department of Energy (DOE) SWU contracts qualify as "contract[s] * * * entered into by an executive agency for * * * the disposal of personal proper ty" for purposes of the Contract Disputes Act of 1978 (CDA), 41 U.S.C. 602(a), which governs the resolution of disputes arising from certain types of government contracts. The government in that case success fully argued that SWU contracts were not contracts for "the disposal of personal property" within the meaning of the CDA, but were instead contracts for the provision of enrichment services, and that resolution of the dispute therefore was not governed by the CDA. Florida Power & Light Co., 307 F.3d at 1373. Unlike the CDA, application of the antidumping-duty statute does not turn on the nature of a particular contract between producer and consumer, but rather turns on whether the course of dealing between the parties results in a "sale" of "mer chandise." As Commerce properly recognized in its final determination in these proceedings, a contract to purchase manufacturing services can result in the "sale" of "merchandise" for purposes of the antidumping- duty statute. See App., infra, 240a-241a.
4 The government notes that bills are currently pending in commit tees in Congress that would explicitly provide that "any contract or transaction for the production of low-enriched uranium" qualifies as "a sale of foreign merchandise" under the antidumping-duty statute, 19 U.S.C. 1673. See H.R. 4929, 110th Cong., 1st Sess. (2007); S. 2531, 110th Cong., 1st Sess. (2007). There is no guarantee, however, that the legislation will be enacted, much less that it will be enacted in its pre sent form.
5 The Governments of the United States and Russia signed an am endment to the suspension agreement on uranium from Russia on Feb ruary 1, 2008. See Amendment to the Agreement Suspending the Anti dumping Investigation on Uranium from the Russian Federation, 73 Fed. Reg. 7705 (2008). The amendment adjusts the limits on Russian exports of commercial LEU to the United States. Id. at 7706.
APPENDIX A
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
Nos. 2007-1005, 1006
EURODIF S.A., COMPAGNIE GENERALE DES MATIERES NUCLEAIRES, AND COGEMA, INC., PLAINTIFFS-APPELLEES, AND AD HOC UTILITIES GROUP, PLAINTIFF-APPELLEE
v.
UNITED STATES, DEFENDANT- APPELLANT, AND USEC INC. AND UNITED STATES ENRICHMENT CORPORATION, DEFENDANTS-APPELLANTS
Sept. 21, 2007
Before MICHEL, Chief Judge, LOURIE, Circuit Judge, and ROBERTSON, District Judge.1
ROBERTSON, District Judge
In this dispute about the correct application of the antidumping statute, 19 U.S.C. § 1673, to enriched uran ium feedstock, appellants United States, USEC Inc., and United States Enrichment Corp. (the latter two col lectively referred to as ("USEC") appeal from a judg ment of the United States Court of International Trade. Eurodif S.A. v. United States, 442 F. Supp. 2d 1367 (Ct. Int'l Trade 2006). In 2005, we issued two interlocutory opinions in the same case, Eurodif S.A. v. United States, 411 F.3d 1355 (Fed. Cir. 2005) ("Eurodif I"), and Euro dif S.A. v. United States, 423 F.3d 1275 (Fed. Cir. 2005) ("Eurodif II"). Because the issues appellants raise in the instant appeal concern only the application of those decisions to future entries of low enriched uranium, we dismiss the appeal as unripe.
I. BACKGROUND
In Eurodif I and Eurodif II, we found that separate work unit ("SWU") contracts for the enrichment of ur anium were contracts for services, rather than for the sale of goods, and that the low enriched uranium ("LEU") produced under those contracts was therefore not subject to the antidumping statute. Eurodif I, 411 F.3d at 1364; Eurodif II, 423 F.3d at 1278. Following those decisions, the Court of International Trade issued a remand order, instructing the Department of Com merce ("Commerce") to revise its final determination and order, and to "explain how its final determination and order on remand has eliminated all SWU transac tions" in accordance with our decisions. Eurodif S.A. v. United States, 414 F. Supp. 2d 1263 (Ct. Int'l Trade 2006) ("Eurodif III"). Acting pursuant to that order, Commerce excluded LEU covered by SWU contracts from its recalculation of the duty margin, Final Results of Redetermination Pursuant to Court Remand, Euro dif S.A. v. United States (Mar. 3, 2006), but it did not modify the scope of the antidumping duty order to ex clude future imports of LEU covered by SWU contracts.
Plaintiffs-Appellees Eurodif S.A., Cogema, and Cog ema, Inc. (collectively referred to herein as "Eurodif") supported Commerce's action, as far as it went, but they also asked the Court of International Trade to require Commerce to amend the scope order so that it would ex pressly exclude LEU covered by SWU contracts. De fendant-Appellant USEC supported Commerce's decis ion not to amend the scope order, but asserted that it was error for Commerce to exclude all LEU imported pursuant to SWU contracts from its recalculation with out investigating the facts behind each contract to deter mine whether the transaction was a sale of services, as stated in the contract, or was in fact a sale of goods.
The Court of International Trade agreed with Euro dif. It found that our opinions in Eurodif I and Eurodif II took into account the factual circumstances operating behind the individual contracts in this case and there fore that Commerce was correct to exclude all LEU cov ered by those SWU contracts from its recalculation. Eurodif S.A. v. United States, 431 F. Supp. 2d 1351, 1354 (Ct. Int'l Trade 2006) ("Eurodif IV"). Further more, the Court of International Trade concluded that our previous opinions required Commerce to rewrite the scope of the antidumping duty order, and it remanded the case to Commerce once again with instructions to amend the order to exclude all LEU covered by SWU contracts from the "class or kind of merchandise" cov ered by the order. Id. at 1355 (citing 19 U.S.C. § 1673e(a)(2)). On this second remand, Commerce re defined the scope of the antidumping order to exclude any entry of LEU that is accompanied by a certification claiming that the entry is made pursuant to a SWU contract. The Court of International Trade sustained, Eurodif S.A. v. United States, 442 F. Supp. 2d 1367 (Ct. Int'l Trade 2006) ("Eurodif V"), and this appeal fol lowed. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(5).
II. DISCUSSION
In Eurodif I and Eurodif II, we found that the SWU contracts at issue "in this case" were contracts for the sale of services that were not subject to the antidumping statute. See Eurodif I, 411 F.3d at 1362, 1364. We did not address how Commerce should determine whether future entries of LEU are made pursuant to SWU con tracts. The contentions of the government and USEC on this appeal are directed to future entries. They argue that Commerce should be permitted to suspend liquida tion of future LEU imports until it determines-trans action-by-transaction and by administrative review- whether the SWU contract exception applies. USEC additionally argues that the scope amendment and certification should be modified now to make it clear that future LEU imports will not be outside the scope of the antidumping law if the unenriched uranium is either (a) obtained from an affiliate of the enricher or (b) delivered to the enricher after entry.
Neither the procedural question presented here (scope review vs. administrative review) nor the sub stantive questions relating to affiliation of the enricher are ripe for decision. The doctrine of ripeness is des igned "to prevent the courts, through avoidance of pre mature adjudication, from entangling themselves in abstract disagreements over administrative policies, and also to protect the agencies from judicial interference until an administrative decision has been formalized and its effects felt in a concrete way by the challenging parties." Abbott Labs. v. Gardner, 387 U.S. 136, 148-49 (1967). It is drawn "both from Article III limitations on judicial power and from prudential reasons for refusing to exercise jurisdiction, but, even in a case raising only prudential concerns, the question of ripeness may be considered on a court's own motion." Nat'l Park Hospitality Ass'n v. Dep't of Interior, 538 U.S. 803, 808, (2003) (citing Reno v. Catholic Soc. Servs., Inc., 509 U.S. 43, 57 n.18 (1993) (citations omitted)).
Administrative Review vs. Scope Determination
The Court of International Trade found that an ad ministrative review is not the "proper forum to address whether merchandise is within the scope of an order," and that Commerce's own regulations authorize a dif ferent mechanism for this purpose: a "scope determin ation." Eurodif IV, 431 F. Supp. 2d at 1356. At the re quest of any interested party, Commerce may "initiate an inquiry" as to whether merchandise is within the scope of an antidumping duty order. Id. (citing 19 C.F.R. § 351.225(b)). If the Secretary determines that the product in question is included within the scope of the order, he may instruct Customs to suspend liqui dation for each unliquidated entry, effective as of the date the scope inquiry was initiated. 19 C.F.R. § 351.225(l)(2). That determination is reviewable by the Court of International Trade. 28 U.S.C. § 1581(c).
Appellants argue that this scope determination pro cess is inadequate, because, as a practical matter, an en try of LEU under review will be liquidated before Com merce can complete its determination. They assert that determining whether a particular transaction is entitled to the SWU-contract exception requires a careful anal ysis of the contract itself and an opportunity to inves tigate the manner of its execution. The administrative review process would permit Commerce to suspend liq uidation while such an assessment takes place, but the scope determination process permits Commerce to sus pend liquidation only after the Secretary has issued a preliminary scope ruling. USEC notes that liquidation typically occurs ten months after entry, but Commerce's previous assessments of LEU contracts have taken sev enteen to eighteen months.2 As a result, appellants ar gue, the scope determination process will not be com pleted before the entry under review has been liquida ted, mooting the review.
This dispute is about what may or may not happen with the next LEU case-a case about which we have no facts. Our decisions in Eurodif I and Eurodif II did not resolve the procedural problem that USEC and the government have presented here, but we decline to at tempt a resolution on this record. We have held that SWU contracts are contracts for services and that the LEU in this case entered under SWU contracts. Whe ther the next contested shipment of LEU is covered by a valid SWU contract is a question that must await the next case. If Commerce is correct, and the next dis puted LEU entry is liquidated before Commerce can complete its scope review, the dispute will not be ren dered non-justiciable, as it would be "capable of repe tition, yet evading review." S. Pac. Terminal Co. v. ICC, 219 U.S. 498, 515 (1911).
LEU Obtained from or Sold to Affiliates
The more substantive questions USEC brings on this appeal also require a specific factual context for their resolution, and such a record is not before us. USEC wants it made clear that future LEU imports will not av oid antidumping penalties if the unenriched uranium was either (a) obtained from an affiliate of the enricher or (b) delivered to the enricher after the importation of the LEU. Although USEC does not challenge our find ing that the contracts in this case were contracts for the sale of services,3 it seeks clarification as to whether our holding would apply to future entries with these charac teristics. Until we have record evidence regarding such entries, however, USEC's questions are non-justiciable. Elec. Bond & Share Co. v. S.E.C., 303 U.S. 419, 443 (1938) ("We are invited to enter into a speculative inquiry for the purpose of condemning statutory provisions the effect of which in concrete situations, not yet developed, cannot now be definitely perceived. We must decline that invitation.").
III. CONCLUSION
For the aforementioned reasons, we dismiss.
DISMISSED.
* Honorable James Robertson, District Judge, United States District Court for the District of Columbia, sitting by designation. 1 Eurodif responds that Commerce's regulations provide for the issu ance of final scope rulings within 120 days, but the regulation clearly states only that a decision "normally" will be reached within that time. 19 C.F.R. § 351.225(f)(5). 2 USEC initially requested that we order Commerce to reopen the record of the SWU contracts analyzed in Eurodif I and Eurodif II to examine purchases of unenriched uranium from affiliates, but now ac knowledges that it raised this question in its appeal of Commerce's final redetermination of the antidumping duty, and that we rejected that ap peal. Eurodif S.A. v. United States, 217 Fed. Appx. 963 (Fed. Cir. 2007).
APPENDIX B
UNITED STATES COURT OF APPEALS
FOR THE FEDERAL CIRCUIT
Nos. 04-1209, 04-1210
EURODIF S.A., COMPAGNIE GENERALE DES MATIERES NUCLEAIRES, AND COGEMA, INC., PLAINTIFFS-APPELLANTS, AND AD HOC UTILITIES GROUP, PLAINTIFF-APPELLANT
v.
UNITED STATES, DEFENDANT-CROSS APPELLANT, AND USEC INC. AND UNITED STATES ENRICHMENT CORPORATION, DEFENDANTS-CROSS APPELLANTS
March 3, 2005
Before BRYSON, Circuit Judge, PLAGER, Senior Circuit Judge, and PROST, Circuit Judge.
PROST, Circuit Judge.
This interlocutory appeal comes to us from the Uni ted States Court of International Trade, which certified four separate questions for appeal to this court. The Ad Hoc Utilities Group ("AHUG"), Eurodif S.A. ("Euro dif"), Compagnie Generale des Matieres Nucleaires ("CGMN") and Cogema, Inc. appeal two issues from the Court of International Trade. The United States, USEC, Inc. and the United States Enrichment Corpor ation (the latter two collectively referred to as "USEC" in this opinion) cross-appeal two issues. We affirm the Court of International Trade's decision affirming the Department of Commerce's ("Commerce") industry sup port determination. We also affirm the court's decision that uranium enrichment contracts constitute a pro vision of services, rather than a sale of goods. Finally we reverse the court's decision regarding subsidies, and hold that overpayment for uranium enrichment services by foreign government entities cannot constitute a countervailable subsidy. Because we need not review the court's decision regarding Commerce's application of the tolling regulation in the context of export price determination, we decline to do so.
BACKGROUND
Enriched uranium fuel rods are used by the utility industry to generate nuclear power. The process of pro ducing those rods involves multiple steps. First, uran ium ore must be mined. Second, the ore must be milled or refined into concentrated uranium. Third, that con centrated uranium must be converted into uranium hex afluoride. Fourth, that uranium hexafluoride must be enriched into low enriched uranium ("LEU"). Fifth, and finally, LEU is used to fabricate uranium rods. This case involves the fourth step in the process of creating uranium rods-the enrichment of uranium hexafluoride into LEU.
Many utilities in the United States contract to buy uranium from a third-party seller and then contract to have that uranium enriched by a uranium enricher. Only one entity in the United States enriches uranium into LEU-USEC, formerly an arm of the federal government. A variety of foreign enrichers, including Eurodif, CGMN and Cogema, compete with USEC and also enrich the uranium of American utility companies.4
Contracts for enriched uranium come mainly in two different forms. The first form involves contracts that provide money for the sale of enriched uranium, other wise known as enriched uranium product, or EUP, con tracts. The second form, the form relevant to this ap peal, involves the transfer of unenriched uranium by a buyer to an enricher and the purchase of separative work units ("SWU") from the enricher. In these SWU contracts, the enricher enriches the unenriched uranium and delivers LEU to the purchaser. Although the en richer may not necessarily produce a particular utility's LEU from the uranium that utility provides to the en richer, the utility retains title, during the enrichment process, to the quantity of unenriched uranium that it supplies to the enricher.
In most of the transactions relevant to this case, AHUG and American utilities entered into SWU con tracts with European enrichers. These utilities compen sated enrichers to process unenriched uranium into LEU. In another critical transaction, a partially public French utility, Electricite de France ("EdF"), entered into an SWU contract with French enricher Eurodif. In that contract, EdF allegedly paid Eurodif greater than adequate compensation for the enrichment of uranium.
On December 7, 2000, USEC petitioned Commerce to undertake an antidumping and countervailing duty investigation focusing on LEU coming from France, Germany, the Netherlands, and the United Kingdom. On December 21, 2001, Commerce issued its final deter minations in that investigation. Those determinations focused on two main issues: (1) whether SWU contracts were contracts for the sale of goods and not services and, therefore, subject to U.S. antidumping and counter vailing duty statutes, and (2) whether domestic utilities or foreign enrichers were "producers" of LEU for the purposes of determining whether or not there was suf ficient industry support to begin an antidumping and countervailing duty investigation in the first place. In its final determinations, Commerce concluded that SWU contracts are contracts for the sale of goods and not ser vices. It also decided that the foreign enrichers of uran ium, and not the domestic utilities, were "producers" of LEU.
AHUG and the foreign enrichers party to this case appealed Commerce's determination to the Court of In ternational Trade, arguing that a uranium enrichment contract is a contract for the provision of services and not the sale of goods and, therefore, not subject to fed eral antidumping and countervailable subsidy statutes. AHUG also disputed Commerce's contention that only the foreign enrichers are "producers" for domestic in dustry support determination purposes, arguing that Commerce's determination that foreign enrichers were "producers" of LEU was inconsistent with its prior de cisions. AHUG further contended that if the domestic utilities are considered producers of LEU, Commerce would not have sufficient domestic industry support to commence an investigation pursuant to 19 U.S.C. § 1673a(c)(4).
The Court of International Trade agreed with AHUG and determined that Commerce's characterization of the enrichment contracts between AHUG and foreign en richers as contracts for the sale of goods was not sus tainable. USEC Inc. v. United States, 259 F. Supp. 2d 1310, 1324-26 (Ct. Int'l Trade 2003) ("USEC I"). It also found that Commerce's determination that the foreign enrichers were "producers" of LEU was against the weight of the evidence and inconsistent with prior Com merce decisions. Id. at 1317-26. As a result, the court remanded the case to allow Commerce to reconsider its determinations.
In its remand determination, Commerce reiterated its original positions. Final Remand Determination, USEC Inc. and United States Enrichment Corp. v. Uni ted States (June 23, 2003) ("Remand Determination"). AHUG and the foreign enrichers then appealed that re mand determination to the Court of International Trade. In its second consideration of Commerce's determina tions, the court concluded that (1) Commerce's interpre tation of the word "producer" in the context of making an industry support determination was reasonable and in accordance with law; (2) uranium enrichment con tracts were contracts for services and not for goods; (3) payment by a foreign government entity of more than adequate remuneration to a foreign enricher for enrichment services qualified as a countervailable sub sidy; and (4) Commerce's interpretation of the word "producer" for the purposes of making an export price determination was inconsistent with its previous determinations in other cases and thus not in accordance with law. USEC Inc. v. United States, 281 F. Supp. 2d 1334 (Ct. Int'l Trade 2003) ("USEC II").
Because the resolution of the issues decided by the court in USEC II are potentially dispositive of this en tire case, the Court of International Trade certified four specific questions for appeal to this court. The four cer tified questions are:
(1) Whether Commerce's decision not to apply its tol ling regulation to determine whether American utilities should be considered "producers" of low enriched uran ium (LEU) for the purposes of determining whether there was enough domestic industry support to proceed with an investigation is in accordance with law. (Com merce determined that foreign enrichers and not do mestic utilities were "producers" of LEU for the purpos es of determining domestic industry support. Remand Determination at 6-36.)
(2) Whether Commerce's decision that the enrich ment of uranium feedstock pursuant to separative work unit (SWU) contracts constitutes a sale of goods instead of services is supported by substantial evidence and in accordance with law. (Commerce determined that SWU contracts like EUP contracts are contracts for the sale of goods. Remand Determination at 70-81.)
(3) Whether Commerce's decision that payment of more than adequate remuneration for enrichment serv ices by partially public foreign entities to foreign enrich ers constitutes a countervailable subsidy is in accor dance with law. (Commerce determined that the trans action between EdF and Eurodif was a sale of goods to a government entity for more than adequate remunera tion and, therefore, subject to the countervailing duty statute. Remand Determination at 82-99.)
(4) Whether Commerce's decision to apply a defini tion of "producer" in the context of export price deter mination that is different from the definition it used in the industry support determination is reasonable and therefore in accordance with law. (Commerce deter mined that foreign enrichers were "producers" of LEU for the purposes of determining LEU export price. Re mand Determination at 69-70.)
We have jurisdiction to hear this appeal under 28 U.S.C. § 1292(d)(1).
DISCUSSION
In reviewing the Court of International Trade's de cisions in this case, we apply the same standard used by that court in evaluating Commerce's determinations, findings and conclusions and hold unlawful any decisions found to be unsupported by substantial evidence or otherwise not in accordance with law. 19 U.S.C. § 1516a(b)(1)(B)(i) (2000).
A. The Tolling Regulation and
Commerce's Industry Support Determination
Before an antidumping and countervailing duty in vestigation can be initiated, the petition on which that investigation is based must meet certain industry sup port requirements. A petition is considered to be filed on behalf of an industry if:
(i) the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and
(ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product pro duced by that portion of the industry expressing support for or opposition to the petition.
19 U.S.C. § 1673a(c)(4)(A) (2000).
Commerce determined that in order to be a pro ducer, an entity must have a "stake" in the domestic in dustry in question. Commerce then defined having a "stake" as undertaking the "actual production of the do mestic like product" within the United States. Remand Determination at 13. Commerce's industry support de termination considered USEC to be the only domestic producer of LEU. Accordingly, Commerce found that there was sufficient domestic industry support to begin an antidumping and countervailing subsidy investiga tion. The Court of International Trade affirmed Com merce's determination that foreign uranium enrichers were "producers" for the purposes of § 1673a(c)(4)(A).
On appeal, appellants AHUG, Eurodif, CGMN and Cogema argue that American utility companies should be considered "producers" for the purposes of deter mining whether USEC's petition has sufficient industry support to trigger Commerce's antidumping and coun tervailing duty investigation. In support, they note that Commerce's tolling regulation orders Commerce not "to consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire ownership, and does not control the relevant sale, of the subject merchandise or foreign like product." 19 C.F.R. § 351.401(h) (2004). According to the appel lants, if the tolling regulation were applied in this case, Commerce could not initiate any antidumping or countervailing duty investigation because the domes- tic utilities would be considered "producers" for the purposes of an industry support determination-and given such a definition of "producer," the dictates of § 1673a(c)(4)(A) would not be satisfied. They draw further support for their argument from prior Com merce determinations that held that control of the aspects of manufacture is sufficient to qualify an entity as a "producer." Finally, they buttress their argument by alleging that Commerce improperly and inconsis tently applied the tolling regulation by using it to deter mine the export price of LEU but declining to apply it in its industry support determination.
The Court of International Trade rejected AHUG's argument and sustained Commerce's interpretation of the term "producer" for the purpose of an industry sup port determination as well as its refusal to apply the tolling regulation to encompass American utilities within the definition of the term "producer." USEC II, 281 F. Supp. 2d at 1346. The court supported its holding by determining that Commerce's use of the tolling regula tion was in keeping with the purposes of the industry support statute and that Commerce's interpretation of the word "producer" was reasonable and, thus, in ac cordance with law. Id. On this issue, we agree with the Court of International Trade and affirm Commerce's initial industry support determination.
Commerce's determination that domestic utilities were not "producers" of LEU is consistent with the pur pose of § 1673a(c)(4)(A). Section 1673a(c)(4) speaks of "industry support" and, as expressed in legislative his tory, Congress intended the industry support statute "to provide an opportunity for relief for an adversely af fected industry and to prohibit petitions filed by persons with no stake in the result of the investigation." S. Rep. No. 249, 96th Cong., 1st Sess. 47 (1979). This view was echoed by the Court of International Trade when it no ted that "[t]he language in the legislative history is broad and unqualified. It contrasts industries suffering adverse effect with those having no stake: the former have standing, the latter do not." Brother Indus. (USA), Inc. v. United States, 801 F. Supp. 751, 757 (Ct. Int'l Trade 1992). Commerce interpreted having a "stake" as requiring that a company "perform some important or substantial manufacturing operation." Remand Deter mination at 14 (internal quotations and citations omit ted). There is no basis to conclude that Commerce's in terpretation in this context is unreasonable or not in ac cordance with law.
Further, determining the export price of a good and determining whether a petition has enough support for an investigation to be initiated are two different tasks that were delegated to Commerce for different purpos es. Thus, using the tolling regulation in one context but not using it in another is a clearly insufficient basis upon which to conclude that Commerce's action was not in ac cordance with law.
B. The Characterization of Enrichment Contracts
Under the statutory scheme adopted by Congress, the sale of goods (or "merchandise") is covered by the antidumping duty statute. See 19 U.S.C. § 1673. The provision of services, however, is not covered by that statute.
In a previous case dealing with SWU contracts and the Contract Disputes Act ("CDA"), we agreed with the government's argument that an SWU contract for the enrichment of uranium is a service contract and, thus, not covered by the CDA. See Fla. Power & Light Co. v. United States, 307 F.3d 1364 (Fed. Cir. 2002). The par ties dispute the relevance of Florida Power to this case.
On appeal, the government and USEC submit that Commerce's finding that SWU contracts are contracts for the sale of goods is supported by substantial evi dence and in accordance with law and that the Court of International Trade's holding to the contrary should be reversed. They rely on three principal contentions.
First, they argue that this court's precedents in NTN Bearing Corp. of Am. v. United States, 368 F.3d 1369 (Fed. Cir. 2004), AK Steel Corp. v. United States, 226 F.3d 1361 (Fed. Cir. 2000), and NSK Ltd. v. United States, 115 F.3d 965 (Fed. Cir. 1997) support their argu ment that the SWU contracts in question were sales of merchandise and not arrangements for services. They point to this court's construction of the word "sold" in NSK as supporting the view that a sale requires "both a transfer of ownership to an unrelated party and con sideration." See NSK, 115 F.3d at 975. They also cite to our opinions in AK Steel and NTN as supporting this construction. According to the government and USEC, this straightforward interpretation should cover the SWU contracts because those contracts involved a transfer of title to LEU from the enricher to the utilities upon sampling and weighing of the LEU and consider ation paid by the utilities to the enrichers.
Second, the government and USEC assert that Com merce's characterization of the SWU contracts as con tracts for the sale of goods is in keeping with the general purpose of the antidumping statute, which they articu late as "provid[ing] domestic producers protection from all dumped imports."
Third, the government and USEC point to the def erential standard of review under which we review Com merce determinations as precluding a reversal of Com merce's determination on this issue. They argue that because Commerce's determination that SWU contracts are contracts for the sale of goods is, in their eyes, sup ported by substantial evidence and in accordance with law, we should affirm it.
It is on these grounds, according to the appellants, that Florida Power is inapposite to this case. Because Florida Power dealt with a contractual dispute under the CDA and not an antidumping investigation, it is not, in their view, applicable here. Moreover, they argue that Florida Power stands for the proposition that "SWU contracts [fall] into neither [the category of sales of goods nor the category of contracts for services]." As support, they point to language in our opinion in Florida Power that indicates that an SWU contract "does not fall neatly into" either side of the goods-services divide. See Fla. Power, 307 F.3d at 1373. The government and USEC consider this language sufficient to support Com merce's determination given the deferential standard of review to be applied in this case.
The Court of International Trade rejected Com merce's determination that the SWU contracts in this case were contracts for the sale of goods and not ser vices, resting its decision on the fact that the enrichers never obtained ownership of either the feed (unen riched) uranium during enrichment or the final LEU product. USEC II, 281 F. Supp. 2d at 1339. Further more, according to the court, the SWU contracts be tween the utilities and the enrichers demonstrated "an intention to establish a continuous chain of ownership in the utility while maintaining the enricher's ability to cover its obligations under the contract should it en counter difficulties in producing or providing LEU for a customer." Id. The court also found that "nothing in the evidentiary record supports a determination that the enricher has any ownership rights [under the SWU contracts]." Id. at 1340. Agreeing with the Court of In ternational Trade, we reject Commerce's determination that the SWU contracts in this case are contracts for the sale of goods.
In reviewing the contracts in this case, it is clear that ownership of either the unenriched uranium or the LEU is not meant to be vested in the enricher during the rele vant time periods that the uranium is being enriched. While it is correct that a utility may not receive the LEU that was enriched from the exact unenriched uran ium that it delivered to the enricher, it is nevertheless true that up until the sampling and weighing of the LEU before delivery, the utility retains title to the quantity of unenriched uranium that is supplies to the enricher. The utility's title to that uranium is only extinguished upon the receipt of title in the LEU for which it con tracted. Therefore, the SWU contracts in this case do not evidence any intention by the parties to vest the en richers with ownership rights in the delivered unen riched uranium or the finished LEU. As a result, the "transfer of ownership" required for a sale under NSK is not present here.
As previously noted, we explicitly dealt with whether or not SWU contracts were contracts for services or goods in Florida Power (albeit in the context of a CDA claim and not in the context of an antidumping investi gation). In that case, the government argued that SWU contracts were contracts for services and not goods. There, the government pointed out in its briefs that the SWU contracts in that case consistently referred to "en richment services" and that the "fundamental purpose" of those contracts was "the provision of enrichment ser vices." The government further declared that the utili ties' argument in that case that the SWU contracts ar ranged for the sale of goods because title passed be tween utilities and enrichers "rest[ed] on [a] technical ity."5
The relevant SWU contract terms in that case are identical to the contract terms in this case. Indeed, the government successfully defeated the CDA claim of the utilities in Florida Power solely on the ground that the SWU contract in that case was a contract for services and not for goods. And while Florida Power is not bin ding precedent for this case because of the different statutory scheme involved, we find its reasoning and its conclusion persuasive.
In addition, while it is true that we stated that SWU contracts "[do] not fall neatly into either [a sale of goods or a contract for services]," our opinion definitively held that the SWU contract in that case was a contract for the provision of services. Fla. Power, 307 F.3d at 1373.6 Holdings of this court are no less decisive because they may have been difficult to develop. Indeed, our charac terization of the SWU contract in Florida Power, how ever we may have arrived at it, created the sole basis for denying the utilities in that case relief under the CDA. And even under the deferential standard of review that we apply in this case, we choose not to ignore our prev ious holdings, particularly where the circumstances in a previous case are nearly identical to the case at hand.
Moreover, while the statutory schemes involved in Florida Power and those involved in this case are differ ent, they do not change the essential nature of the trans action involved in this case. Even though the govern ment is correct in arguing that the general purpose of the antidumping statute is not the same as the general purpose of the CDA, it is incorrect in asserting that this dissimilarity of purposes is sufficient to compel a differ ent result in this case. A contract for services of the kind that we discuss here entails a certain set of obli gations on the part of contracting parties that do not change with the statutory scheme. Thus, unless Con gress specifically gave guidance in the statutory text that certain contracts normally considered service con tracts should be considered contracts for the sale of goods in the antidumping context, the different overall purposes of the CDA and antidumping statute are in sufficient to alter our analysis here. And nothing in the text of the antidumping statute or its legislative history evidences such a Congressional intent to re-characterize contracts like the SWU contracts at issue in this case for the purposes of antidumping investigations by Com merce.
The persuasive power of Florida Power might be mitigated if the government were capable of showing that the contract in that case differed in relevant part from the contracts in this case. No such showing has been made. In Florida Power, we held that an SWU contract was not a contract for "the procurement of pro perty" under the CDA. 307 F.3d at 1373-74. Though we did say that SWU contracts do "not fall neatly" either into the category of contracts for services or the cate gory of contracts for the sale of goods, we found that "the nature of the contractual pricing scheme . . . per suade[d] us that the [SWU] transaction is properly char acterized as a service rather than a sale." Id. The pric ing scheme in the Florida Power SWU contracts is the same as the pricing scheme in the contracts at issue in this case. In both cases, utilities bought separative work units from enrichers. In both cases, they delivered un enriched uranium and monetary compensation to enrich ers in return for enrichment services. In both cases, there were similar title and transfer provisions. And in both cases, the contracts explicitly contemplated the rendering of "enrichment services."
We therefore conclude that the SWU contracts at is sue in this case were contracts for the provision of services and not for the sale of goods. Accordingly, we find that the LEU produced as a result of those con tracts is not subject to the antidumping statute and hold that Commerce's contentions to the contrary are not in accordance with law.
C. EdF, Eurodif and Countervailable Subsidies
In order to be subject to a countervailing duty (or subsidy) investigation, an arm of a foreign government must make a "financial contribution" to a manufacturer that can take one of four forms:
(i) the direct transfer of funds, such as grants, loans, and equity infusions, or the potential di rect transfer of funds or liabilities, such as loan guarantees,
(ii) foregoing or not collecting revenue that is oth erwise due, such as granting tax credits or de ductions from taxable income,
(iii) providing goods or services, other than general infrastructure, or
(iv) purchasing goods.
19 U.S.C. § 1677(5)(D) (2000). A public entity can pro vide a subsidy if it provides goods or services to a manufacturer for less than adequate remuneration or if it buys goods from the manufacturer for more than ade quate remuneration. 19 U.S.C. § 1677(5)(E). The sta tute does not contemplate the purchase of services for more than adequate remuneration to be a subsidy.
The government and USEC assert that EdF, a par tially public French utility, entered into a uranium en richment contract with Eurodif that paid Eurodif more than adequate remuneration. In their view, the contract was also for the sale of goods (instead of services) and thus covered by 19 U.S.C. § 1677(5)(E). In the alterna tive, they argue that the contract between EdF and Eurodif provided more than adequate remuneration to one step (enrichment) in the manufacture of a good (LEU in this case) and was thus covered by § 1677(5). As a result, the transaction between EdF and Eurodif was subject to a countervailing duty investigation.
The Court of International Trade rejected the gov ernment's principal theory but agreed with its alterna tive theory. The court found that "Commerce's distinc tion between manufacturing processes that lead to the production of subject merchandise and other services that do not produce tangible goods is consistent with the language and purpose of the countervailing duty sta tute." USEC II, 281 F. Supp. 2d at 1350. The court fur ther elaborated that this theory was in keeping with the statutory language "because it preserves a real distinc tion between 'goods' and 'services.'" Id. We must disa gree.
Section 1677(5) is clear as to what constitutes a sub sidy-and the purchase of a service by a foreign public entity, however related to the manufacture of a good, is not contemplated in the statute as being a subsidy.7 While the provision of services by a government entity to another entity for less than adequate compensation may be considered a subsidy, the plain language of § 1677(5) does not allow for the purchase of services by a government entity from another entity to be consid ered a subsidy. Thus, to the extent that the government argues that Commerce is owed deference under Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984), we reject that argument because we find that the plain meaning of the statute is unam biguous.
Furthermore, § 1677(5)(D)(iii) clearly shows that Congress was aware of the distinction between contracts for services and contracts for goods. Aware of the dis tinction, Congress could have easily included the pur chase of services by public entities in the statutory def inition of a subsidy. Because it did not, we must assume that the omission was intentional. See Clay v. United States, 537 U.S. 522, 528 (2003) ("When Congress in cludes particular language in one section of a statute but omits it in another section of the same Act, we have recognized, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." (internal quotations and citations omitted)).
While the Court of International Trade, the govern ment and USEC are correct that the purpose of the subsidy statute is to defeat unfair competitive advan tage, that purpose cannot exceed the metes and bounds of the subsidy statute as established by its text. See Negonsott v. Samuels, 507 U.S. 99, 105 (1993) ("[A court's] task is to give effect to the will of Congress, and where it has been expressed in reasonably plain terms, that language must ordinarily be regarded as conclu sive." (quoting Griffin v. Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982))).
Given that we have already concluded that the SWU contracts in this case were contracts for the provision of services and not for the sale of goods, we hold that 19 U.S.C. § 1677(5) is inapplicable in this case. Accord ingly, Commerce's determination to the contrary is not in accordance with law.
D. Commerce's Tolling Regulation and Its Determination of Export Price
Because our holdings regarding the previous three issues obviate the need for us to reach the issue of whe ther Commerce properly employed its tolling regulation in its determination of export price, we decline to do so.
CONCLUSION
For the reasons stated above, we hold that:
(1) Commerce's determination that USEC's petition had sufficient industry support to trigger an antidump ing and countervailing subsidy investigation was in ac cordance with law;
(2) Commerce's finding that the SWU contracts in this case were contracts for the sale of goods was nei ther supported by substantial evidence nor in accor dance with law; and
(3) Commerce's application of 19 U.S.C. § 1677 to the SWU transaction between EdF and Eurodif was not in accordance with law.
Therefore, we affirm the Court of International Trade's decision regarding Commerce's industry sup port determination. We likewise affirm the court's fin ding that the SWU contracts in this case were contracts for services and not for goods or merchandise. We re verse the court's holding that EdF's SWU contract with Eurodif made the LEU produced by Eurodif subject to the countervailing subsidy statute.
AFFIRMED-IN-PART and
REVERSED-IN-PART
1 The Court of International Trade thoroughly documented the factual background
to this case in its opinion. See USEC Inc. v. United States, 281 F. Supp.
2d 1334 (Ct. Int'l Trade 2003) ("USEC II"). 2 The title argument
that "rest[ed] on [a] technicality" in that case is strikingly
similar to the title argument that the government advances in this case.
There, the government argued that despite the temporary transfer of title
of uranium from the utility to the enricher, the fact that the utilities
were entitled to claim any leftover material from uranium enrichment (also
known as "tails") showed that the SWU contract was a contract
for services. Here, the utilities were likewise contractually entitled to
reclaim the uranium "tails" and title to the quantity of unen
riched uranium transferred by the utility only passed to the enricher once
the utilities received title to the LEU from the enrichers. 3 In regards
to the contracts between utilities and the government for enrichment of
uranium, we stated in Florida Power: It seems clear that if the government
purchased natural uranium directly from a third party, enriched the uranium,
and sold it to the customer utilities, the contracts would be for the disposal
of per sonal property and would be covered by the CDA. It seems equally
clear that if the government simply enriched each utility's uranium for
a fee, it would be providing a service, not disposing of personal property.
In light of the evidence that DOE used feed material from other customers,
and sometimes its own feed material, to fulfill a par ticular enriched customer's
order of enriched uranium, this case does not fall neatly into either the
above categories, but it is closer to the latter. The nature of the contractual
pricing scheme, in par ticular, persuades us that the transaction is properly
characterized as a service rather than a sale. 307 F.3d at 1373. 4 Section
1677(5)(B) defines a subsidy as including the case in which an authority
"provides a financial contribution . . . to a person and a benefit
is thereby conferred." Section 1677(5)(D), quoted supra, de fines "financial
contribution."
APPENDIX C
UNITED STATES COURT OF APPEALS
FRO THE FEDERAL CIRCUIT
Nos. 04-1209, 04-1210
EURODIF S.A., COMPAGNIE GENERALE DES MATIERES NUCLEAIRES, AND COGEMA, INC., PLAINTIFFS-APPELLANTS, AND AD HOC UTILITIES GROUP, PLAINTIFF-APPELLANT
v.
UNITED STATES, DEFENDANT-CROSS APPELLANT, AND USEC INC. AND UNITED STATES
ENRICHMENT CORPORATION, DEFENDANTS-CROSS APPELLANTS
Sept. 9, 2005
Before BRYSON, Circuit Judge, PLAGER, Senior Circuit Judge, and PROST, Circuit Judges.
ON PETITION FOR REHEARING
PROST, Circuit Judge.
ORDER
More than three months after we decided this case, the Supreme Court issued its opinion in National Cable & Telecommunications Ass'n v. Brand X Internet Ser vices, -U.S.-, 125 S. Ct. 2688 (2005). In letters disclos ing National Cable as a supplemental authority pur suant to Federal Circuit Rule 28(j), the United States, USEC, Inc. and the United States Enrichment Corpora tion (collectively, "Petitioners") contend that the Supreme Court's reasoning in National Cable strongly supports arguments presented in their petitions for rehearing. We grant the petitions for rehearing by the panel for the limited purpose of addressing the applicability of National Cable to this case. In all other respects, we reaffirm our earlier opinion and judgment. See Eurodif S.A. v. United States, 411 F.3d 1355 (Fed. Cir. 2005).
I.
In National Cable the Supreme Court heard an ap peal from the Ninth Circuit in a case involving the pro per regulatory classification of broadband cable Internet service under the Communications Act of 1934, 48 Stat. 1064, as amended by the Telecommunications Act of 1996, 110 Stat. 56. See 125 S. Ct. at 2696. The Ninth Circuit had vacated a ruling by the Federal Communi cations Commission ("FCC") to the extent the FCC's ru ling concluded that cable modem service was not "tele communications service" under the Communications Act. Id. at 2698. "Rather than analyzing the permis sibility of that construction under the deferential frame work of Chevron, . . . the Court of Appeals grounded its holding in the stare decisis effect of AT & T Corp. v. Portland. . . ." Id. (citations omitted).
The Supreme Court reversed and remanded. It held that "[a] court's prior judicial construction of a statute trumps an agency construction otherwise entitled to Chevron deference only if the prior court decision holds that its construction follows from the unambiguous terms of the statute and thus leaves no room for agency discretion." Id. at 2700. It similarly stated that "[b]e fore a judicial construction of a statute, whether con tained in a precedent or not, may trump an agency's, the court must hold that the statute unambiguously requires the court's construction." Id. at 2702.
The Supreme Court explained that Chevron set forth a two-step process to evaluate whether an agency's interpretation of a statute is lawful. At step one we de termine "whether the statute's plain terms 'directly ad dres[s] the precise question at issue.'" Id. (quoting Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843 (1984)). If we determine that the statute is ambiguous on the precise question at issue, "we defer at step two to the agency's interpretation so long as the construction is 'a reasonable policy choice for the agency to make.'" Id. (quoting Chevron, 467 U.S. at 845, 104 S. Ct. 2778). On the other hand, if we determine that the statute is unambiguous on the precise question at issue, we do not defer to the agency's interpretation, regardless of whether that interpretation is grounded in a reasonable policy choice. See id.
II
Petitioners argue that the holding of National Cable strongly supports their contention that we erroneously relied upon Florida Power & Light v. United States, 307 F.3d 1364 (Fed. Cir. 2002), to conclude that the Depart ment of Commerce's ("Commerce's") finding, that the separative work units ("SWU") contracts at issue in this case were contracts for the sale of goods and therefore subject to the antidumping duty statute, is not in accor dance with law. In particular, the United States argues that we have not held, either in Florida Power or here, "that the antidumping 'statute unambiguously requires' that the term 'sold' excludes the acquisition of imported merchandise in exchange for raw materials and cash." Similarly, USEC, Inc. and the United States Enrich ment Corporation (collectively, "USEC") contend that we "erroneously relied upon the earlier determination of this Court in Florida Power & Light Co. v. United States so as to fail to give appropriate deference to the Commerce Department's conclusion that the import transactions [here] involved a sale of merchandise under the antidumping law."
III
As a preliminary matter, Petitioners are incorrect to the extent they imply that we found ourselves bound by Florida Power in this case under the doctrine of stare decisis. To the contrary, we specifically stated that "Florida Power is not binding precedent for this case" but that it is "persuasive" authority. Eurodif, 411 F.3d at 1363; cf. National Cable, 125 S. Ct. at 2701 (noting that the Ninth Circuit held that a prior judicial construc tion of a statute categorically controls an agency's con trary construction).8
On the other hand, Petitioners are correct to the extent they point out that in Florida Power we did not expressly hold that the antidumping duty statute "un ambiguously" applies to contracts for the sale of goods only and "unambiguously" does not apply to the con tracts at issue in this case in particular. And although in our opinion in this case we did expressly hold that the countervailing duty statute unambiguously does not al low for the purchase of services to be considered a sub sidy, Eurodif, 411 F.3d at 1365, as in Florida Power we did not expressly state that the antidumping duty sta tute unambiguously applies to contracts for the sale of goods only and unambiguously does not apply to the con tracts at issue in this case in particular.
We now clarify by stating expressly that the anti dumping duty statute unambiguously applies to the sale of goods and not services. In our opinion, we stated that "[u]nder the statutory scheme adopted by Congress, the sale of goods (or 'merchandise') is covered by the anti dumping duty statute" but that the "provision of servic es, however, is not. . . ." Eurodif, 411 F.3d at 1361. While we did not use the term "unambiguous," we clear ly foreclosed any argument that § 1673 is ambiguous on the precise question of whether the antidumping duty statute encompasses contracts for services. It undoubt edly does not.
Commerce's characterization of the SWU contracts at issue in this case would contradict, we conclude, the statute's unambiguous meaning because it is clear that those contracts are contracts for services and not goods. While Petitioners concede that a sale of goods requires a transfer of ownership, see United States' Petition for Rehearing at 9 (citing NSK Ltd. v. United States, 115 F.3d 965 (Fed. Cir. 1997)) and USEC's Petition for Re hearing at 2 (same), they do not recognize the critical importance of the indisputable fact that, pursuant to the contracts at issue in this case, enrichers never obtain ownership of either the feed (unenriched) uranium dur ing enrichment or the final low enriched uranium ("LEU") product. Nevertheless, the inescapable con clusion flowing from this circumstance is that the enrich ers do not "sell" LEU to utilities pursuant to the SWU contracts at issue in this case.
As we stated in our opinion:
In reviewing the contracts in this case, it is clear that ownership of either the unenriched uranium or the LEU is not meant to be vested in the enricher during the relevant time periods that the uranium is being enriched. While it is correct that a utility may not receive the LEU that was enriched from the exact unenriched uranium that it delivered to the en richer, it is nevertheless true that up until the samp ling and weighing of the LEU before delivery, the utility retains title to the quantity of unenriched ur anium that is supplie[d] to the enricher. The utility's title to that uranium is only extinguished upon the receipt of title in the LEU for which it contracted. Therefore, the SWU contracts in this case do not evi dence any intention by the parties to vest the enrich ers with ownership rights in the delivered unen riched uranium or the finished LEU. As a result, the "transfer of ownership" required for a sale [of goods] is not present here.
Eurodif, 411 F.3d at 1362. We adhere to that analysis today, noting that the complete absence of a transfer of ownership over LEU requires that we reject Com merce's application of the antidumping duty statute to the SWU contracts.
IV
This Order constitutes the panel's action in response to the petitions for rehearing. We conclude that our an alysis in this case is consistent with the Supreme Court's holding in National Cable, and we reaffirm our decision that Commerce's finding that the SWU contracts were contracts for the sale of goods and therefore subject to the antidumping duty statute was not in accordance with law.
APPENDIX D
UNITED STATES COURT OF
INTERNATIONAL TRADE
SLIP OP. 03-121
Court Nos. 02-00112, 02-00113, 02-00114, 02-00219, 02-00221, 02-00227, 02-00229, 02-00233
USEC INC. AND UNITED STATES ENRICHMENT CORPORATION, PLAINTIFFS
v.
UNITED STATES, DEFENDANT
Sept. 16, 2003
Before: POGUE, WALLACH, and EATON, Judges.
OPINION
POGUE, Judge.
In USEC Inc. v. United States, 27 CIT ___, 259 F. Supp. 2d 1310 (2003) ("USEC I"),1 this Court remanded aspects of the final affirmative antidumping and coun tervailing duty determinations of the Department of Commerce ("the Department" or "Commerce") with re gard to low enriched uranium ("low enriched uranium" or "LEU") from France, Germany, the Netherlands, and the United Kingdom.2 The Court instructed Commerce to evaluate the applicability of its tolling regulation, 19 C.F.R. § 351.401(h), to determine whether the interven ors (the "utilities," also the "Ad Hoc Utilities Group" or "AHUG") should be designated as producers of LEU. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1326. The Court further directed that if Commerce found the tol ling regulation applicable, the agency should also (1) re consider whether application of the regulation affects the determination as to which companies are "produc ers" for the purpose of the industry support determin ation, USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1328; and (2) reconsider its application of the countervailing duty laws. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1329. The Court now reviews the results of the remand as presented in Commerce's Final Remand Determi nation, USEC Inc. and United States Enrichment Corporation v. United States (June 23, 2003) ("Remand Determ."). Jurisdiction lies under 28 U.S.C. § 1581(c) (2000) and 19 U.S.C. § 1516a(a)(2)(B)(i) (2000).
Background
The antidumping and countervailing duty investi gations at issue here covered all low enriched uranium. Low enriched uranium is used to produce nuclear fuel rods, which in turn produce electricity in nuclear reac tors. See, e.g., USEC I, 27 CIT at ____, 259 F. Supp. 2d at 1314. Uranium enrichment is one of five steps in the production of nuclear fuel.3 See id.; LEU from France, 66 Fed. Reg. at 65,879. At issue in this proceeding is whether, for purposes of application of the antidumping and countervailing duty statutes, the "separative work unit" contracts entered into by the utilities and the com panies that enrich the uranium feedstock (the "enrich ers") constitute subcontracting arrangements involving the purchase of services or sales of enriched uranium.
As we more fully explained in USEC I, nuclear utili ties employ two types of contracts for procuring LEU from uranium enrichers. See, e.g., USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1314. One is a contract for enriched uranium product ("EUP contract"), in which the utility simply purchases LEU from the enricher. See LEU from France, 66 Fed. Reg. at 65,878, 65,884. In an EUP contract, the price paid for the LEU covers all elements of the LEU's value, including the feed uranium and the effort expended to enrich it. Tran script of Dep't of Commerce Hearing in the Matter of Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom (Oct. 31, 2001), Jt. App. Tab 6-A at 46 ("Hrg. Trans."). As noted in USEC I, all parties to this action agree that sales of en riched uranium product constitute sales of merchandise subject to the antidumping and countervailing duty laws. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1314.
The second type of contract is called a "separative work unit" or "SWU" contract. A "separative work unit" is a measurement of the amount of energy or effort re quired to separate a given quantity of feed uranium into LEU and depleted uranium, or uranium "tails," at speci fied assays. See LEU from France, 66 Fed. Reg. at 65,884. Under a SWU contract, a utility purchases sep arative work units and delivers a quantity of feed uran ium to the enricher. LEU from France, 66 Fed. Reg. at 65,878, 65,884-85.
As discussed in USEC I, because feed uranium is fungible, the specific feed uranium provided by a utility need not be used to produce LEU for that utility. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315 (citing Resp. Br. of USEC, Inc. Opp'n Cogema/Urenco Mot. J. Agency R. at 16-17 & n.21). Enrichers maintain inven tories of feed uranium, which is not segregated according to source or ownership, and any uranium held by the enricher may be used to produce LEU for any customer. Id.
Utilities purchase feed uranium from third parties,4 and prior to delivering the feed uranium to the enricher, the utilities have title, risk of loss, power to alienate or sell, and use and possession of the feed uranium. The utility retains title to feed uranium supplied to the en richer until the enricher delivers the LEU ordered by the utility. In addition, at the time of delivery of the LEU, the enricher recognizes that title to the LEU is also held by the utility. As stated in one of the contracts in the record, "[t]itle to the Feed Material shall remain with [the utility] until the [LEU] Delivery associated with such Feed Material . . . at which time the Feed Material shall be deemed to have been enriched; where upon [the utility] sha[ll] have title to such [LEU] asso ciated with such Feed Material and title to such Feed Material will be extinguished." Uranium Enrichment Services Contract between [Utility A] and Urenco, Jt. App. Tab 3-F at JA-1364; see also Uranium Toll En richment Services Contract between [Utility B] and COGEMA, Inc., Jt. App. Tab 3-A at JA-1210; Uranium Enrichment Services Contract between [Utility C] and COGEMA, Inc., Jt. App. Tab 3-E at JA-1302; Uranium Enrichment Services Contract between [Utility D] and Urenco, Jt. App. Tab 3-G at JA-1399. In USEC I, we described the SWU transactions as follows:
Pursuant to the SWU contracts, risk of loss or dam age to the feed uranium, as well as use and posses sion, pass from the utility to the enricher upon deliv ery of the feed uranium to the enricher. However, the enricher does not obtain title to the feedstock; rather, actual title is at all times with the utility. Nor does the enricher have the power to sell a util ity's feedstock to a third party. Moreover, it appears clear on this record that at the moment when the LEU is delivered to the utility by the enricher, the utility has title to and ownership of the LEU. The feed uranium does not become an asset of the enrich er, nor is it ever reflected as such on the enricher's books and records.5
USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315 (internal citations omitted).
In reaching its original affirmative antidumping and countervailing duty determinations, Commerce found that under both LEU and SWU contracts the enrichers were producers of LEU for purposes of the less-than- fair-value determination.6 The agency concluded that EUP and SWU contracts were "functionally equivalent," in that "the overall arrangement under both types of contracts is, in effect, an arrangement for the purchase and sale of LEU." LEU from France, 66 Fed. Reg. at 65,884-85.
In USEC I, this Court concluded that the circum stances of the SWU transactions at issue resemble those of earlier cases involving "tolling" or "subcontracting" arrangements in which Commerce applied its tolling regulation, 19 C.F.R. § 351.401(h), to determine that the tollee, rather than the toll manufacturer, or subcontrac tor, was the producer of the subject merchandise. The Court therefore directed Commerce to assess the applic ability of the tolling regulation, and thus, the propriety of designating the enrichers as producers of LEU and respondents in the antidumping and countervailing duty investigations. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1326, 1331. The Court also directed Commerce to explain why it applied a different definition of the term "producer" in the context of determining industry sup port than that used in the context of calculating the dumping margin. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1328.
In its Remand Determination, Commerce concludes once again that the enrichers, rather than the utilities, are the producers of LEU, finding that (1) "the enrich ers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value," (2) the enrichers "are the only companies engaged in the production of LEU," (3) the enrichers "control the pro duction of LEU," and (4) the utilities are "industrial users and consumers of LEU." Remand Determ. at 52. Commerce also explained that the different definitions of the term "producer" are warranted by the purposes underlying the relevant statutory provisions. Id. at 14-15, 22-23, 25.
Standard of Review
This Court will uphold an agency determination un less it is "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).
Discussion
I. Ownership of the Subject Merchandise
Commerce bases its selection of the enrichers as the producers of LEU primarily on its conclusion that under the terms of the contracts, the enrichers own all of the LEU that they have produced but not yet delivered. See Remand Determ. at 52, 59. Commerce asserts that the enrichers transfer title to and ownership of the LEU to the utilities upon delivery of the LEU. Id. Therefore, Commerce argues, the delivery of the LEU effects a transfer of title and ownership for consideration, which constitutes a sale under NSK Ltd. v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997), and a relevant sale for the purposes of calculating a dumping margin. Id. at 59-60.
As we discussed in USEC I, however, the SWU con tracts governing the transactions at issue establish a legal fiction that the very feed uranium delivered by a utility to an enricher is enriched and then returned as LEU to the utility. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1321-22; Oral Arg. Trans. at 33-34, 38, 41. The Court concluded that although the enrichers obtain the right to use and possess the feedstock, and assume the risk of loss or damage, there is no evidence that they ever obtain ownership of either the feed uranium or the final enriched product. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1315, 1323; see also Oral Arg. Trans. at 30-35, 38, 41. Moreover, the contractual provisions ad dressing the retention of title in the feed uranium and passage of title in the LEU suggest an intention to es tablish a continuous chain of ownership in the utility while maintaining the enricher's ability to cover its ob ligations under the contract should it encounter dif ficulties in producing or providing LEU for a customer. See, e.g., Oral Arg. Trans. at 33-34 (noting that the con tractual provisions specifying that a utility obtains title to LEU are necessary because "if title to the product material were not specified clearly in the contract, there could be a question"), 38 ("[The enricher] receives mat erial that it is holding for the account of the Utility cus tomer, to be enriched and returned. And, when it is re turned in enriched form, title passes to the enriched pro duct. Title is extinguished in the feed."); Uranium En richment Services Contract between Cogema, Inc. and [Utility E], App. to Response of USEC to Dep't of Com merce's Remand Determ. of June 23, 2003, Tab 1 at JA-9003 ("USEC Remand App."); Uranium Enrichment Services Contract between [a utility] and Urenco, USEC Remand App. Tab 2 at JA-9074; see also contracts cited supra pp. 5-6. For example, these provisions enable the utility to claim the amount of feed uranium delivered, or the value thereof, from the enricher in the event that the enricher breached the contract. Such a contractual arrangement, which is apparently beneficial to both parties, is aided by the essential fungibility of the material at issue. Parsing the contractual provisions at issue does not lead to the conclusion that the enricher obtains ownership over the LEU and then sells it to the utility. Rather, the contracts delineate a transaction in which a utility provides raw material to an enricher, pays for the service of processing the material, and ob tains the finished product after the manufacturing ser vice has been performed.
Because the enricher does not obtain ownership of the LEU enriched under SWU contracts, the transfer of LEU by the enricher to the utility cannot constitute a sale of merchandise under NSK Ltd. v. United States. See 115 F.3d 965, 975 (Fed. Cir. 1997) (concluding that a sale "requires both a transfer of ownership to an unre lated party and consideration"). Nothing in Commerce's Remand Determination provides any evidentiary or le gal basis for a contrary conclusion. Commerce's basic premise in the Remand Determination is that "the en richers make the only relevant sales that can be used for purposes of establishing U.S. price and normal value." Remand Determ. at 52. This statement, however, begs the question whether these transactions can truly be construed as relevant sales of merchandise. Com merce's duty is to investigate "sales" at less than fair value. The agency's assertion that the enrichers' trans actions with the utilities are the only transactions that could be such sales, without more, does not establish that there is an evidentiary or legal basis to conclude that those transactions constitute sales for purposes of our antidumping statutes.
Commerce's subsidiary factual determination is no more well-founded. Commerce asserts that because the utilities only hold title to the feedstock at the time prior to delivery, "[t]he enricher, by contrast, would have rights as to the LEU." Remand Determ. at 58. Com merce, however, cannot and does not provide any evi dentiary basis for this supposition; nothing in the record supports a determination that the enricher has any ownership rights. Accordingly, Commerce's determin ation is unsupported by substantial evidence and not in accordance with law.
II. Equivalence of EUP and SWU Contracts
In addition to its claim that the enrichers obtain own ership of the
LEU, Commerce also bases its conclusions upon the assertion that EUP and
SWU contracts are fundamentally equivalent. Commerce states that
the completed product, LEU, is entering the market place through the transactions
at issue. Utility cus tomers cannot obtain LEU by purchasing enrich ment
alone. Rather, in every instance in which the utility customer enters into
a SWU transaction, it is obtaining LEU.
Remand Determ. at 61.
Commerce made essentially the same argument in its original determinations when it stated that "the overall arrangement under both [EUP and SWU] contracts is, in effect, an arrangement for the purchase and sale of LEU." LEU from France, 66 Fed. Reg. at 65,884. This Court dismissed that argument in USEC I when we sta ted that "under any tolling arrangement, the 'overall ar rangement' is one for acquisition of a good, usually man ufactured by the toller." USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1324. Furthermore, the SWU transaction does not account for the full value of the finished prod uct; rather, it accounts only for the value of the enrich ment processing. Cf. Response to Court Remand, Tai wan Semiconductor Mfg. Co. v. United States, Jt. App. Tab 7-A at JA-2604 (Dep't Commerce June 30, 2000) ("Under the Department's practice, the 'relevant sale' must be a sale by the company that owns the merchan dise entirely, including all essential components, can dis pose 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. . . . In contrast, a subcontractor's or toller's price does not rep resent all elements of value. Rather, the subcontractor or toller merely performs one or more segments of the manufacturing process at the direction of another entity. Thus, subcontracted production is distinguishable from other types of production because the subcontractor does not bear at least one element of cost which is es sential to production of the subject merchandise.") ("SRAMS Remand Response"). Here, the SWU trans action represents approximately 65 percent of the value of the LEU, and is not equivalent to a sale of the fin ished product at its full value. See USEC I, 27 CIT at __, 259 F. Supp. 2d at 1325 (indicating that natural uranium supplies "approximately 35 percent of enriched uranium's total value").
Commerce states in a footnote that "in a meaningful sense, enrichment transactions do reflect the full value of the LEU since the things of value provided by the utility customer to the enricher (cash and natural uran ium) account for the full value of the LEU received by the customer from the enricher." Remand Determ. at 54 n. 34. Yet this reasoning could be applied to any subcon tracting case, including some of Commerce's earlier tolling cases, in which a tollee provides raw materials to the toll manufacturer and pays for the manufacturing services. For example, in SRAMS from Taiwan, the value of the wafer design and design mask provided by the design house plus the value of the manufacturing processes performed by the toller, considered together, reflect the full value of the finished product. In that case, however, Commerce recognized that the toller was paid only for the actual manufacturing processes, and that "a subcontractor's or toller's price does not repre sent all elements of value." SRAMS Remand Response, Jt. App. Tab 7-A at JA-2603-04. In Certain Pasta from Italy, Corex provided the materials to the toller and paid the toller for its manufacturing services. 63 Fed. Reg. 53,641, 53,642 (Dep't Commerce Oct. 6, 1998) (pre liminary results of new shipper antidumping duty ad ministrative review). The payment to the toller was characterized as a "processing fee," and Commerce de termined that Corex, rather than the toller, was the pro ducer of the subject merchandise. Id. Commerce has stated that "[t]ypically, the subcontracting, or tolling, addressed by [the tolling regulation] involves a contrac tor who owns and provides to the subcontractor a mater ial input and receives from the subcontractor a product that is identifiable as subject merchandise." SRAMS Remand Response, Jt. App. Tab 7-A at JA-2604. Conse quently, we find unpersuasive Commerce's argument that the transaction between the tollee and toll manu facturer reflects the full value of the merchandise pro duced.7
III. The Tolling Regulation, 19 C.F.R. § 351.401(h)
In the Remand Determination, Commerce again con cludes that the tolling regulation does not apply in this case to designate the utilities as producers of LEU for purposes of calculating export price or constructed export price. See Remand Determ. at 47, 52. As in its original determinations, Commerce concludes that the enrichers are the producers of LEU. Id. at 45, 52, 56-57.
In explaining its decision, Commerce reasons that the tolling regulation "does not purport to address all aspects of an analysis of tolling arrangements," and that the agency looks at the totality of the circumstances in making its determination. Remand Determ. at 49 (quo ting Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 32,813). Commerce distinguishes the prior tolling cases cited by the Court in USEC I on the grounds that in each of those cases, the agency "faced a choice of res pondents, based upon its analysis of the sales made by two entities-the toller on the one hand, and the tollee on the other." Remand Determ. at 48. Commerce argues that in each of the earlier cases, the tollee sold the subject merchandise, as contem plated by the regulation. Second, in nearly all of these cases, and in particular where the Department was required to examine the totality of the circum stances to determine the producer, the tollee enga ged in manufacturing or processing operations. In no instance did the Department determine an entity was a producer based solely upon its purchase of an input and the designation of product specifications.
Remand Determ. at 62-63. The agency says that in this case, by contrast, the tollees did not sell the completed merchandise. As the utilities made no sales of the sub ject merchandise, Commerce claims that they cannot be designated as respondents for the purpose of establish ing export price or constructed export price. Therefore, Commerce concludes, "the tolling regulation cannot be applied to the facts and circumstances of this case with out defeating the purpose of the regulation and the sta tutory provisions that the regulation is designed to im plement." Remand Determ. at 47. Commerce asserts that the tolling regulation does not contemplate the cir cumstances of this case, and that "the statutory provis ions governing the establishment of U.S. price are si lent" as to how to calculate U.S. price in such circum stances. Id. at 51; see also id. at 47 ("A fundamental re quirement upon which the tolling regulation is premised is that merchandise produced through a tolling opera tion is sold to a party in the United States. . . . In promulgating the tolling regulation, the Department did not contemplate the situation in which the tollee makes no sales of subject merchandise."). Commerce thus pro ceeds to evaluate "the totality of the circumstances in order to select the appropriate respondents." Remand Determ. at 50.
It is certainly true that the tolling regulation does not "address all aspects of an analysis of tolling arrange ments," Remand Determ. at 49 (quoting Polyvinyl Al cohol from Taiwan, 63 Fed. Reg. at 32,813), and that the agency may look at the totality of the circumstances in making a determination. See, e.g., Stainless Steel Bar from India, 66 Fed. Reg. 13,496, 13,496 (Dep't Com merce Mar. 6, 2001) (preliminary results of new shipper antidumping duty administrative review) ("In determin ing whether a company that uses a subcontractor in a tolling arrangement is a producer pursuant to 19 C.F.R. [§ ] 351.401(h), we examine all relevant facts surroun ding a tolling agreement."); Polyvinyl Alcohol from Tai wan, 63 Fed. Reg. at 32,813 ("[W]hen determining whe ther a party is a producer or manufacturer of subject merchandise, we look at the totality of the circumstances presented."). Nonetheless, we find Commerce's continu ing attempts to distinguish its earlier tolling cases from the instant case unpersuasive.
In support of its assertions, Commerce relies primar ily on SRAMS from Taiwan and Polyvinyl Alcohol from Taiwan, in which the tollees participated in manufact uring or processing operations. See SRAMS Remand Response, Jt. App. Tab 7-A at JA-2603, JA-2605 (finding that the tollee design house engaged in research and development, thereby producing the intellectual prop erty that was "one of the primary determinants of the value of individual products"); Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527; Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 32,817 (concluding that DuPont was the producer of the subject merchandise, because it manufactured the primary input and shipped it to a toller for further manufacturing).
In a number of other cases, however, it appears that the tollee did not engage in manufacturing or processing operations, and was determined to be a producer based on procurement and continued ownership of inputs or raw materials, payment of processing fees to subcon tractors for manufacturing, and overall control of the series of processes (such as purchasing inputs, procur ing manufacturing services, and marketing and sales services) involved in creating the final product. In Cer tain Pasta from Italy, Commerce determined that Cor ex was the producer of the subject pasta because Corex "(1) purchase[d] all of the inputs, (2) pa[id] the subcon tractor a processing fee, and (3) maintain[ed] ownership at all times of the inputs as well as the final product." See 63 Fed. Reg. at 53,642. Corex also was "solely res ponsible for the marketing and sales of the product and any freight arrangements." Id. Corex's involvement in the production of the subject merchandise apparently involved not manufacturing or processing, but managing the successive steps in production of the subject merch andise by procuring and maintaining ownership of the material inputs and subcontracting the manufacturing processes. In Certain Forged Stainless Steel Flanges from India, Commerce found respondent Akai the pro ducer of the subject merchandise, even though Akai did not own the machinery used in producing flanges and apparently did not engage in the actual manufacturing processes. 58 Fed. Reg. 68,853, 68,855-56 (Dep't Com merce Dec. 29, 1993) (notice of final determination of sales at less than fair value). Instead, Commerce's con clusion was premised on the following facts:
Akai purchase[d] and maintain[ed] title (during the entire course of production) to the raw materials used for the production of the vast majority of the flanges, and . . . direct[ed] and control[led] the manufacturing process insofar as it determine[d] the quantity, size, and type of flanges to be produced. . . . Akai control[led] the costs for all elements in corporated in the production of the flanges.
Id. at 68,856. In explaining its conclusion, Commerce stated that "[t]he Department is required to capture all the costs involved in the production of the subject mer chandise, and must therefore look to the company that controls the costs of production of the merchandise." Id.; see also Dep't of Commerce Mem. from Joseph A. Spetrini to Troy Cribb, Issues and Decision Memoran dum for the Final Determination in the Antidumping Duty Investigation of Stainless Steel Butt-Weld Pipe Fittings from Italy at 3 (Dec. 27, 2000) (unpublished), at www.ia.ita.doc.gov/frn/index.html (concluding that a company that "perform[ed] all marketing and selling functions," "purchased the raw material," and "main tained ownership of all materials sent . . . for further production" was the producer of subject merchandise, while the two companies that actually performed manu facturing operations were tollers and not producers); Stainless Steel Bar from India, 65 Fed. Reg. 59,173, 59,174 (Dep't Commerce Oct. 4, 2000) (preliminary re sults of new shipper antidumping duty administrative review) (finding a company the producer of the subject merchandise where it "(1) [p]urchase[d] all of the inputs, (2) pa[id] the subcontractor a processing fee, and (3) maintain[ed] ownership at all times of the inputs as well as the final product").
In other cases, it appears that the tollee did engage in manufacturing or processing operations, but this fact was not crucial to Commerce's determination that the tollee was the producer. See, e.g., Dep't of Commerce Mem. from Joseph A. Spetrini to Faryar Shirzad, Issues and Decision Memorandum for the Administrative Review of Certain Stainless Steel Wire Rod from India for the Period of Review ("POR") Covering December 1, 1999 through November 30, 2000 at 5 (May 29, 2002) (un published), at www.ia.ita.doc.gov/frn/index.html ("[T]he sub-contractor is not the producer of the wire rod, be cause the companies of the [tollee] Viraj Group retain ownership of the material and control the sale of the subject merchandise; therefore, [the Viraj companies] are producers of subject merchandise."). As we stated in USEC I, "'Commerce's construction of "producer," as memorialized in [the regulation], emphasizes three fac tors: (1) ownership of the subject merchandise; (2) con trol of the relevant sale . . . ; and (3) control of pro duction of the subject merchandise.'" USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1318 (quoting Taiwan Semi conductor Mfg. Co. v. United States, 25 CIT at ___, 143 F. Supp. 2d at 966).
In the production of LEU, the utilities manage the successive processes in the production of nuclear fuel, using contractors that perform mining and milling of ur anium, conversion of uranium into uranium hexafluoride, enrichment of uranium hexafluoride to obtain LEU, and fabrication of nuclear fuel rods. See, e.g., USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1314, 1322. The utilities manage the entire process of creating nuclear fuel in or der to manage costs and assure a steady and reliable supply of fuel. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1316; Oral Arg. Trans. at 47, 53-54. Enrichment is merely one step in this process, and the utilities obtain it by providing a raw material to a subcontractor and paying for the service of enrichment. As discussed in USEC I, the utilities' management of the process of producing nuclear fuel and their relationship with the enrichers under SWU contracts render this case very similar to the tolling arrangements seen in earlier cases. Consequently, the fact that the utilities do not subse quently sell the finished product, but rather consume it in the production of electricity, does not render the tol ling regulation inapplicable. Moreover, as noted in sec tion I, supra, nothing in the record provides a basis for determining that the tolling arrangements at issue here constitute sales that may be considered equivalent to the full-value sale of a finished product. Accordingly, Com merce's determination that its tolling regulation is inap plicable to this case is neither supported by substantial evidence nor in accordance with law.
IV. Definitions of "Producer" in the Contexts of In dustry Support and the Determination of Export Price or Constructed Export Price
In USEC I, the Court directed Commerce to assess whether the definition of "producer" in the industry support context should differ from the definition applied in the context of determining export price or construc ted export price. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1328. In addition, the Court directed that "[i]f Commerce finds that the tolling regulation applies here, the agency must consider whether those entities determined to be 'producers' under the tolling regula tion are also 'producers' for purposes of the industry support determination. " Id.
In its Remand Determination, Commerce concludes that in order to qualify as the producer of a good for the purposes of industry support, a company must have a "stake" in the domestic industry, which the agency in terpreted to mean that a company must be engaged in the "actual production of the domestic like product" in the United States. Remand Determ. at 13 (quoting S. Rep. No. 96-249 at 47 (1979)), 15-16. Commerce rea soned that "[w]hether a company is at risk from unfairly traded imports depends on the nature and extent of its operations in the United States. It stands to reason that a company may be injured by unfairly traded imports where it is in the business of producing the domestic like product." Id. at 14. Commerce further reasoned that the tolling regulation is inapplicable in the industry sup port context because its application could lead to the in clusion of companies within the domestic industry that would not be adversely affected by unfairly traded im ports of merchandise. See Remand Determ. at 16. Commerce claims that such an outcome would defeat the purpose of the unfair trade laws, which exist to aid dom estic producers adversely affected by unfair trade. See id. at 16-17; see also Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir. 1995) ("The purpose under lying the antidumping laws is to prevent foreign manu facturers from injuring domestic industries by selling their products in the United States at less than 'fair value,' i.e., at prices below the prices the foreign manu facturers charge for the same products in their home markets."); Tung Mung Dev. Co. v. United States, 26 CIT ___, ___, 219 F. Supp. 2d 1333, 1338-39 (2002).
In the context of the less than fair value determin ation, Commerce maintains that the purpose and intent of the statute warrants application of a different defin ition of "producer" than is used in the industry support context. Commerce explains that 19 U.S.C. §§ 1677a and 1677b focus on the price of a good, rather than on its manufacture. Remand Determ. at 22-23. Section 1677a refers to the "producer or exporter" of a good in con nection with selecting an appropriate respondent and sale price. Id. at 22; 19 U.S.C. § 1677a(a)-(b). Com merce explains that in this context, it may be appro priate to select a toller as the producer when that com pany, although it may not actually manufacture the good, is responsible for setting the price "at which the merchandise is first sold (or agreed to be sold) before the date of importation." 19 U.S.C. § 1677a(a)-(b); Re mand Determ. at 23-24 & n.21.
Absent application of the tolling regulation to the in dustry support context, Commerce again concludes, as it did in the original determinations, that USEC is the sole domestic producer of LEU. Remand Determ. at 18-20. The agency concludes that for purposes of the in dustry support determination, the utilities are industrial users and purchasers of LEU, rather than producers, because they do not actually produce LEU in the United States and they do not maintain any manufacturing op erations or facilities for the production of LEU. Id. at 19-20 (noting also that the "business interest" of the util ities, "like that of any industrial user, lies in obtaining lower priced LEU in an effort to keep the cost of pro ducing electricity down"). Consequently, as Commerce concludes that USEC is the sole domestic producer of LEU, the agency finds that the petitions had support within the domestic industry as required by 19 U.S.C. § 1673a(c)(4). See id.
In explaining why it applies the tolling regulation in establishing export or constructed export price, but not in the industry support determination, Commerce has articulated reasons that are consistent with the purpos es of the two sections of the statute. In accordance with Commerce's reasoning, we acknowledge that in this case, the utilities would benefit from, rather than be in jured by, the availability of lower-priced LEU or enrich ment services provided by foreign companies. Conse quently, the Court finds Commerce's application of dif ferent definitions of "producer" in these two contexts is reasonable and therefore in accordance with law. See Pesquera Mares Australes Ltda. v. United States, 266 F.3d 1372, 1382 (Fed. Cir. 2001); Chevron U.S.A. Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843-44, 104 S. Ct. 2778 (1984). As the Court upholds Com merce's reasons for declining to apply the tolling regula tion in the industry support context, we also uphold the agency's finding that USEC is the sole member of the domestic industry for the purposes of satisfying the industry support requirement and permitting the investigation to proceed. See 19 U.S.C. §§ 1673a(b)(1), 1673a(c)(4)(A).
V. Applicability of the Countervailing Duty Statute
Title 19 U.S.C. § 1671 provides that Commerce may impose countervailing duties where it determines that a government or public entity within a country is provid ing a countervailable subsidy8 "with respect to the man ufacture, production, or export of a class or kind of mer chandise imported, or sold (or likely to be sold) for im portation, into the United States," and imports of that merchandise injure or threaten to injure a domestic industry.9 In its Remand Determination, as in its orig- inal determinations, Commerce concludes that the coun tervailing duty provisions are applicable to both EUP purchase contracts and SWU enrichment contracts.
In the Remand Determination, Commerce notes that "the scope of the CVD law is clearer [than the scope of the antidumping law] in that the plain language of the statute provides that the law is applicable where the merchandise is either imported, or sold for importation, into the United States." Remand Determ. at 84. The agency "interpret[s] the CVD law to apply whenever a foreign government provides subsidies with respect to a class or kind of merchandise that is imported into the United States," and states that "[a]ccordingly, we con clude that the law is applicable to all imports of LEU from the respective countries under investigation." Id. at 85.10
The language of the countervailing duty provisions states that duties may be imposed where (1) merchan dise is imported and (2) a countervailable subsidy has been provided "with respect to the manufacture, pro duction, or export" of that merchandise. 19 U.S.C. § 1671(a)(1). Thus, no sale of the subject merchandise is required for the application of the countervailing duty statute. Moreover, in the countervailing duty context, the enricher may be considered to "manufacture" or "produce" LEU by performing the processing opera tions that transform feed uranium into enriched urani um.11 See, e.g., Oxford English Dictionary at www.oed. com (defining the verbs "produce" as, inter alia, "[t]o bring forth, bring into being or existence. . . . [t]o bring (a thing) into existence from its raw materials or elements, or as the result of a process; to give rise to, bring about, effect, cause, make" (an action, condition, etc.) and "manufacture" as, inter alia, "[t]o make (a pro duct, goods, etc.) from, (out) of raw material; to produce (goods) by physical labour, machinery, etc." and "[t]o make up or bring (raw material, ingredients, etc.) into a form suitable for use; to work up as or convert into a specified product") (emphasis supplied).
Consequently, we find Commerce's interpretation that the statutory countervailing duty provisions are applicable to imports of LEU under both EUP purchase contracts and SWU enrichment contracts reasonable.
There remains the question whether purchases of enrichment services for more than adequate remuner ation may constitute countervailable subsidies. Title 19 U.S.C. § 1677(5)(E)(iv) provides that a subsidy which confers a benefit exists "in the case where goods or services are provided, if such goods or services are pro vided for less than adequate remuneration, and in the case where goods are purchased, if such goods are pur chased for more than adequate remuneration." Thus, while the statute explicitly provides a remedy for the provision of subsidies in the form of goods or ser vices, it also explicitly limits purchases that may con stitute subsidies to purchases of "goods." 19 U.S.C. § 1677(5)(E)(iv).
As in its original determinations, Commerce con cludes in the Remand Determination that the state- owned French electric utility, EdF, purchased a good from and provided a subsidy to the French enricher Eurodif. See Remand Determ. at 86; see also Low Enriched Uranium from France, 66 Fed. Reg. 65,901, 65,902 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determination); Dep't of Commerce Mem. from Bernard T. Carreau to Faryar Shirzad, Issues and Decision Memorandum: Final Af firmative Countervailing Duty Determination: Low Enriched Uranium from France-Calendar Year 1999 at 3-5 (Dec. 21, 2001) (unpublished), at www.ia.ita.doc. gov/frn/index.html. Commerce first bases this con clusion on its finding that SWU transactions constitute sales of LEU, because the enricher obtains ownership of the LEU and transfers ownership to the utility for con sideration. See Remand Determ. at 86-87. As discussed above, the Court has found this conclusion incorrect. See supra pp. 11-12.
Commerce also states, however, that even if the SWU transactions do not constitute sales of merchan dise, EdF's purchase of enrichment from Eurodif still constitutes a countervailable subsidy. The agency ar gues that "[f]irst, there is no question that EdF obtains LEU in a series of purchase transactions (i.e., the pur chase of natural uranium, the purchase of conversion, and the purchase of enrichment)." Id. at 87. Accor dingly, Commerce argues, EdF's "payment of more than adequate remuneration to Eurodif is made in connection with the major step in the process by which EdF is 'pur chasing goods.'" Id. Second, Commerce argues that
the fundamental purpose of the [countervailing du ties] provision is to address subsidization of manu facturing operations that produce subject merchan dise. In this context, the purchase of manufacturing or processing is a necessary component of the good. As a practical matter, goods include any manufactur ing or processing that is necessary to produce the article. Thus, the sale of manufacturing or process ing, which is a necessary component of the good, per tains to the purchase of goods, and does not consti tute the purchase of a "service" in this context.
Remand Determ. at 87.
We find Commerce's first argument unpersuasive. We have found that the enrichment transaction here does not constitute a sale of subject merchandise, and the mere fact that enrichment is "purchased" as part of a series of transactions in the nuclear fuel production process simply does not constitute a basis for concluding that the purchase of enrichment processing is tanta mount to the purchase of a good. Moreover, it appears from the record that under SWU contracts, Eurodif per forms only the enrichment portion of the nuclear fuel production process. Commerce stated in its preliminary countervailing duty determination that "[f]or purposes of this determination, we accept Eurodif's assertion that its operations are no different from those of USEC." Low Enriched Uranium from France, 66 Fed. Reg. 24,325, 24,327 (Dep't Commerce May 14, 2001) (notice of preliminary affirmative countervailing duty determina tion and alignment with final antidumping duty determi nation). If, under SWU contracts, Eurodif performs only the uranium enrichment, then EdF must contract with third parties for the other steps in the production of nu clear fuel, including procuring feed uranium and fabri cating LEU into nuclear fuel rods. See supra note 3 (listing the five steps in the production of nuclear fuel). The fact that the utility contracts with third parties, rather than with the enricher, to complete four of the five steps in the nuclear fuel production process renders even less plausible the claim that enrichment is merely part of an overall goods transaction between the utility and enricher.
Commerce's second argument posits that operations resulting in or leading to the production of a good do not constitute "services" for the purpose of the countervail ing duty statute. Remand Determ. at 87 ("[T]he sale of manufacturing or processing, which is a necessary com ponent of the good, pertains to the purchase of goods, and does not constitute the purchase of a 'service' in this context."). The agency bases this conclusion on its un derstanding that "the fundamental purpose of the [stat utory countervailing duties] provision is to address sub sidization of manufacturing operations that produce sub ject merchandise." Id.
The countervailing duty provisions are "intended to offset any unfair competitive advantage enjoyed by for eign manufacturers or exporters over domestic produc ers as a result of subsidies." S. Rep. No. 103-412, at 88 (1994). To realize this legislative intent, Commerce in terprets the countervailing duty statute to reach sub sidies that help to defray the costs of manufacturing subject merchandise. Noting that the statute does not define "service," the agency distinguishes manufactur ing services, or operations that result in the production of a good, from other types of services which do not re sult in the production of a good. See Remand Determ. at 87-88 ("The term 'service' is not defined in the statute. Under its ordinary meaning, consistent with the purpose of [19 U.S.C. § 1677(5)(D)], we interpret the term to mean '[t]he sector of the economy that supplies the needs of the consumer but produces no tangible goods, as banking and tourism.'") (internal citation omitted). Under this interpretation, the agency concludes that even transactions "solely for contract manufacturing" are covered by 19 U.S.C. § 1677(5)(D), because the man ufacturing operations lead to the production of a good. Remand Determ. at 88. Essentially, Commerce states that because manufacturing operations are integral to the good produced, subsidization of those operations constitutes subsidization of the good itself. See id. at 89.
Commerce's distinction between manufacturing pro cesses that lead to the production of subject merchan dise and other services that do not produce tangible goods is consistent with the language and purpose of the countervailing duty statute. It is consistent with the statute's language because it preserves a real distinction between "goods" and "services." It is consistent with the statute's purpose because subsidization of a process essential to the manufacture of a good lowers the manu facturer's cost of producing that good, which may enable the manufacturer to gain a competitive advantage over an unsubsidized competitor.
In the case of enrichment processing, subsidization would lower an enricher's production costs, enabling the enricher to sell enrichment processing at lower prices than an unsubsidized enricher. This is the type of "un fair competitive advantage" the statute is intended to counter, and therefore, Commerce's interpretation of the statute is reasonable and in accordance with law. Consequently, we affirm Commerce's determination that purchase of enrichment for more than adequate remu neration may constitute a countervailable subsidy.
Conclusion
In summary, we find Commerce's explanation of its industry support determination is in accordance with law, and we sustain this portion of the Remand Deter mination. We also sustain Commerce's determination that the countervailing duty law may apply to imports of LEU under either LEU purchase contracts or SWU en richment contracts, as well as the agency's determina tion that the purchase of enrichment for more than ade quate remuneration may constitute a countervailable subsidy. Because this opinion is limited to general is sues, see Scheduling Order at 4-5 (Aug. 5, 2002), we do not decide here the question whether the LEU imported from the subject countries benefitted from countervail able subsidies.
We also find Commerce's determinations that LEU and SWU contracts are equivalent and that the anti dumping provisions are applicable to SWU transactions are neither supported by substantial evidence nor in accordance with law. Accordingly, with respect to these conclusions, we find that Commerce's Remand Deter mination is unlawful and we reverse.
The parties are ordered to consult with each other and with the Clerk of the Court and to file a revised scheduling order within sixty days of the date of entry of this opinion.
1 Familiarity with the Court's prior opinion is presumed.
2 The determinations challenged in the original action were Low En riched Uranium from France, 67 Fed. Reg. 6,680 (Dep't Commerce Feb. 13, 2002) (notice of amended final determination of sales at less than fair value and antidumping duty order); Low Enriched Uranium from France, 66 Fed. Reg. 65,877 (Dep't Commerce Dec. 21, 2001) (no tice of final determination of sales at less than fair value) ("LEU from France"); Low Enriched Uranium from France, 67 Fed. Reg. 6689 (Dep't Commerce Feb. 13, 2002) (notice of amended final determination and notice of countervailing duty order); Low Enriched Uranium from France, 66 Fed. Reg. 65,901 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determination); Low Enriched Ur anium from Germany, the Netherlands, and the United Kingdom, 67 Fed. Reg. 6,688 (Dep't Commerce Feb. 13, 2002) (notice of amended fin al determinations and notice of countervailing duty orders); Low En riched Uranium from Germany, the Netherlands, and the United Kingdom, 66 Fed. Reg. 65,903 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determinations)
3 The steps involved in nuclear fuel production are: (1) mining uran ium ore; (2) milling and/or refining the ore into uranium concentrate, referred to as natural uranium (U308); (3) converting the natural uran ium into uranium hexafluoride (UF6), or "feed uranium;" (4) enriching uranium hexafluoride to create low enriched uranium; and (5) using the low enriched uranium to fabricate nuclear fuel rods for use in nuclear reactors. USEC I, 27 CIT at___, 259 F. Supp. 2d at 1314; see also LEU from France, 66 Fed. Reg. at 65,879.
4 Nothing in the record suggests that the parties from whom utilities purchase the feed uranium are in any manner related to the enrichers.
5 See USEC I, 27 CIT at___, 259 F. Supp. 2d at 1315-16 n.5 (not- ing that (1) the foreign enrichers' records, which were verified by Commerce, did not reflect payments for customer-provided uranium, (2) USEC requires utilities to pay the property taxes on customer-pro vided uranium in USEC's possession, and (3) the record does not indi cate that the enrichers treated customer-provided uranium as an asset).
6 To determine whether merchandise is being sold or is likely to be sold in the United States at less than fair value, Commerce compares the merchandise's normal value, or the price at which the merchandise is first sold for consumption in the exporting country, to the export price or constructed export price, which represents the price of the good when sold in or for export to the United States. See 19 U.S.C. § 1673; 19 U.S.C. § 1677a; 19 U.S.C. § 1677b(a). In making an export price or constructed export price determination, Commerce first must decide which company is the producer or exporter of the merchandise. See 19 U.S.C. § 1677a(a)-(b); Taiwan Semiconductor Mfg. Co. v. United States, 25 CIT 324, ___, 143 F. Supp. 2d 958, 966 (2001).
7 Commerce also cites to Polyvinyl Alcohol from Taiwan for the proposition that "the sale of subject merchandise may occur in two distinct transactions," and "such relevant sales may be combined to derive, and calculate, the price of the subject merchandise." Remand Determ. at 55-56 (citing Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. 32,810, 32,81[3-14] (Dep't Commerce June 16, 1998) (final results of antidumping duty administrative review)). The transactions in Poly vinyl Alcohol from Taiwan to which this comment refers are those between Perry and Chang Chun. Commerce determined that Chang Chun, the toller, was the producer of the subject merchandise and that the other company, Perry, was merely an importer and reseller. See Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. 6,526, 6,527 (Dep't Commerce Feb. 9, 1998) (preliminary results of antidumping duty ad ministrative review). Perry had restructured its contractual arrange ment with Chang Chun after Commerce found that Chang Chun was selling subject merchandise at less than fair value. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1320-21 n.11 (citing Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527). Under the restructured contract, Perry purchased inputs from an affiliate of Chang Chun and arranged delivery of the inputs to Chang Chun for processing. USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1321 n.11 (citing Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527). As we stated in USEC I, "[t]he crucial finding in Polyvinyl Alcohol from Taiwan was that, under the circum stances, Perry had simply restructured its payments to Chang Chun in an effort to circumvent the antidumping duties." USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1321 n.11. By contrast, in considering DuPont's relationship with Chang Chun in the same case, Commerce held that DuPont was the producer of the subject merchandise because DuPont manufactured the primary input, shipped it to Taiwan for processing by Chang Chun according to specifications supplied by DuPont, and ex ported it from Taiwan back to the United States and to third countries. See USEC I, 27 CIT at ___, 259 F. Supp. 2d at 1320 (citing Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527).
The instant case is more similar to the contract between DuPont and Chang Chun than to the contract between Perry and Chang Chun. First, in the course of managing the sequential steps in the production of nuclear fuel, the utility purchases uranium feedstock from a third party and pays the enricher to process it into LEU. See, e.g., USEC I, 27 CIT at __, 259 F. Supp. 2d at 1314-15. Second, the utility does not merely import and resell LEU. Finally, the contractual arrangement here long predates the initiation of unfair trade investigations. See, e.g., Hrg. Trans., Jt. App. Tab 6-A at 43-45; Oral Arg. Trans. at 42. Unlike the contract referred to in the Remand Determination, the SWU contracts here are not simply restructured purchase contracts.
8 A "countervailable subsidy" is a "financial contribution" or "any form of income or price support" that confers a benefit. 19 U.S.C. § 1677(5).
9 19 U.S.C. § 1671(a) states that
If-
(1) 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 res pect to the manufacture, production, or export of a class or kind of merchandise imported, or sold (or likely to be sold) for importation, into the United States, and
(2) in the case of merchandise imported from a Subsidies Agree ment country, the Commission determines that--
(A) an industry in the United States-
(i) is materially injured, or
(ii) is threatened with material injury, or
(B) the establishment of an industry in the United States is materially retarded,
by reason of imports of that merchandise or by reason of sales (or the likelihood of sales) of that merchandise for importation,
then there shall be imposed upon such merchandise a countervail ing duty . . . equal to the amount of the net countervailable subsidy.
19 U.S.C. § 1671(a). "Subsidies Agreement country" is defined in 19 U.S.C. § 1671(b) to mean countries that are WTO members or as to which the United States has undertaken certain obligations. In the case of non-Subsidies Agreement countries, no determination of injury or threat of injury to the domestic industry is required. 19 U.S.C. § 1671(c). France, Germany, the Netherlands, and the United Kingdom are Subsidies Agreement countries. See Membership of the World Trade Organization, WTO Doc. No. 95-2450, WT/L/51/Rev.4 (Aug. 18, 1995), at http://docsonline.wto.org; Agreement Establishing the World Trade Organization, Apr. 15, 1994, 33 I.L.M. 1144, 1144 (1994) (provid ing that multilateral agreements included in Annex 1, which includes the Subsidies Agreement, are binding on all WTO members).
10 Commerce also states that "based up [its] analysis" that the en richers "own and hold title to the complete LEU product . . . and transfer ownership and title to the utility customers for consideration . . . these [SWU contract] sales are also relevant for purposes of the CVD law." Remand Determ. at 83-84. As discussed above, we find in correct Commerce's conclusion that pursuant to the SWU contracts the enrichers own and transfer ownership in the complete LEU. Conse quently, contrary to its statement in the Remand Determination, Com merce's conclusion that SWU transactions are sales of subject merchan dise cannot lend support to Commerce's countervailing duty finding. See id.
11 We concluded in section III, supra, that Commerce's tolling regu lation applies in the antidumping context to designate the utilities as "producers" of LEU. That regulation, which is applicable in the context of determining export price or constructed export price in order to assess a dumping margin, does not apply in the countervailing duty con text. Consequently, for purposes of the countervailing duty determina tion, the tolling regulation does not prohibit recognition of a subcontrac tor or toll manufacturer as a producer of a good. Thus, the tolling regu lation does not contradict the conclusion that the enrichers are "pro ducers" of LEU for purposes of a countervailing duty determination.
APPENDIX E
FINAL REMAND DETERMINATION USEC Inc. and United States Enrichment Corpora tion v. United States
Court Nos. 02-00112, 02-00113, 02-00114 and Consol. Court Nos. 02-00219, 02-0000221 [sic], 02-00227, 02-00229, and 02-00233 Slip Op. 03-34, (March 25, 2003)
SUMMARY
This remand determination, submitted in accordance with the order of the U.S. Court of International Trade on March 25, 2003 (Slip Op. 03-34), involves challenges to the initiations and final affirmative determinations by the U.S. Department of Commerce (the Department) in the antidumping and countervailing duty investigations on low enriched uranium from France, Germany, the United Kingdom, and the Netherlands. Notice of Initia tion of Antidumping Duty Investigations: Low En riched Uranium From France, Germany, the Nether lands, and the United Kingdom, 66 FR 1080 (Jan. 5, 2001); Notice of Initiation of Countervailing Duty In vestigations: Low Enriched Uranium From France, Germany, the Netherlands, and the United Kingdom, 66 FR 1085 (Jan. 5, 2001); Notice of Final Determination of Sales at Less Than Fair Value: Low Enriched Ura nium From France, 66 FR 65877 (Dec. 21, 2001) ("Final French AD Determination"); Notice of Final Affirma tive Countervailing Duty Determination: Low En riched Uranium From France, 66 FR 65901 (Dec. 21, 2001); and Notice of Final Affirmative Countervailing Duty Determinations: Low Enriched Uranium from Germany, the Netherlands, and the United Kingdom, 66 FR 65903 (Dec. 21, 2001).
The challenges pertain to the Department's interpre tation and application of its "tolling or subcontractor" regulation, 19 C.F.R. § 351.401(h), for purposes of deter mining industry support; for selecting the exporters or producers for purposes of establishing export and/or constructed export price, and normal value; and for pur poses of determining whether the government of France has purchased goods, as compared to services, for more than adequate remuneration.
BACKGROUND
On December 21, 2001, the Department published notices of final affirmative determinations in the anti dumping duty investigation on low enriched uranium from France, and in the countervailing duty investiga tions on low enriched uranium from France, Germany, the Netherlands, and the United Kingdom. Final French AD Determination, 66 FR 65877 (Dec. 21, 2001); and Notice of Final Affirmative Countervailing Duty Determination: Low Enriched Uranium From France, 66 FR 65901 (Dec. 21, 2001); and Notice of Final Affir mative Countervailing Duty Determinations: Low En riched Uranium from Germany, the Netherlands, and the United Kingdom, 66 FR 65903 (Dec. 21, 2001).
On March 25, 2003, the U.S. Court of International Trade (the Court) issued an opinion in the above cases, remanding the above issues to the Department for fur ther explanation and consideration of its determinations.
USEC Inc. and United States Enrichment Corp. v. United States, Slip Op. 03-34, (Mar. 25, 2003). The Court's opinion on each of the issues is summarized in the particular sections of this redetermination.
On June 6, 2003, the Department issued a draft re mand redetermination in the above cases. Comments pertaining to the Department's draft redetermination were filed on June 13, 2003, by Urenco and Eurodif in a combined submission; USEC; PACE, on behalf of the domestic workers; and the Ad Hoc Utilities Group (AHUG) on behalf of U.S. utility companies.
A. INDUSTRY SUPPORT
a. The Department's Decision to Initiate the AD and CVD Investigations on LEU
In making its decision to initiate the investigations on low enriched uranium, the Department was required to determine whether the petitions were "filed by or on behalf of the industry."1 To do so, the statute directs the Department to determine whether there is sufficient support for the petition by "the domestic producers or workers" who are eligible to file a petition. To deter mine whether a company qualifies as a "domestic pro ducer," the Department "examines production opera tions to determine whether a company qualifies as a pro ducer of the domestic like product." Determination of Industry Support for the Antidumping and Counter vailing Petitions on Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom (Dec. 27, 2000) ("LEU Industry Support Mem."), at 8. The Department stated that "[a]t a mini mum, a finding that a company is a producer of the do mestic like product requires that a company perform some important or substantial manufacturing opera tion." Id. at 7. To determine whether a company may be a member of the domestic industry, the Department adopted the same test the U.S. International Trade Commission (ITC) employs to determine the appropri ate domestic industry for purposes of its injury investi gation, analysis and determination. To make its deter mination, the ITC examines a company's "production related activities in the United States." The Depart ment noted that the ITC's six-factor test "focuses upon the 'overall nature' of the production related activities in the United States, to determine whether production op erations are sufficient for a company to be considered a member of the domestic industry." Id. at 8. See, e.g., Certain Cut-to-Length Steel Plate from France, India, Indonesia, Italy, Japan, and Korea, Inv. Nos. 701-TA- 387-391 and 731-TA-816-821 (Final), USITC Pub. 3273 at 8-9 (Jan. 2000). The Department stated that "[t]he Commission typically considers six factors: (1) the ex tent and source of a firm's capital investment; (2) the technical expertise involved in U.S. production activity; (3) the value added to the product in the United States; (4) employment levels; (5) the quantities and types of parts sourced in the United States; and (6) any other costs and activities in the United States leading to pro duction of the like product." LEU Industry Support Mem., at 8.
In applying the test, the Department found USEC to be the sole producer of the domestic like product based upon its analysis of USEC's manufacturing operations. Id. at 5.
The Department found that "USEC performs all of the processes necessary for enriching converted ura nium." Id. at 8. The Department concluded that:
In light of the fact that USEC is the only entity in the United States that enriches converted uranium to produce LEU; is the only entity with the technol ogy and technical expertise to produce LEU; that enrichment is a necessary and major manufacturing operation in the production of LEU; and that the product output from USEC's enrichment facilities constitutes the domestic like product, we find that USEC is the only producer of LEU in the United States.
Id. at 5.
In reaching this conclusion, the Department also de termined that the agency's regulation on the treatment of subcontractors and "tolling," 19 C.F.R. § 351.401(h), was not applicable for purposes of making industry support determinations.2 The Department reasoned as fol lows:
First, we do not interpret section 351.401(h) of the Department's regulations (i.e., the "tolling regula tion") to be applicable to our determinations on in dustry support. Instead, consistent with the lan guage of the regulation, we find that section 351.401, including subsection (h) on tolling, was intended to "establish certain general rules that apply to the cal culation of export price, constructed export price and normal value," and not for purposes of determining industry support. Our interpretation that the tolling regulation is intended for purposes of calculating antidumping margins is further supported by the absence of any parallel provision on tolling in the CVD regulations.
The Department also examined the purpose of the provi sions in which the term "producer" appeared, and set forth its rationale for not applying the tolling regulation in its industry support analysis, stating as follows:
In practice, moreover, the Department has never applied, nor relied upon, section 351.401(h) to deter mine industry support, with good reason. The pur pose of the tolling regulation is to identify the party responsible for setting the price of subject mer- chandise sold in the United States. Under section 351.401(h), therefore, the Department focuses on which party controls the relevant sale of the subject merchandise or foreign like product. By contrast, to determine industry support, the Department seeks to identify the entity or entities (or workers) that are engaged in the production or manufacture of the identical merchandise set forth in the petition. Thus, identifying the seller for purposes of respondent se lection and identifying the domestic producers for purposes of industry support are separate questions that require different examinations for different pur poses.
Id. at 7.
b. The Court's Remand on the Department's Indus try Support Determination
The Court has now remanded this issue to the De partment for further examination and explanation, as appropriate. USEC Inc. and United States Enrichment Corp. v. United States, Slip Op. 03-34, (Mar. 25, 2003) (USEC). In its remand decision, the Court stated that "Commerce's decision not to apply the tolling regulation to determine who is the producer in connection with its industry support determination is based on the agency's assessment of the purpose and context of the regula tion." USEC, at 38. The Court acknowledged that "the purpose of the tolling regulation is accurate calculation of export or constructed export price, and that the regu lation does not arise in connection with the industry sup port determination." Id. The Court noted, however, that "it is unclear from Commerce's explanation why the definition of 'producer,' a term that is not statutorily defined, should differ between one subsection of the statute and another." Id.
In addition, the Court noted the potential incongruity that "Commerce may determine that the utility compa nies are not producers of LEU for the purpose of the industry support determination, but subsequently may determine, as a result of applying the tolling regulation, that the same companies are producers for the purpose of determining export price or constructed export price." Id. at 39. Citing the principle enumerated in SKF USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001) (SKF USA), the Court stated that "[w]here a term appears in multiple subsections within a statute, we 'presume that Congress intended that the term have the same meaning in each of the pertinent sections or subsections of the statute, and we presume that Congress intended that Commerce, in defining the term, would define it consistently.'" Id. at 39, quoting SKF USA at 1382. The Court stated that "Commerce is permitted to apply different definitions of such a statu tory term only if it provides 'an explanation sufficient to rebut this presumption.'" Id., quoting SKF USA at 1382. The Court then stated that:
as the Court is remanding the Department's deter mination for reconsideration of its decision not to apply the tolling regulation, Commerce also will have the opportunity to reconsider the effect of the tolling regulation on its industry support determination. If Commerce finds that the tolling regulation applies here, the agency must consider whether those enti ties determined to be 'producers' under the tolling regulation are also 'producers' for purposes of the industry support determination. Should Commerce determine that this is not the case, and that, in ef fect, a different definition of 'producer' applies in the industry support context than in the context of the export price calculation, the agency is directed to articulate an appropriate basis for such a conclusion.
Id. at 40.
c. Analysis and Discussion of the Industry Support Determination
In accordance with the Court's direction, the Depart ment has reconsidered its interpretation of its tolling regulation in the industry support context. In this case, we note that in the original LEU investigations the De partment uniformly determined uranium enrichers to be the producers of LEU, both for purposes of industry support and for establishing U.S. price and normal value (NV). Because the Court has recognized the potential for reaching incongruous results (i.e., finding enrichers to be domestic producers for purposes of industry sup port, while finding that utility companies may, under the tolling regulation, be considered foreign producers for purposes of establishing U.S. price and NV), the Depart ment will explain its analysis further with respect to the different definitions of the term "producer" used in these contexts. Based upon our examination and inter pretation of the statutory provisions governing industry support and U.S. price and NV, together with the rele vant legislative history, we find that different legislative purposes behind these statutory provisions warrant the use of different definitions of the term "producer" in order to fulfill the intent of Congress, as we will explain.
1. The Statutory Definitions
In determining whether to initiate AD and CVD in vestigations, the statute directs the agency to examine whether the petition has been "filed by or on behalf of the industry" under sections 702(c)(4) of the Act for countervailing duties; and section 732(c)(4) of the Act for antidumping duties.3 Section 771(4)(A) of the Act de fines the industry as "the producers as a whole of a do mestic like product, or those producers whose collective output of a domestic like product constitutes a major proportion of the total domestic production of the product."4 Thus, to determine whether there is adequate industry support for a petition, the Department must first identify the domestic like product. Once the prod uct is identified, the agency examines the industry's pro duction for purposes of determining whether the peti tion is filed by or on behalf of the industry. Specifically, section 732(c)(4) of the Act states that "the administer ing authority shall determine that the petition has been filed by or on behalf of the industry," if two conditions are established:
(i) the domestic producers or workers who support the petition account for at least 25 percent of the to tal production of the domestic like product, and
(ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by the portion of the industry expressing support for or opposition to the petition.
19 U.S.C. § 1673a(c)(4)(A). The statute also defines the term "domestic producers or workers" for purposes of industry support determination, stating that "[f]or purposes of this subsection, the term 'domestic produc ers or workers' means those interested parties who are eligible to file a petition under subsection (b)(1) of this section."5 In turn, subsection (b)(1) states that an antidumping proceeding shall be initiated whenever an interested party described in subparagraph (C), (D), (E), (F), or (G) of section 1677(9) of this title files a peti tion . . ." .6 The statute enumerates those parties that may file a petition, specifically listing "a manufacturer, producer, or wholesaler in the United States of a domes tic like product" under subsection (C), and "a certified union or recognized union or group of workers which is representative of an industry engaged in the manufac ture, production, or wholesale in the United States of a domestic like product" under subsection (D).7
By contrast, the statutory provisions governing the determination of export price (EP), constructed export price (CEP) and normal value (NV), refer to "the pro ducer or exporter" of the subject merchandise.8 Section 772(a) of the Act, for example, states that "[t]he term 'export price' means the price at which the subject mer chandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise . . .". The term "exporter or pro ducer" is expressly defined in the statute as
the exporter of the subject merchandise, the pro ducer of the subject merchandise, or both where ap propriate. For purposes of section 773, the term 'ex porter or producer' includes both the exporter of the subject merchandise and the producer of the same subject merchandise to the extent necessary to accu rately calculate the total amount incurred and real ized for costs, expenses, and profits in connection with production and sale of that merchandise.
Notwithstanding the fact that the term domestic pro ducers or workers and the term exporter or producer are separately defined in different provisions of the stat ute, the term "producer" is contained in both the provi sions governing industry support and the provisions governing EP, CEP, and NV. The statute, however, does not define the term "producer."
2. The Federal Circuit Decision in SKF USA
In SKF USA, the Federal Circuit ruled that:
In the antidumping statute Congress has used the term "foreign like product" in various sections, and has specifically defined it in 19 U.S.C. § 1677(16). We therefore presume that Congress intended that the term have the same meaning in each of the perti nent sections or subsections of the statute, and we presume that Congress intended that Commerce, in defining the term, would define it consistently.
263 F.3d at 1382. The Federal Circuit stated that "[w]ithout an explanation sufficient to rebut this pre sumption, Commerce cannot give the term 'foreign like product' a different definition (at least in the same pro ceeding) when making the price determination and in making the constructed value determination. This is particularly so because the two provisions are directed to the same calculation, namely the computation of nor mal value (or its proxy, constructed value) of the subject merchandise." Id. Citing the Supreme Court decision in Sorenson v. Treasury, 475 U.S. 851 (1986), the Fed eral Circuit in SKF USA also noted that this "normal rule of statutory construction" applies with particular force where Congress has specifically defined the term. 263 F.3d at 1381-82.
In this case, however, the term "producer" is not de fined in the statute. As we explain further below, to ful fill the legislative purpose of the different provisions at issue, the Department must engage in a different exami nation, and thereby define the term differently depend ing upon the context. Unlike the term "foreign like product," which is directed to the same computation of normal value, the term "producer" is being applied in distinct provisions of the statute and for different pur poses, requiring different examinations by the agency.
However, even under the circumstances in SKF USA, where the term is expressly defined and is di rected to the same computation, the Federal Circuit recognized that the agency could rebut the presumption, and interpret the same term differently provided it pro vides a reasonable explanation. SKF USA, 263 F.3d at 1382. Indeed, the Federal Circuit has now ruled on the issue in SKF USA, affirming the Department's use of different definitions based upon the agency's further explanation on remand. FAG Kugelfischer Georg Schafer AG, Et Al, and SKF USA, Et Al v. United States, 02-1500, 02-1538, 2003 U.S. App. LEXIS 11607 (June 11, 2003).
3. Discussion of "Producer" for Purposes of In dustry Support
As discussed above, for purposes of industry support, the statute defines the term "domestic producers or workers" by referring back to "those interested parties who are eligible to file a petition under subsection (b)(1) of this section."9 Thus, to have standing to file a peti tion, or to support or oppose a petition, the same "inter ested party" requirements contained in the statute must be satisfied.
The statute, however, does not define the term "man ufacturer" or "producer" of the domestic like product. Where Congress has not defined a term or otherwise indicated what criteria Commerce is to use in determin ing what constitutes a "producer," the agency has been granted broad discretion to establish its own methodol ogy for determining who qualifies as a producer of the domestic like product. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 844 (1984). In the case of industry support, we believe any definition of such terms as "producer" or "manufac turer" must be informed by the statutory definition of the term "industry" that also appears in the industry support provisions discussed above.
The legislative history pertaining to the definition of the industry is instructive. The Statement of Adminis trative Action accompanying the URAA clarifies that:
The definition of domestic industry in Article 4 is virtually identical to that in the 1979 Code and cur rent U.S. law. See S. Rep. No. 249, 96th Cong., 1st Sess. 47, 63 (1979); H.R. Rep. No. 317, 96th Cong., 1st Sess. 51, 59-60 (1979).
SAA at 811. In turn, the Senate Report accompanying the 1979 Act that is referred to in the SAA of the URAA above, states:
The standing requirements in section 702(b)(1) for filing a petition implement the requirements of Article 2(1) of the agreement. The committee in tends that they be administered to provide an oppor tunity for relief for an adversely affected industry and to prohibit petitions filed by persons with no stake in the result of the investigation.
S. Rep. No. 249, 96th Cong., 1st Sess. 47 (1979) (empha sis added). For AD, see id[.] at 63.
In determining who has standing to file petitions, the court in Brother Industries (USA) Inc. v. United States has recognized that "[t]he language in the legislative history is broad and unqualified. It contrasts industries suffering adverse effect with those having no stake: the former have standing; the latter do not." 801 F. Supp. 751, 756 (CIT 1992) (citing S. Rep. No. 249, 96th Cong., 1st Sess. 47 (1979)) (Brother), aff'd 1 F.3d 1253 (Fed. Cir. 1993). In addressing the same statutory term "pro ducer," the court in Brother recognized that "ITA has discretion to utilize any methodology reasonably suited to fulfilling the statutory goals." Id. at 757.
In exercising its discretion, the Department has adopted the ITC's six-factor test to determine whether a company is a producer of the domestic like product. Like the ITC, the Department's longstanding practice has been to examine the overall nature of a company's manufacturing operations.10 "At a minimum, a finding that a company is a producer of the domestic like prod uct requires that a company perform some important or substantial manufacturing operation." LEU Industry Support Mem., at 7.
The Department adopted and applied this test to fulfill the statutory goals intended by Congress. Whether a company is at risk from unfairly traded im ports depends on the nature and extent of its operations in the United States. It stands to reason that a company may be injured by unfairly traded imports where it is in the business of producing the domestic like product. Thus, the "stake in the result of the investigation" that Congress contemplated would justify the filing of a peti tion is not the interest of an industrial user in pursuit of lower priced goods. The legislative history makes clear: the law was intended to protect from dumped and subsi dized imports those U.S. industries that are at risk of injury due to dumped or subsidized imports.11 The De partment's practice, like that of the ITC, therefore, rea sonably recognizes that "whether a company is at risk depends on the nature and extent of its operations in the United States." Brother[,] 801 F. Supp. at 756 (citing the ITC's six-factor test).
Second, the legislative history indicates Congress' intent that the domestic producers in the industry would be engaged in the actual production of the domestic like product. The Senate Report states:
The term industry is not defined in either the Antidumping Act or in section 303. As noted in the committee report on the Trade Act of 1974 (S. Rept. 93-1298, pp. 179-181), in practice, the phrase "an in dustry in the United States", as used in both laws, has been interpreted by the ITC as referring to all the domestic producer facilities engaged in the pro duction of articles like the subsidized or dumped imported articles, although a number of investiga tions have been concerned with the domestic pro ducer facilities engaged in the production of articles, which while not like the imports concerned, are nev ertheless competitive with the imports in domestic markets. In either case, the industry has generally been considered to be a national industry involving all domestic facilities engaged in the production of the domestic articles involved.
S. Rep. No. 249, 96th Cong., 1st Sess. 82 (1979) (empha sis added).
The Senate Report of the 1979 Act further states that:
Section 771(4) enacts in many respects current ITC practice, and delineates important concepts with re spect to the definition and treatment of the term "in dustry" as that term is used in determining whether an industry in the United States is materially in jured, threatened with material injury, or the estab lishment of an industry is being materially retarded. "Industry" generally means: (1) All the domestic producers who produce products like the imported articles subject to the investigation, or, if no such product exists, the product most similar in character istics and in use to the imported article subject to the investigation . . . .
* * *
In examining the impact of imports on the domestic producers comprising the domestic industry, the ITC should examine the relevant economic factors (such as profits, productivity, employment, cash flow, capacity utilization, etc.), as they relate to the production of only the like product, if available data permits a reasonably separate consideration of the factors with respect to production of only the like product.
S. Rep. No. 249, 96th Cong., 1st Sess. 83-84 (1979) (em phasis added). As is clear from the legislative history, for the ITC to make its determination, it must examine data directly relevant to those companies with domestic facilities actually engaged in the production of the do mestic like product, such as profits, productivity, em ployment, and capacity utilization "as they relate to pro duction of only the like product." While the ITC's test is not binding upon the Department, the connection be tween the respective determinations cannot be ignored. Companies that have standing to file a petition should reasonably be those same companies at risk from dumped or subsidized imports. Accordingly, both agen cies seek to identify domestic producers engaged in the actual production of the domestic like product.12 Commerce's test fulfills the legislative purpose of the indus try support provisions in the statute in that it recognizes that to be at risk from dumped or subsidized imports reasonably requires a company, at a minimum, to be engaged in some important or substantial manufactur ing operation.
By contrast, if the Department were to interpret its tolling regulation as applicable in the industry support context, and the Department were to apply that regula tion in a manner so as to bestow domestic producer sta tus upon industrial users and consumers of the domestic like product, or other entities that have no stake in the result of the investigation (as the term was intended by Congress), the industry at risk from unfairly traded im ports would be denied the opportunity to obtain relief, thereby defeating the fundamental purpose of the law.
Other incongruities could also arise from such an application that would frustrate the intent of Congress. For example, by using very different tests, the Depart ment and the ITC could reach significantly different determinations as to the domestic producers in an indus try. Because of the significant differences in the tests, each agency could potentially identify different domestic producers, and therefore different industries. In our view, such anomalous results would be inconsistent with the intent of Congress because the adversely affected industry would be denied its opportunity for relief.
Another incongruity would arise in the industry sup port context with respect to domestic workers if the toll ing regulation were to apply. In our view, such an appli cation would deprive domestic workers of the opportu nity to obtain relief under the AD and CVD laws, and thereby defeat a fundamental object of the law.
The statutory provisions governing industry support establish that domestic workers are entitled to file and support petitions for relief from unfairly traded imports, as discussed above.13 The SAA accompanying the URAA further clarified that the position of workers is equal to that of firms producing the domestic like product for purposes of the Department's industry support determi nations. The SAA states:
New sections 702(c)(4)(A) and 732(c)(4)(A) recognize that industry support for a petition may be ex pressed by either management or workers. The Ad ministration intends that labor have equal voice with management in supporting or opposing the initiation of an investigation. Commerce's implementing regu lations will make clear that in considering the views of labor, Commerce will count labor support or oppo sition as being equal to the production of the domes tic like product of the firms in which the workers are employed.
SAA at 862.14
We interpret the statute and the accompanying SAA to indicate that Congress intended the domestic workers to encompass those workers engaged in the actual pro duction of the domestic like product. Moreover, the leg islative history indicates that Congress intended that domestic workers, who are eligible to file petitions, to be those workers employed by the firms engaged in such production. Thus, the statute and SAA contemplate that the identification of the domestic producers must involve the identification of firms with workers and facilities that produce the domestic like product.
4. Review of the Industry Support Determina tion in the LEU Investigations
In this case, Commerce examined the production operations that were necessary to manufacture LEU. In determining whether USEC was the domestic producer of LEU, Commerce examined the nature and extent of USEC's manufacturing operations, finding that:
USEC performs all of the processes necessary for enriching converted uranium. In fact, the Nuclear Regulatory Commission (NRC) requires enrichment facilities to be licensed in order to operate in the United States. The information on the record from the NRC indicates that USEC's two gaseous diffu sion plants in Paducah, Kentucky and Portsmith, Ohio are the only facilities in the United States that are licensed to enrich uranium. Accordingly, USEC is the only company in the United States with the technology and the technical expertise necessary to produce LEU. And, all LEU produced in the United States must be enriched by USEC.
Further, the information on the record indicates that enrichment is a major manufacturing process in the production of LEU, responsible for a substantial por tion of the total value of LEU; and that enrichment is a necessary process for the production of LEU. Finally, we note that the product output from enrich ment facilities is LEU, as defined in the petition.
In light of the fact that USEC is the only entity in the United States that enriches converted uranium to produce LEU; is the only entity with the technol ogy and technical expertise to produce LEU; that enrichment is a necessary and major manufacturing process in the production of LEU; and that the prod uct output from USEC's enrichment facilities consti tutes the domestic like product, we find that USEC is the only producer of LEU in the United States. Accordingly, we determine that petitioner accounts for 100 percent of LEU production in the United States.
LEU Industry Support Mem., at 4-5.
By contrast, Commerce determined that utility com panies were purchasers of LEU rather than producers, finding that:
the utility companies do not qualify as producers of LEU. These companies do not engage in any type of manufacturing activities related to the production of LEU: they make no claim to have any LEU manu facturing operations; no capital investment in pro duction facilities; they add no value to the product through the performance of any manufacturing oper ations; and have no employees dedicated to manufac turing. Unlike producers, we find that the utility companies are purchasers and industrial users of LEU.
Id. at 8 (citation omitted).
Citing the ITC factors used by the Department in Certain Portable Electric Typewriters from Singapore: Rescission of Initiation of Antidumping Duty Investi gation and Dismissal of Petition, 56 Fed. Reg. 49880 (Oct. 2, 1991), the agency stated, "[t]he utilities make no claim as to any of these factors." LEU Industry Sup port Mem., at 8, n.16. Nor is there any evidence on the record to indicate, or support the conclusion, that utility companies have satisfied any of the factors used to de termine whether a company is a producer of the domes tic like product.
The Department's determination comports with the remedial purpose of the law and the clear intent of Con gress. The "stake in the result of the investigation" is not the interest of a consumer or industrial user in pur suit of lower priced goods, as discussed above. Rather, the law was intended to protect from unfair trade those U.S. industries that are at risk due to dumped or subsi dized imports. The utility companies are not at risk of injury due to dumped or subsidized imports of LEU. To the contrary, as the Department determined: "[u]nlike producers, we find the utility companies are purchasers and industrial users of LEU." Id. at 8. "The principal use of LEU is for the generation of electricity." USEC Petition, Prop. Doc. 1, at I-9. It is undisputed that the U.S. utility companies are in the business of producing electricity for sale to consumers in the United States.15 As such, their business interest, like that of any indus trial user, lies in obtaining lower priced LEU in an ef fort to keep the cost of producing electricity down. Ac cordingly, unlike domestic producers, they have no stake in the result of these investigations, as envisaged by Congress.
As for the domestic workers, in this case, PACE, the union representing the workers engaged in the actual production of LEU, joined USEC in the AD and CVD petitions. The Department found that the domestic workers provided an independent basis for industry sup port. LEU Industry Support Mem., at 5. By contrast, the utility companies were found to "have no employees dedicated to manufacturing [of LEU]." Id. at 8.
Finally, we find that any application of the tolling regulation for purposes other than the establishment of U.S. price and normal value also presents the potential incongruity of broadly defining the U.S. domestic indus try based upon how an entity purchases or obtains the domestic like product, rather than upon its stake in the results of an investigation. For example, if U.S. utilities, by virtue of the tolling regulation, could qualify as do mestic producers of LEU based upon how the contrac tual arrangements are structured, then any entity that obtains LEU from a U.S. enricher, under similar con tractual arrangements, could also qualify as a member of the U.S. domestic industry. Accordingly, to the ex tent that Japanese, French or British utility companies, for example, obtain LEU from USEC under similar ar rangements as U.S. utilities, then these foreign utility companies would also qualify, by virtue of the tolling regulation, as members of the U.S. domestic industry. It is inconceivable how a foreign utility could be ad versely affected by unfairly traded LEU in the United States. More importantly, in our view, such a result is not what Congress intended when it enacted the provi sions on industry support. Nothing in the statute or the relevant legislative histories supports such a broad ap plication of the AD and CVD laws. In our view, the ap plication of the tolling regulation in this context would frustrate the intent of Congress because it would fail to provide an opportunity for relief for an adversely af fected industry, and conversely would fail to prohibit petitions filed by persons with no stake in the result of the investigation, contrary to Congress' intent.
5. "Producer" for Purposes of Establishing U.S. Price and Normal Value
Unlike industry support determinations, where the legislative purpose of the provisions is to identify those entities that, by virtue of their facilities and workers dedicated to the production of the domestic like product, have a stake in the results of an investigation, the pur pose of the provisions governing U.S. price and normal value is to identify the seller of the subject merchandise and foreign like product, as discussed below.
The term "producer" appears in the statutory provi sions governing the establishment of U.S. price and nor mal value. As noted above, section 772(a) of the Act, directed at export price, states that export price means "the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise."16 Similar language on "producer or exporter" is contained in the constructed export price provision.17 Under these provisions, the Department need not identify and select the foreign "producer" as the respondent in an anti dumping investigation. For respondent selection, the statute provides that export or constructed export price may be established by the sale of either "the producer or exporter" of the subject merchandise. While the legisla tive histories of the trade acts provide no guidance as to whether the Department is to establish a preference for exporter over producer, the statutory provisions, includ ing section 773(a)(1)(B) governing the determination of normal value, all focus upon the price of the subject merchandise or foreign like product.18 Accordingly, the Department selects the respondent in an investigation or administrative review based upon which entity sells the subject merchandise and foreign like product.
In promulgating its regulation governing the calcula tion of U.S. price and normal value, and in particular the subsection addressing "subcontracting" or "tolling," the Department recognized that the focal point of the regu lation is the sale of subject merchandise and foreign like product. Specifically, the relevant subsection of the reg ulation states the Department "will not consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire own ership, and does not control the relevant sale, of the sub ject merchandise or foreign like product."19
The regulation was promulgated to assist the De partment in establishing U.S. price and normal value. Accordingly, for purposes of establishing U.S. price and normal value, the Department does not consider it es sential that the entity selected as an appropriate respon dent be engaged in any manufacturing operations. Rather, the traditional functions of a producer in this context are not essential to the determination of whether the entity sold the subject merchandise and foreign like product. To clarify further, producers fre quently sell the merchandise they produce, and thus they may be identified and selected as the appropriate respondents. The relevant sale of subject merchandise, however, may be made by other companies, such as ex porters. In such cases, the Department selects the ex porter as the appropriate respondent.20 This is also the case with resellers in proceedings in which the reseller has sold the subject merchandise. Thus, in this context, the performance of traditional producer functions, such as manufacturing operations in which value is added to the product, is not essential to the fulfillment of the ob ject and purpose of the regulation, which is to establish U.S. price and normal value. Accordingly, the Depart ment will select the exporter or reseller of subject mer chandise over the producer, not based upon the pro ducer's performance of any producer-type functions, but based upon the Department's determination of which entity sells the subject merchandise to or into the United States.21
In promulgating its tolling regulation, the Depart ment indicated the relevance of the traditional manufac turing operations when it stated that "[t]he Department will not consider the subcontractor to be the manufac turer or producer regardless of the proportion of pro duction attributable to the subcontracted operation or the location of the subcontractor or owner of the goods." Antidumping Duties; Countervailing Duties; Proposed Rule, 61 FR 7307, 7330 (Feb. 27, 1996). In such cases, the Department looks to the seller of the subject mer chandise as the respondent, regardless of whether the seller has manufacturing operations. This definition of producer fulfills the purpose of the statute in that it en ables the agency to establish as accurately as possible U.S. price and normal value for purposes of determining the margin of dumping.
Industry Support Conclusion
Based upon the above, the Department may interpret the term producer in the U.S. price and normal value contexts differently than in the industry support con text, depending on the circumstances of the case, in or der to fulfill the legislative purposes behind these provi sions, as envisaged by Congress. With respect to the Department's tolling regulation, the Department has never applied its regulation on tolling for purposes of industry support because to do so would frustrate the intent of Congress to properly identify those domestic producers engaged in the production of the domestic like product, and thus it would fail to provide U.S. domestic industries with the opportunity to obtain relief as in tended by Congress.
Comments from Parties
USEC22 and the workers' union, PACE,23 filed com ments supporting the Department's analysis and conclu sion on industry support. These parties have also made suggestions to the Department for clarification pur poses. We have made changes to the remand determina tion as appropriate for clarification purposes.
The Ad Hoc Utilities Group (AHUG) submitted com ments on industry support. Urenco and Eurodif have not submitted comments on this issue, but have instead indi cated their support and agreement with AHUG's com ments. Urenco/Eurodif Comments, June 13, 2003, at 3, n.2.
AHUG's Comments on Industry Support
AHUG advances several points to support its conten tion that the justifications provided by the Department's industry support determination do not satisfy the stan dard for giving the same term in the statute different meanings. AHUG's Comments, at 3. AHUG first con tends that the Department's draft remand ignores the plain language of the statute, and relies instead upon legislative history that does not pertain to the applicable section of the statute. Id. at 4-5. AHUG further con tends that the Department lacks authority to require manufacturing operations in order to determine whether entities are producers for purposes of industry support. Id. at 7. AHUG further asserts that the Department's practice does not require manufacturing operations for purposes of industry support. Id. at 7-8.
Next, AHUG argues that the Department's interpre tation of the term "producer" in the industry support context contradicts the plain language of the statute and the Department's own regulation on tolling. Id. at 6. Instead, AHUG argues, the statute provides mecha nisms for preventing domestic producers benefitting from unfairly traded imports from blocking initiation of investigations, while recognizing that such producers are still part of the domestic industry. Id. at 9. Finally, AHUG contends that it remains unclear whether USEC has a cognizable stake in the domestic industry.
Department Position:
At the outset, we note that, fundamentally, AHUG is arguing that the Department, as a matter of law, is pro hibited from applying the ITC's 6-factor test to deter mine whether an entity is a "producer" for purposes of industry support. This same test has been expressly approved by Congress in the relevant legislative history, and was held to be a reasonable interpretation of the statute by the Court of International Trade in Brother. Accordingly, we have continued to apply the test in this case. Each of AHUG's points is discussed further below.
With respect to the relevance of the statutory defini tion of the term "industry" and its legislative history, AHUG contends that the Department is attempting "to avoid the plain language of the statute by asserting that the legislative history related to the definition of indus try in Section 771(4) evidences congressional intent to limit the domestic industry for industry support pur poses to those entities with manufacturing facilities." Id. at 5. AHUG argues that, to the contrary, the legisla tive history confirms that Section 771(4) was intended to reflect and apply to the practice of the ITC in determin ing whether an industry is materially injured. AHUG claims that the statute plainly distinguishes between the analysis required for the ITC to identify the relevant industry to determine injury, on the one hand, and the domestic interested parties pertinent to the Depart ment's industry support determination, on the other. According to AHUG, the Department cannot refer to legislative history of another, distinct provision to inter pret already clear statutory language." Id. at 5.
We disagree with AHUG. Rather, we find that Con gress intended the term "industry," as defined in section 771(4)(A) of the Act, to be relevant and applicable to the Department's analysis for purposes of industry support. First, as discussed in the body of the Department's re mand determination above, to determine whether to initiate AD and CVD investigations, the statute directs the agency to examine whether the petition has been "filed by or on behalf of the industry" under sections 702(c)(4) of the Act for countervailing duties and section 732(c)(4) of the Act for antidumping duties. The legisla tive history that we relied upon, moreover, expressly refers to the standing requirements for filing a petition. The legislative history addressing the term "industry" states:
The standing requirements in section 702(b)(1) for filing a petition implement the requirements of Article 2(1) of the agreement. The committee in tends that they be administered to provide an oppor tunity for relief for an adversely affected industry and to prohibit petitions filed by persons with no stake in the result of the investigation.
S. Rep. No. 249, 96th Cong., 1st Sess. 47 (1979) (empha sis added). For AD, see id[.] at 63. As discussed above, the court in Brother recognized the relevance of, and specifically relied upon, the same legislative history of the 1979 Act in affirming the Department's use of the 6- factor test to determine whether the entity at issue in that case was a producer of the domestic like product.24
Finally, the SAA accompanying the URAA clarifies that:
The definition of domestic industry is important to the Commission's injury analysis and Commerce's initiation determination. With the exception of con forming changes in terminology and . . . , section 222(a) of the bill does not change the basic definition of domestic industry in section 771(4)(A).
SAA at 857 (emphasis added). Accordingly, we do not accept AHUG's conclusion that the definition of the term "industry" defined in section 771(4), and its legislative history, is not relevant to the Department's determina tions on industry support.
Next, AHUG contends that the Department's application of the tolling regulation as limited to the context of defining the "producer or exporter" for EP or CEP is contradicted by the plain language of the statute and the Department's regulation on tolling. AHUG contends that "the tolling regulation, by its terms, applies to the identification of a 'manufacturer or producer.'" AHUG's Comments, at 6. AHUG argues that if the tolling regu lation were focused solely on identifying the party re sponsible for the export price, it would not have substi tuted the term "manufacturer or producer" for the stat ute's use of the term "producer or exporter." AHUG concludes that the only reasonable interpretation of this difference in terminology is that the tolling regulation applies to toll manufacturing generally. Because estab lished rules of statutory and regulatory construction require that regulations must be read to give effect to every word, AHUG asserts, the Department's interpre tation of its tolling regulation is impermissible because it would replace the term "manufacturer" with the term "exporter." Id.
We disagree. First, by its own terms, the regulation states that the provision applies for purposes of estab lishing EP, CEP and NV, as discussed above. Thus, the plain language of the regulation supports the Depart ment's interpretation that it is not applicable for pur poses of industry support. Second, as discussed above, the application of the regulation for purposes of deter mining industry support would be contrary to the intent of Congress established in the legislative history.
AHUG next contends that the Department's practice does not require manufacturing operations for purposes of determining industry support. Id. at 7. AHUG ar gues that the Department incorrectly relies upon Indus trial Belts and Components and Parts Thereof, Whether Cured or Uncured, From Japan; Termination of Cir cumvention Inquiry of Antidumping Duty Order, 59 FR 23693, 23694 (May 6, 1994) (Industrial Belts From Japan). According to AHUG, the salient issue in that case was not whether the company, Brecoflex, had man ufacturing facilities, which it did, but rather whether the activities performed in the United States altered the essential nature of the imported merchandise such that it could be considered domestic like product. Based upon that inquiry, AHUG argues, that case has no bear ing whatsoever on whether or not a tollee is required to have manufacturing operations to be counted as part of the domestic industry in an industry support analysis. AHUG's Comments[.] at 7-8.
We disagree. The Department has stated that to be a domestic producer, an entity, at a minimum, must en gage in some important or substantial manufacturing operation. While it was established in Industrial Belts From Japan that Brecoflex engaged in some processing operations, i.e., finishing and packaging, the Depart ment found that the operations were not sufficient or adequate for the company to be considered a domestic producer. Thus, the test applied in that case was not limited to whether Brecoflex had manufacturing facili ties. To the contrary, the test allowed the agency to determine the nature and extent of Brecoflex's opera tions in determining whether the entity should qualify as a domestic producer. Thus, AHUG is correct in that having some manufacturing or finishing operation alone may not be sufficient to establish the entity as a pro ducer of the domestic like product. This is a minimum requirement. In our view, Industrial Belts From Japan stands for the principle that, at a minimum, an entity must establish that it performs an important or substan tial manufacturing operation to be considered a pro ducer of the domestic like product. Accordingly, the de cision in Industrial Belts From Japan is consistent with the decision in the instant case to consider the nature and extent of the manufacturing operations in determin ing whether the entity qualifies as a producer of the domestic like product.
Next, AHUG cites two cases, Ferrovanadium From China and South Africa25 and Live Cattle From Canada,26 to support its proposition that the Department's recent cases indicate that an entity need not have like- product manufacturing operations to be considered part of the domestic industry, and that the Department need not align its domestic industry determination with that of the ITC. Id. at 8-9. Specifically, AHUG contends that in Ferrovanadium three of the five petitioners were tollees with no like-product manufacturing of their own. In Live Cattle, AHUG contends, the Department in cluded wholesalers of the domestic like product within the industry for purposes of industry support.
We disagree with AHUG's points. With respect to Live Cattle, the case involved wholesalers of the domes tic like product who qualified as interested parties, re spectively, under subsection 771(9)(C), and associations thereof under subsection 771(9)(E) of the Act. Live Cat tle Industry Support Memorandum, at 17. In the case of LEU, no party claims, nor does the evidence on re cord support a conclusion, that the U.S. utility compa nies are wholesalers of LEU. The Department's 6-factor test is to determine whether a company qualifies as a domestic producer, not a wholesaler, of the domestic like product.
With respect to tollees, in Ferrovanadium, a case initiated after the initiations of the LEU investigations, the Department made no affirmative finding that tollees are to be considered producers of the domestic like product. The notice of initiation indicates that the De partment "received no opposition to the petitions." Id. at 66399. The Department found that two companies in that case, "BMC and Shieldalloy together account for 100 percent of U.S. product of ferrovanadium." There fore, the Department had no need to address the status of tollees in that case. There is no discussion of the toll ing regulation and its application; and no industry sup port memorandum was prepared given the above facts as to BMC and Shieldalloy. The issue of which compa nies qualify as domestic producers and upon what basis was not an issue for purposes of initiation and was not addressed in a meaningful way in the initiation notice. Consequently, we believe that the status of the other companies in that case was not sufficiently highlighted and therefore the case should not be considered to rep resent a change in practice for the agency.
Instead, the Department's practice in this area is more clearly reflected in the recent case of Certain Color Television Receivers from Malaysia and the Peo ple's Republic of China.27 In that case, the Department examined the operations of a toller to determine whether the entity was a producer of the domestic like product for purposes of industry support. The petition ing company submitted information on the 6-factors. The Department concluded that the company was a do mestic producer because, inter alia, it added significant value in its CTV production and had substantial capital investment in its CTV production facility. See CTV In dustry Support Memorandum, at 5. That decision went on to state that the Department's tolling regulation was not applicable for purposes of industry support determi nations, based upon the language and purpose of the regulation to establish U.S. price and normal value. Id. In sum, the Department continues to maintain in prac tice the position that to be a domestic producer, a com pany must, at a minimum, engage in some important or substantial manufacturing operation, and that the 6-fac tor test continues to be an important part of the agency's practice with respect to determining whether an entity is a producer for purposes of industry support.
In its next point, AHUG contends that the Depart ment's alleged requirement that producers have manu facturing facilities in order to prevent parties benefit ting from unfairly traded imports from blocking initia tion of investigation is unfounded. According to AHUG, Congress expressly provided a mechanism for discount ing the opinion of members of the domestic industry when they are related to foreign producers or are im porters of subject merchandise. AHUG argues that be cause Congress has already determined the precise cir cumstances under which a party's opinion may be disre garded on the basis that it benefits from dumped or un fairly subsidized imports, the Department cannot go beyond the existing statutory scheme to disqualify par ties that are neither related to foreign manufacturers nor importers.
We disagree with AHUG on this point. First, the issue of whether an entity qualifies as a member of the domestic industry revolves around whether the entity has a stake in the results of an investigation, as dis cussed above, i.e., whether the entity can be at risk from unfairly traded imports. AHUG's arguments as to other provisions of the statute, such as those governing the treatment of domestic producers who are related to for eign producers, and who are importers of subject mer chandise, do not shed light on how the Department is to interpret the term "producer" for purposes of industry support in the first instance. We note, moreover, that AHUG has not attempted to explain how the utility com panies, under any scenario, would be at risk from un fairly traded imports of LEU. Apart from legal argu ments concerning the interpretation of the language of the statute and tolling regulation, and the relevant legis lative histories, AHUG makes no argument as to why Congress would have intended to extend the relief avail able under the AD and CVD laws to cover entities which are not at risk from unfairly traded imports.
As a final matter, AHUG argues that it remains un clear whether USEC has a cognizable stake in the do mestic industry. AHUG Comments, at 10. AHUG states that it is a matter of public record that USEC imported 5.5 million SWUs from Russia in 2000. AHUG points out that USEC exports the great majority, if not all, of the LEU produced at the U.S. facilities, while it delivers Russian origin material to U.S. utility compa nies. AHUG complains that the Department has not dealt with the legal implications of allowing a company to use the trade remedy law to protect sales in the United States of its imports from a third country, rather than domestic production." Id.
We note first that AHUG does not set out a legal basis for the Department to undertake the analysis it suggests, nor any statutory provisions that would sup port such an examination. We note, for example, that the statute contains no public interest provision. In stead, the statute states that an antidumping proceeding "shall be initiated whenever an interested party" alleges the necessary elements under section 731 of the Act. The statute does not require, nor provide a basis for, the Department to determine whether to initiate an investi gation based upon how a producer disposes of its domes tic production, whether it sells it abroad or in the United States. The relevant issues for determining industry support in the 20-day period following the filing of a pe tition involves, inter alia, resolution of whether the en tity is a producer of the domestic like product, and whether there is sufficient industry support for the peti tion for purposes of initiation. To the extent a domestic industry is materially injured by unfairly traded imports from the countries identified in the petitions, the law provides a remedy to the domestic industry, regardless of which markets domestic producers choose to serve by virtue of their sales of the domestic product.
Second, we note that if the facts are as AHUG sug gests, i.e., that USEC sells its domestic production abroad, but sells its Russian SWUs to U.S. utility com panies, then the potential incongruity of applying the tolling regulation in the industry support context, as discussed in the body of this remand determination, would be present in this case. As noted above, if U.S. utilities, by virtue of the tolling regulation, could qualify as domestic producers of LEU based upon how the con tractual arrangements are structured, then any entity that obtains LEU from a U.S. enricher, under similar contractual arrangements, could also qualify as a mem ber of the U.S. domestic industry. We noted, therefore, that to the extent Japanese, French or British utility companies, for example, obtain LEU from USEC under similar arrangements as U.S. utilities, then these for eign utility companies would also qualify, by virtue of the tolling regulation, as members of the U.S. domestic industry. Under the facts presented by AHUG, how ever, USEC sells its domestic production abroad, but sells its Russian LEU, downblended from HEU, to the U.S. utilities. Thus, apart from the incongruity of apply ing the tolling regulation in this context, such an appli cation in this case would not establish the U.S. utilities as domestic producers of LEU. We believe, therefore, that the facts in this case further demonstrate the po tential incongruity of applying the tolling regulation in the industry support context, consistent with the rea sons stated above.
B. THE AGENCY'S TOLLING REGULATION
a. The Department's Analysis Under the "Tolling Regulation"
In making its final affirmative determination, the Department examined and addressed, inter alia, the distinct issues of whether the AD and CVD law applies to LEU entering the United States pursuant to enrich ment contracts; and separately, whether foreign enrich ment companies are the appropriate respondents in the AD investigations, based upon the Department's tolling regulation and application to the facts in this case.
(i) Scope of the AD and CVD Law
Separate from our analysis and conclusions in the final determinations with respect to the Department's tolling regulation, we determined that "all LEU from the investigated countries entering the United States for consumption is subject to the AD and CVD laws." Final French AD Determination, 66 FR at 65878. In making that determination, we stated that "the AD and CVD laws were enacted to address trade in goods." We fur ther stated that "the issue of whether merchandise en tering 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." Id. We also found that:
In these investigations, no party disputes that the LEU entering the United States constitutes mer chandise. As the product yield of a manufacturing operation, the Department continues to find that LEU is a tangible product. Second, it is well estab lished, and no party disputes, that the enrichment process is a major manufacturing operation for the production of LEU, and that enrichment is a re quired operation in order to produce LEU. Thus, we find that the enrichment process constitutes substan tial 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.
66 FR at 65879.
We also stated that "the LEU at issue {i.e., under SWU or enrichment transactions} enters 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." Id.
With respect to arguments raised that enrichment is a service beyond the scope of the AD and CVD law, we noted, inter alia, that "reference to the term 'services' mischaracterizes the nature of 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." Id.
Some parties argued that the AD and CVD laws are 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. con sumers. These parties concluded that the law is not ap plicable because no entity sells the subject merchandise. In that context, we stated that "[i]t does not matter whether the producer/exporter sold subject merchan dise 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." Id.
The Department also addressed respondents' and AHUG's arguments that the tolling regulation provides a basis for obtaining an exemption under the law for the LEU at issue, stating that "we do not interpret section 351.401(h) of the Department's regulations to be rele vant or applicable in determining whether merchandise entering the United States is subject to the AD and/or CVD laws." Id. 66 FR at 65880. The Department stated:
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 the purpose of determining whether the AD and/or CVD laws are applicable. Our interpretation that the tolling regulation is intended solely for purposs 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 mer chandise from AD proceedings, nor have we ever applied the provision in CVD proceedings. More over, our application of the tolling regulation in SRAMs from Taiwan does not support AHUG's or respondent's claim for exemption from the AD and CVD laws. In that case we applied the tolling regu lation, seeking to determine which party made the relevant sale of subject merchandise.
Id. 66 FR at 65880 (citations omitted).
(ii) Determination of the Producers of Subject Merchandise
The Department determined that the foreign enrichers are the producers of the subject merchandise for purposes of establishing U.S. price and normal value for several reasons. First, the Department found that "the enrichment process is such a significant operation that it establishes the fundamental character of the LEU." Id. 66 FR at 65884. "Second, the enrichers con trol the production process to such an extent that they cannot be considered tollers in the traditional sense un der the regulation. Third, utility companies do not main tain production facilities for the purpose of manufactur ing subject merchandise." Id. Finally, the Department reasoned that "the overall arrangement, even under the SWU contracts, is an arrangement for the purchase and sale of LEU." Id.
b. The Court's Remand on the Department's Tolling Regulation
The Court has now remanded this issue to the De partment for further reconsideration of its decision not to apply the tolling regulation in this case. USEC, Slip Op. 03-34, (Mar. 25, 2003). In reviewing the case, the Court stated that the circumstances in this case largely resemble the tolling arrangements seen in earlier deter minations by the Department. The Court noted that, like the producer, Akai, in Certain Forged Stainless Steel Flanges from India, the utilities in this case direct and control the process of producing the merchandise, i.e., nuclear fuel. Using contractors at each step, the Court noted, they coordinate the production of uranium, LEU, and fuel rods. As in Polyvinyl Alcohol from Tai wan, where the contracting company provided the mate rial to be processed, the utilities in this case provide the feed uranium to the enrichers and pay separately for the work performed, measured in SWUs. The utilities, by supplying the feed uranium, accept the risk of fluctua tions in the price of UF6 and can make the decision as to how much UF6 versus how many SWUs to purchase in a given transaction. USEC, at 22-23.
The Court examined the contracts, finding that SWU contracts require the utility customer to provide the quantity of feed necessary to produce the desired quan tity and assays of LEU. The Court also found that the utility customer retains title to the feed uranium until it is enriched. Upon enrichment and delivery of the LEU, the title to the feed is considered extinguished and the customer gains title to the LEU. Id. at 23. The Court also found it significant that the contracts for LEU state that once the separative work is performed and the LEU is delivered, the feed material shall be deemed to have been enriched; whereupon the customer takes title to the LEU associated with such feed material and title to the feed material will be extinguished. Id. The Court found that "[t]hese contractual provisions acknowledge the fungible nature of feed uranium while establishing a legal fiction that the enrichment process will be per formed on the uranium provided by the customer." Id. at 24. Based upon its examination of the contracts, the Court found that the SWU contracts indicate that the provision of feed uranium is not treated by the parties as a payment in kind, but the provision of specific material, owned by the customer, to be enriched. The Court con cluded that "the contractual provisions, without more, do not support Commerce's interpretation that the pro vision of feed uranium is substantively a payment in kind." Id.
Moreover, the Court found that the designation by the utilities of particular assays for the LEU and for uranium tails is analogous to DuPont's provision of spec ifications to Chang Chun in Polyvinyl Alcohol from Tai wan, and to Akai's control of the specifications in Cer tain Forged Stainless Steel Flanges from India, where the Department found these companies to be producers of the subject merchandise. In the case of LEU, the Court found that the designation of quantities and as says is based on (1) the design of the core reactor, which determines the level of U235 needed by that reactor, and (2) the utility's needs at a particular time, depend ing on its operating cycle and the amount of fuel that has been spent. Id. at 24-25. The Court stated that the utili ties provide these specifications to the enricher, which then produces LEU in the required quantities and as says. Id. at 25.
Citing SRAMs from Taiwan and Certain Forged Stainless Steel Flanges from India, the Court stated that "Commerce has previously indicated that control over the specifications of the final product was sufficient control to be considered a producer. Companies that did not engage in actual manufacturing processes have pre viously been held to be producers of subject merchan dise." Id. The Court concluded that "if the text of 19 C.F.R. § 351.401(h) and Commerce's prior decision were applied to the evidence on this record, the SWU con tracts would be treated as contracts for the performance of services, and the enrichers would be treated as tollers and the utilities as the producers of LEU." Id. at 26-27.
The Court then examined the Department's grounds for treating the enrichers as producers. Finding unper suasive the Department's basis that the enricher's oper ations establish the fundamental character of LEU, the Court reasoned that in prior tolling cases, it has been the toller that created the "essential character" of the finished good by transforming the raw materials or in puts into subject merchandise. In the case of LEU, the Court noted, the enricher transforms feed uranium into LEU. "Yet, as in earlier cases, while the enricher's oper ations create the 'essential character' of LEU, the enricher does not acquire ownership over either the feed or the final product, and neither its operations nor its pricing account for the full value of the finished LEU." Id. at 27-28. Second, the Court found unpersuasive the Department's conclusion that enrichers control the pro duction of LEU under SWU contracts because, like Akai in Certain Forged Stainless Steel Flanges from India, the utilities control the specifications of the final prod uct, even though, as in past determinations by the De partment, "the actual processes of creating the product are left within the control of the tollers." Id. at 28-29.
Third, the Court found unpersuasive the Depart ment's reasoning that the utility companies have no pro duction facilities for the purpose of manufacturing sub ject merchandise. Citing SRAMs from Taiwan, Certain Pasta from Italy, and Certain Forged Stainless Steel Flanges from India, once again, the Court noted that in prior determinations the Department found entities to be producers who did not maintain manufacturing facili ties, but that this did not prohibit the application of the tolling regulation. Id. at 29. Finally, the Court found unpersuasive the Department's basis that "the overall arrangement, even under the SWU contracts, is an ar rangement for the purchase and sale of LEU." The Court noted that under any tolling arrangement, the "overall arrangement" is one for acquisition of a good, usually manufactured by the toller. Again, the Court reasoned that the agency previously distinguished toll- produced goods on the grounds that the toller does not acquire ownership, and the toller's price for its work does not represent the full value of the good. Id. at 30.
The Court, therefore, concluded that it could not "reconcile the Department's prior distinctions between tolling services and sale of goods with the agency's statements in this case that EUP and SWU contracts are 'functionally equivalent' and '[i]t does not matter whether the producer/exporter sold subject merchan dise as subject merchandise, or whether the producer/ exporter sold some input or manufacturing process that produced the subject merchandise, as long as the result of the producer/exporter's activities is subject merchan dise entering the commerce of the United States.'" Id. at 30-31. The Court stated that "Commerce's claim that the sole difference between enrichment transactions and sales of LEU under EUP contracts is the way such transactions are structured fails to take into account a critical difference between the two transactions: what is purchased." Id. at 31.
The Court found that the SWU transactions do not contemplate the sale of the completed product, and do not include the significant cost of the natural uranium, which is approximately 35 percent of enriched uranium's total value. Id. at 32. The Court pointed out that the Department previously recognized "where the price paid for the subject merchandise does not include the entire value of such merchandise, but instead only that portion of the value added by the services performed, there is no cognizable sale under the antidumping law." Id. at 32- 33.
In remanding the case, the Court acknowledged that "[w]hile Commerce correctly states that 19 C.F.R. § 351.401(h) does not 'exempt merchandise from (anti dumping) proceedings,' the regulation is applicable in determining who is the producer in order to determine export price or constructed export price. Thus, a deter mination that the enricher provides a tolling service would mean that the price charged by the enricher to the utility for the enrichment cannot form the basis of the export price for the purpose of determining dumping margins." Id. at 33 (citations omitted). The Court noted that the Department is authorized to depart from itsprior practice as long as the agency articulates a "reasoned analysis" which demonstrates that the depar ture is supported by substantial evidence and in accor dance with law. The Court found that "Commerce's de cision not to apply the tolling regulation to a case that appears similar to earlier tolling cases . . . represents a departure from the practice authorized by a regulation 'having the force and effect of law.' As such, Com merce's decision requires a more persuasive explanation than provided in the agency's determinations." Id. at 34 (citations omitted).
Because the Department's reasons for distinguishing the instant case, and consequently for declining to apply the tolling regulation, were found to be unpersuasive, the Court concluded that the Department's decision "to treat these contracts as contracts for sales of a good is neither supported by substantial evidence nor in accor dance with law." Id. at 34-35. Accordingly, the Court remanded this case for the Department to reconsider its decision not to apply the tolling regulation. Id. at 34-35, and 40.
a. Analysis and Discussion of the Department's Tolling Regulation
In accordance with the Court's direction, the Depart ment has reconsidered the application of its tolling regu lation in these investigations. Pursuant to that reconsid eration, the Department has determined that the enrich ment companies are the producers of LEU, and thus are the appropriate respondents for purposes of establishing the U.S. price of the subject merchandise and its normal value. An examination of the facts of this and prior de terminations on tolling arrangements is discussed below.
(i) The Tolling Regulation
The Department's regulation addressing the "calcu lation of export price, constructed export price, fair value, and normal value" states that "[i]n general terms, an antidumping analysis involves a comparison of export or constructed export price in the United States with the normal value in the foreign market. This section estab lishes certain general rules that apply to the calculation of export price, constructed export price, and normal value." 19 C.F.R. § 351.401(a). One of the general rules promulgated by the Department speaks to the treat ment of subcontractor or tolling situations. That provi sion states that the Department "will not consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire own ership, and does not control the relevant sale, of the sub ject merchandise or foreign like product." 19 CFR § 351.401(h).
As a general rule, the language of the tolling subsec tion was intended to "establish[] certain conditions un der which the Department will not find a toller or sub contractor is the producer of the subject merchandise." Final Results of Antidumping Duty Administrative Review; Polyvinyl Alcohol From Taiwan, 63 FR 32810, 32813 (June 16, 1998) (Polyvinyl Alcohol from Taiwan). In administering the regulation, the Department has consistently stated that "[t]he purpose of the tolling reg ulation is to identify the seller of the subject merchan dise for purposes of establishing export price, con structed export price, and normal value." LEU from France, 66 FR at 65878; Taiwan Semiconductor Manu facturing Co. Ltd. v. United States, Remand Determi nation, (May 2, 2000) at 4 (SRAMs from Taiwan).28 In practice, 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, 63 FR at 32813. More specifically, the Department has recognized that it is "not restricted to the four corners of the contract" and will "look at the totality of the circumstances presented" in order to de termine the appropriate respondent in a given case. Id.
The Court has cited several administrative determi nations in which the facts appear to be similar to the facts of the instant case.29 The Department has closely examined the facts and determinations made in those cases, and the facts in the instant case. Based upon our analysis and the express purpose of the tolling regula tion, we have concluded that the tolling regulation can not be applied to the facts and circumstances of this case without defeating the purpose of the regulation and the statutory provisions that the regulation is designed to implement, as discussed below.
A fundamental requirement upon which the tolling regulation is premised is that merchandise produced through a tolling operation is sold to a party in the United States. As discussed above, the tolling regula tion focuses upon the sale of subject merchandise. It states, in part, that the Department will not consider the toller to be the manufacturer or producer where the toller "does not control the relevant sale" of the subject merchandise or foreign like product. In promulgating the tolling regulation, the Department did not contem plate the situation in which the tollee makes no sales of subject merchandise. In the preamble to its proposed regulation, the Department stated "where a party own ing the components of subject merchandise has a sub contractor manufacture or assemble that merchandise for a fee, the Department will consider the owner to be the manufacturer, because that party has control over how the merchandise is produced and the manner in which it is ultimately sold." Antidumping Duties; Countervailing Duties; Proposed Rule, 61 FR 7307, 7330 (Feb. 27, 1996) (emphasis added) (Proposed Rule). The Department illustrated how it anticipated the regu lation would work, stating as follows:
For example, where Firm A sends raw materials to a subcontractor for finishing before Firm A sells the finished goods to the United States, the Department will base export price or constructed export price on the price charged by Firm A (or its U.S. affiliate) for the finished goods. Similarly, the Department will base normal value on Firm A's sales of the finished goods in its home market . . .
Proposed Rule, 61 FR at 7330.
In promulgating the tolling regulation, the Depart ment only anticipated the situation in which both the toller and the tollee would make sales that could be con strued as sales of subject merchandise. In the above illustration, the Department anticipated that Firm A, the tollee, would be selected as the respondent because the price Firm A charges is for the finished goods (i.e., the subject merchandise). In its practice under the reg ulation, the Department has consistently faced a choice of respondents, based upon its analysis of the sales made by two entities-the toller on the one hand, and the tollee on the other, for all prior cases addressing tolling arrangements, including those referenced by the Court. In each of these cases, the tollee made sales of subject merchandise.
In SRAMs from Taiwan, for example, the Depart ment was faced with a choice between sales made by TSMC, a foundry and a seller of wafer processing for a fee; and sales made by the U.S. design house, a seller of SRAMs to unaffiliated customers in the United States. SRAMs Remand Determination, at 5. In making its determination, the Department analyzed not only the foundry's sales of wafer processing, but also the sales made by the tollee, the U.S. design house, stating "we found that it was appropriate to treat the design house as the manufacturer, rather than TSMC in accordance with 19 CFR 351.401(h), because we concluded that the relevant sale was the sale between the design house and its customers." SRAMs Remand Determination, at 3 (citing SRAMs Final Determination), and 5.49 30 See also Flanges from India, 58 FR at 68856 (where Akai, the respondent selected by the Department, sold the flanges in question in the United States); Pasta from Italy, 63 FR at 53642 (where the respondent, Corex, was "solely responsible for the marketing and sales of the product"); Final Determination of Sales at Less Than Fair Value: Chrome-Plated Lug Nuts From Taiwan, 56 FR 36130, 36131 (July 31, 1991) (Lug Nuts From Taiwan) (where the Department found the respondent, Gourmet, to be the seller of the subject merchandise); Polyvinyl Alco hol from Taiwan, 63 FR 32810, 32811-32813 (June 16, 1998) (where producers, Chang Chun and DuPont, both sold the subject merchandise); Notice of Final Determi nation of Sales at Less Than Fair Value: Collated Roof ing Nails From Taiwan, 62 FR 51427, 51435 (Oct. 1, 1997) (Roofing Nails From Taiwan) (where all produc tion of subject merchandise is the property of, and sold by, the tollee). None of the prior cases provides guid ance to the Department on its selection of the appropri ate respondent where the tollee does not sell the subject merchandise. As noted above, we have recognized that "the regulation does not purport to address all aspects of an analysis of tolling arrangements." Polyvinyl Alco hol from Taiwan, 63 FR at 32813. In some cases, we must make a determination based upon "the totality of the circumstances presented" in order to determine the appropriate respondent in a given case. Id.
In the case of LEU, all parties agree that the utility companies do not sell LEU. Final French AD Determi nation, 66 FR at 65879. As discussed above, the utility companies are in the business of producing electricity for sale to consumers in the United States. To the ex tent that "the purpose of the tolling regulation is to identify the seller of the subject merchandise for pur poses of establishing export price, constructed export price, and normal value," identifying the utility compa nies as the respondents would frustrate the purpose of the regulation to establish U.S. price and normal value for purposes of calculating dumping margins.
In light of the facts of this case, we must examine the totality of the circumstances in order to select the ap propriate respondents in this case, as we did with re spect to Perry in Polyvinyl Alcohol from Taiwan. Im portantly, it was previously established in the case of LEU that enrichment is a required operation for the production of LEU; and that the enrichment process is a major manufacturing operation. Final French AD Determination, 66 FR at 65879. The Department found that enrichment accounts for an estimated 60 percent of the value of the LEU entering the United States. Id. at 65881. Thus, the Department concluded that "the en richment processing adds substantial value to the natu ral 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." Id.
Further, the LEU at issue enters into the commerce of the United States. Id. The merchandise enters the customs territory of United States through U.S. Cus toms ports of entry. Further, the merchandise is intro duced into the commerce of the country for purposes of consumption in the United States. In every instance, the utility companies obtain LEU, a separate and dis tinct product of the respective country subject to inves tigation, under either an EUP transaction in which the full value of the LEU is contained in the contract, or through separate transactions for the purchase of the natural uranium feed component and the enrichment component. Given these facts, the Department has rec ognized that in every instance in which the utility cus tomer obtains LEU for use in the generation of electric ity, the merchandise is entering the commerce of the United States.31
The Department has recognized that once the mer chandise enters the commerce of the United States, the Department must then determine the appropriate basis for establishing the price of the subject merchandise and its normal value, in order to calculate whether, and if so to what extent, dumping has occurred. As discussed above, the regulation does not contemplate the circum stances of this case. Moreover, the statutory provisions governing the establishment of U.S. price are silent as to how the Department is to calculate the price of the subject merchandise in such circumstances.32
In our view, the facts in this case warrant a determi nation based upon the totality of the circumstances, as it did with respect to Perry in Polyvinyl Alcohol from Taiwan, in order to select the appropriate respondent consistent with the limited purpose of establishing U.S. price and normal value. Based upon the totality of the circumstances in this case, we find that the enrichers are the producers of the subject merchandise because: (1) the enrichers make the only relevant sales that can be used for purposes of establishing U.S. price and nor mal value; (2) the enrichers are the only companies en gaged in the production of LEU, whereas the utility companies have no LEU production or manufacturing operations; (3) the enrichers control the production of LEU; and (4) utility companies are industrial users and consumers of LEU. Apart from the determination of the producers, we also find that the enrichers are the ex porters of the subject merchandise, and therefore, sepa rately qualify as the "exporters or producers" of the subject merchandise under the circumstances of this case. Each of these points, and its relevance, is dis cussed below.
(ii) The Relevant Sales
Prior to changing its practice with respect to subcon tracting or tolling, as codified in the tolling regulation, the Department calculated dumping margins in tolling situations based upon the sale of the processing, where such processing involved substantial transformation and conferred country of origin on that product. In Color Television Receivers, Except for Video Monitors, from Taiwan; Final Results, 55 FR 47093, 47100 (Nov. 9, 1990), for example, where a Taiwan company assembled third-country parts supplied by a Hong Kong company, the Department treated the Taiwan company, the toller, as the producer and exporter, and based U.S. price upon the tolling fee charged by the Taiwan company to the Hong Kong company for the assembly. In Final Deter mination of Sales at Less Than Fair Value: Certain Headwear from the People's Republic of China, 54 FR 11983, 11988, (Mar. 23, 1989), the respondent, a Chinese company, toll-processed material supplied by a Hong Kong company into subject merchandise, and the De partment based U.S. price on the fee paid for process ing. Similarly, in Certain Small Diameter Welded Car bon Steel Pipes and Tubes from the Philippines; Final Determination of Sales at Less Than Fair Value, 51 FR 33099, 33100 (Sep. 18, 1986), a U.S. importer purchased material inputs in Thailand and contracted with a toller in the Philippines to manufacture the inputs into pipe and tube. There, the Department treated the Philippine company as the respondent and calculated the margin for tolled sales based upon the price of the tolling charged by the Philippine company to the U.S. importer. In all of these cases, the producer, and thus the one se lected by the Department as the respondent, was the entity actually engaged in the manufacture or produc tion of the subject merchandise.33
The tolling regulation was promulgated to change the Department's practice in this area in order to calcu late dumping margins based upon the full value of the sales of subject merchandise. Since the adoption of the tolling regulation, the Department has stated its prefer ence to select the respondent whose price covers the full cost of production (i.e., the full value of the subject mer chandise). See SRAMs Remand Determination, at 4-5. In that case, the Department also stated that "[b]ecause a subcontractor does not sell 'subject merchandise,' but rather only sells services and/or inputs, the export price (or constructed export price) cannot be derived from the subcontractor's 'sales.'" Id. at 4.
Our statements in that case, however, do not address the situation where the full value of the merchandise may not be reflected in any one transaction in the chain of commerce.34 We did not intend to imply in SRAMs from Taiwan that a transaction cannot be subject to the antidumping law unless the price charged includes 100 percent of the value of subject merchandise. Nor did we intend to imply that a toller can never be selected to be a respondent, even in the situation where the tollee does not sell the subject merchandise, but rather uses or con sumes such merchandise in its own production process. Accordingly, even if one were to focus solely upon the cash price paid by a utility customer in a SWU transac tion, the fact that the cash price paid to the enricher may reflect less than 100 percent of the value of the im ported LEU does not mean that the transaction is be yond the scope of the AD law. Transactions may occur whereby a party that might be considered a toller pro duces subject merchandise and transfers ownership to that merchandise to the purchaser (tollee) for consider ation. As discussed below, under relevant Federal Cir cuit precedent, such transactions involve sales of subject merchandise.
In sum, our statements made in SRAMs from Tai wan fail to reflect the Department's authority to calcu late margins where relevant sales may exist for pur poses of calculating the U.S. price and normal value of the merchandise. Where relevant sales exist that can form the basis of the price of subject merchandise and foreign like product, the Department must exercise its authority to examine those sales and determine whether, and if so, to what extent, dumping has occurred.
Polyvinyl Alcohol from Taiwan is also instructive in this context in that it demonstrates, to some extent, the flexibility the Department has in administering the pro visions governing the establishment of U.S. price and normal value. In that case, the Department rejected the U.S. importer's claims that it, Perry, was the producer of the subject merchandise, even though it had sold the subject merchandise and purchased the major input, vinyl acetate monomer (VAM), that was delivered to the processor, Chang Chun, to be manufactured into polyvi nyl alcohol (i.e., subject merchandise). Instead, the De partment found Chang Chun, the processor, to be the producer. While the Department found that "the mere rearrangement of Perry's contractual relationship with Chang Chun insufficient to establish Perry as a pro ducer of PVA," it is important to recognize that "Perry continued to purchase PVA from Chang Chun, albeit in two separate transactions instead of through a single purchase of the finished product." 63 FR at 32814. Ac cordingly, to calculate the price of the subject merchan dise sold to Perry in that case, the Department added together the values from these two transactions to de termine the U.S. price of the subject merchandise. Id. at 32815. Although the two relevant sales that were combined in that case-one sale of the processing and one sale of the material inputs-were made by affiliated companies, the case, nevertheless, is instructive in that it recognizes that the sale of subject merchandise may occur in two distinct transactions, as compared to the traditional stand-alone transaction for the sale of sub ject merchandise. Second, it recognizes that the statute, while not addressing this situation, accommodates the interpretation that such relevant sales may be combined to derive, and calculate, the price of the subject mer chandise.
In the case of LEU, as in the case of Polyvinyl Alco hol from Taiwan, the Department seeks to obtain the full value of the subject merchandise that has entered the commerce of the United States. Accordingly, in this case the Department calculated the price of the subject merchandise by combining the price of the enrichment component with the value of the natural uranium feed component to obtain the full value of the subject mer chandise sold to U.S. utility companies. Final French AD Determination, 66 FR at 65885. The Department stated that
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 de termined 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.
Id.
Based upon the way in which the utility companies obtain LEU in these circumstances, we find that the transactions between the enrichers and the utilities are relevant for purposes of establishing the price of the subject merchandise for a number of reasons. First, these sales represent the transfer of ownership in the complete LEU product for consideration. Based upon the contracts and other evidence of record, we find that the enrichers own, and hold title to, all the LEU they produce. The enrichers transfer ownership of, and title to, the LEU to the utilities upon delivery of the mer chandise for consideration. Second, because the com pleted product is entering the commerce of the United States through these transactions and because the pric ing behavior of the foreign enrichers is relevant to the issue of whether the LEU is being sold at less than fair value, we find that the enrichers' sales are relevant sales for purposes of establishing the U.S. price of the subject merchandise and its normal value under the facts and circumstances of this case. Each element is discussed below.
First, in this case, whether under EUP contracts or SWU contracts, the enrichers own, and hold title to, all the LEU they produce. In SWU contracts, the utility customers hold title to the natural uranium feedstock that they provide to the enrichers.35 The contracts state that the enrichers transfer title to the LEU to the utili ties upon production and delivery of the LEU.36 At the time of delivery, title to the LEU is transferred to the customer, and title to the feed material is extinguished.37 Based upon the terms of the contracts, the utility cus tomers retain title to the feed material until such time as the LEU product is delivered to the destination speci fied in the contract. As the Court has recognized, how ever, "[t]hese contractual provisions acknowledge the fungible nature of feed uranium while establishing a legal fiction that the enrichment process will be per formed on the uranium provided by the customer." Slip Op. 03-34, at 24. Accordingly, at the point in time in which the enricher produces the LEU but before deliv ery is performed, the customer only holds title to the natural uranium feedstock provided to the enricher un der the contract. The customer does not hold title to the LEU, nor does she hold title to the feed material con tained within the recently produced LEU because the LEU produced by the enricher cannot be identified as having been derived from the feedstock provided by any particular customer. The terms of the contracts at issue indicate that at this point in time, the customer only has title to the feed material. The enricher, by contrast, would have rights as to the LEU.
Moreover, the record indicates that LEU delivered to a utility customer by an enricher under an enrichment contract may be produced before any natural uranium supplied by that customer could have been part of the production process for that LEU, thereby making it impossible to conclude that the LEU produced and de livered by the enricher is in any way derived from the uranium supplied by the customer. Based upon the above, we find that between the time in which the LEU is produced and the time in which it is delivered as spec ified under the contract, the enricher holds title and holds ownership in the complete LEU product. Be cause, under the terms of the contracts, the utility cus tomers have no right of ownership with respect to the LEU that is produced, but not delivered, we find that the enrichers own the LEU, including the right to sell the LEU at issue to any buyer. Therefore, we find that the enrichers own all the LEU they produce.
Moreover, we find that enrichers make a relevant sale when they transfer ownership of the complete LEU to the utilities through the delivery of such merchandise for consideration. In NSK Ltd. v. United States, the Federal Circuit addressed the meaning of the term "sold" in the definition of exporter's sales price (now CEP). In that case, the Court held that the term "re quires both a transfer of ownership to an unrelated party and consideration." 115 F.3d 965, 973 (Fed. Cir. 1997) (NSK). See also AK Steel Corp. v. United States, 226 F.3d 1361, 1371 (Fed. Cir. 2000).
As discussed above, the contracts in this case provide that title to the LEU product is transferred to the cus tomers upon production and delivery of the LEU. At the time of delivery of the LEU product, the contracts provide that the utilities' title to the natural uranium feedstock is extinguished. Under the terms of the con tracts at issue, the enrichers transfer ownership of the LEU upon delivery of the LEU. Accordingly, we find that the enrichers transfer title to, and ownership in, the complete LEU upon delivery of the LEU as specified under the contracts. Thus, under the test in NSK, the sales at issue in this case represent the sale of subject merchandise in that they are transfers of title to, and ownership in, the subject merchandise for consideration.
We have also examined the transfer of title in SRAMs Remand Determination. In that case, we placed little weight on the fact that the foundry held temporary title to the finished SRAM wafers and trans ferred title to the design house. We stated that "while TSMC may have held temporary title to the SRAM wa fers in order to indemnify itself against the potential for loss, it did not, and could not, control the sale of these finished wafers because it never owned the intellectual property which is embodied within them." Id. at 5. In light of the decisions in NSK and AK Steel, we believe the Department was not precluded from selecting the foundry as the respondent in that case. Both entities, the foundry and the design house, held title to the fin ished product seriatim. In that case, however, the De partment was faced with a choice of respondents, and used those sales that contained the full value of the sub ject merchandise, as contemplated by the regulation. Because the design house also owned the finished wafer, including the intellectual property contained within it and subsequently sold the subject merchandise, the De partment selected the design house as the appropriate respondent.
There is, however, another important difference in these cases. In the case of LEU, the record shows that enrichers hold inventories of uranium from various sources, including uranium owned by the enricher itself, and produce LEU without relying solely upon the input from a particular customer.38 This contrasts with the situation of the SRAM foundry in which the foundry does not own the intellectual property pertaining to the wafer design and "has no right to sell those wafers to any party other than the design house . . ." SRAMs Remand Determination, at 3. Unlike the case in SRAMs in which the foundry was prohibited from sell ing the finished wafer, the enrichers in this case are not prohibited from selling the undelivered LEU to other customers. Given these facts, the foundry in SRAMs may hold temporary title to the finished wafer, but be cause it is not free to sell the finished product, it does not appear to hold ownership in that product. By con trast, in this case, the enrichers retain ownership in the undelivered LEU.
In examining the totality of the circumstances in this case, we find it relevant that the completed product, LEU, is entering the marketplace through the transac tions at issue. Utility customers cannot obtain LEU by purchasing enrichment alone. Rather, in every instance in which the utility customer enters into a SWU transac tion, it is obtaining LEU. Moreover, the transaction by which the utility obtains the LEU constitutes a "sale of merchandise" under relevant Federal Circuit court deci sions. As such, this is a relevant sale in that it is the transaction by which the merchandise enters the United States market.
Finally, under the circumstances of this case, we be lieve the transactions at issue are also relevant sales because the enrichment process is a significant portion of the value of the subject merchandise such that the pricing behavior of the foreign enrichers is relevant to the issue of whether the LEU is being sold at less than fair value. Based upon all of the above, we find that, under the facts and circumstances of this case, the sales at issue are relevant for purposes of determining the price of the subject merchandise and its normal value.39
(iii) The Role of Utility Companies in the Production of LEU
The Court found that the designation by the utilities of particular assays for the LEU and for uranium tails was analogous to DuPont's provision of specifications to Chang Chun in Polyvinyl Alcohol from Taiwan, and to Akai's control of the specifications in Certain Forged Stainless Steel Flanges from India where the Depart ment found these companies to be producers of subject merchandise. For LEU, the Court found that the desig nation of quantities and assays is based on (1) the design of the core reactor, which determines the level of U235 needed by that reactor, and (2) the utility's needs at a particular time, depending on its operating cycle and the amount of fuel that has been spent. Id. at 24-25. The Court stated that the utilities provide these specifica tions to the enricher, which then produces LEU in the required quantities and assays. Id. at 25. Citing SRAMs from Taiwan and Certain Forged Stainless Steel Flanges from India, the Court stated that "Com merce has previously indicated that control over the specifications of the final product was sufficient control to be considered a producer." Id. The Court noted that like the producer in Certain Forged Stainless Steel Flanges from India, the utilities control the specifica tions of the final product, even though, as in past deter minations by the Department, "the actual processes of creating the product are left within the control of the tollers." Id. at 28-29.
In re-examining the above cases, we find the facts and circumstances to be very different from the case of LEU. In each of the cases cited by the Court, the tollee sold the subject merchandise, as contemplated by the regulation. Second, in nearly all of these cases, and in particular where the Department was required to exam ine the totality of the circumstances to determine the producer, the tollee engaged in manufacturing or pro cessing operations. In no instance did the Department determine an entity was a producer based solely upon its purchase of an input and the designation of product specifications. If it were to do so, the Department would be unable to distinguish between purchasers, who do little more than provide specifications, and producers themselves.
The above cases need to be viewed in light of the rel evant facts and circumstances, taken as a whole. For example, in Polyvinyl Alcohol from Taiwan, Dupont not only provided product specifications to the processor, it produced the major input, VAM, and sold the subject merchandise to unaffiliated customers in the United States. In Certain Forged Stainless Steel Flanges from India the producer, Akai, not only purchased and re tained title to the raw materials, and determined the quantity, size and type of flanges to be produced, it also performed processing on most of the flanges, and, more over, it sold the subject merchandise to unaffiliated cus tomers in the United States. 58 FR at 68856. In SRAMs from Taiwan, the U.S. design house performed all of the research and development for the SRAM to be produced; it produced, or, at a minimum, arranged and paid for the production of, the design mask. SRAMs Remand Determination, at 3. In every instance the U.S. design house created the design that went into the SRAM wafer. The design did not equate to the provi sion of product specifications; rather, as the Department reasoned, "in an industry that is shaped by intellectual property considerations . . . the design is one of the primary determinants of the value of individual prod ucts." Id. at 5, (finding "no substantive difference" be tween the product design and development phase of pro duction, equating design to a physical input).40 Finally, in every instance, the U.S. design house sold the subject merchandise to unaffiliated customers in the United States. We find that in all of the cases, the respondent selected by the Department engaged in more than the purchase of the input and the provision of product speci fications.
With respect to whether the producer must engage in manufacturing or processing to be considered a pro ducer, the Court found unpersuasive the Department's reasoning that the utility companies have no production facilities for the purpose of manufacturing subject mer chandise. Citing SRAMs from Taiwan, Certain Pasta from Italy, and Certain Forged Stainless Steel Flanges from India, the Court noted that in prior determinations the Department found entities to be producers who did not maintain manufacturing facilities, but that this did not prohibit the application of the tolling regulation. Id. at 29.
Engaging in manufacturing operations is not a re quirement under the regulation. In Polyvinyl Alcohol from Taiwan, however, the Department noted that the tolling regulation "only addresses the circumstances in which a toller will be considered a producer of the sub ject merchandise. Therefore, the Department is not restricted to the factors set forth in that regulation when determining whether a party other than a toller is the producer of merchandise under consideration." 63 FR at 32814. The Department went on to recognize the importance of engaging in production activities, noting that "while examining the production activities of a party may not be decisive in every case, whether a party has engaged either directly or indirectly in some aspect of the production of subject merchandise is an important consideration." Id. Importantly, in Polyvinyl Alcohol from Taiwan, DuPont produced the major input, VAM, that was sent to Chang Chun for processing into polyvi nyl alcohol. Polyvinyl Alcohol from Taiwan, 63 FR at 32817. In that same case, the Department rejected Perry's claim that it was a producer, based in part on the conclusion that the new tolling arrangement "merely reordered the contractual relationship between the par ties, but had no significant effect on how they conducted business;" but also based upon the conclusion that "whether a party has engaged either directly or indi rectly in some aspect of the production of the subject merchandise is an important consideration." Id. at 32814. Unlike DuPont, Perry did not engage, directly or indirectly, in any manufacturing operations. If Perry had done so, the new tolling arrangement would not have been a mere "reordering of the contractual rela tionship" because there would have been a significant change in how the company was conducting business. Accordingly, in that case, whether Perry engaged in manufacturing or production operations was relevant to the determination of whether Perry had ceased to be a purchaser and reseller, and had become the producer of the subject merchandise, as contemplated by the tolling regulation.
Where an examination of the totality of the circum stances is warranted in order to determine the producer of the subject merchandise, the performance of manu facturing or processing operations may take on added importance, as it did in the case of Perry in Polyvinyl Alcohol from Taiwan. In examining the functions per formed by the tollee in SRAMs from Taiwan, for exam ple, the Department found that "the design house per forms all of the research and development for the SRAM that is to be produced. It produces, or arranges and pays for the production of, the design mask." SRAMs Remand Determination, at 3. The Department rea soned, inter alia, that "in an industry that is shaped by intellectual property considerations . . . the design is one of the primary determinants of the value of individ ual products." Id. at 5. Thus, the U.S. design house pro duces the intellectual property that is one of the main components of value in the SRAM.
In the case of LEU, the facts and circumstances, taken as a whole, are significantly different from the above cases where the tollee was selected as the pro ducer of the subject merchandise under the tolling regu lation. In LEU, the utility companies make no sales of subject merchandise; nor do they engage in any manu facturing or processing operations related to production of the subject merchandise. Rather, the facts in this case indicate that utility companies are industrial users of the subject merchandise. And, as the utility compa nies themselves contend, they consume the subject mer chandise. Final French AD Determination, 66 FR at 65879. As such, a finding that these companies are also producers of the subject merchandise would be at odds with the ordinary meaning of the term producer as one "who produces a commodity. Opp. to consumer." See The New Shorter Oxford English Dictionary, (1993 ed.), at 2367 (emphasis in original). To interpret the term "producer" in this context as encompassing industrial users and consumers of the subject merchandise would yield absurd results, and would be fundamentally in con flict with the legislative purpose of the statutory provi sions to establish the price of subject merchandise and its normal value.
Finally, with respect to the issue of control over the production of LEU, we find that the enrichment compa nies direct and control the manufacturing operations for the production of LEU sold pursuant to SWU contracts to the same extent they direct and control the produc tion of LEU sold pursuant to EUP contracts. As such, the provision of product specifications by the utility cus tomer does not, by itself, establish a basis for the De partment to find that utility companies are producers of LEU.
Unlike EUP contracts, an enrichment or SWU con tract allows the the customer to select the "transactional tails assay." By designating the transactional tails as say, the utility makes the decision of (1) the amount of natural feed uranium it must provide to the enricher in any given transaction; and (2) the amount of SWU to be paid for by the customer. In other words, the "trans actional tails assay," a term that is well-known in the industry, allows a customer to optimize the amount of money and the amount of uranium it must provide for the LEU it will receive, based upon the commercial con siderations of the customer. Their decision is based upon the commercial price of SWU and the commercial price of feed uranium.
By contrast, the transactional tails assay does not determine either the amount of natural uranium actually used by the enricher, nor the amount of energy actually expended by the enricher in producing the LEU under the contract. Rather, enrichers make business decisions as to whether they will overfeed or underfeed (i.e., use more feed uranium and less energy, or vice versa). These decisions are wholly within the decision-making of the enricher, and are based upon different commercial considerations than those faced by the utility customer.
In our view, the terms of the SWU contracts specify a transactional tails assay because this assay establishes the price for the quantity of LEU to be delivered. The contract terms, however, do not specify how the enricher is to produce the LEU. To the contrary, it is common practice in the industry for the enricher to determine how much feed to use and how much energy to expend in producing the required amount of LEU at the specified assay.41
To illustrate the point, enrichers do not run their enrichment facilities at different levels of feed input and energy input based upon whose feed is entering the pro duction process or based upon whose LEU is being pro duced under a particular contract. Only the enricher makes these types of production decisions. This is fur ther demonstrated by the fact that enrichers can, and frequently do, provide LEU under SWU contracts from LEU that has already been delivered to fabricators and that is listed as the enrichers' inventory on the books and records of the fabricator (i.e., book transfers). In deed, book transfers are prevalent in the industry be cause LEU is largely a fungible product.
In sum, while a utility customer may select a "transactional tails assay" from a range of assays of fered by the enricher and such a selection will determine the amount of SWUs the customer will have to pay for and the amount of uranium the customer must deliver to the enricher, it is the "operating tails assay" established by the enricher that determines the amount of energy and feed uranium that the enricher will actually use in its production of LEU. Accordingly, we find that enrichers have complete control over the enrichment process and control the amount of uranium and energy actually used in producing the LEU that is ultimately delivered to the customer. In addition, while the utili ties direct the timing of when they want LEU delivered, the utility does not control the timing of when the LEU that is ultimately delivered is produced by the enricher or delivered by the enricher to the fabricator.
Finally, apart from our determination that the enrichers are the producers of the subject merchandise, the facts in this case also indicate that the enrichers are the "exporters" of the subject merchandise, as refer enced under section 771(28) of the Act, and under sec tions 772(a) and (b) for purposes of export and con structed export price, and for normal value as well un der section 771(28). Accordingly, the foreign enrichers as exporters of the subject merchandise separately qual ify as respondents under the circumstances of this case.
Conclusion on Producer or Exporter For Purposes of U.S. Price and Normal Value
Because enrichers make relvant sales that can be used to establish the U.S. price of subject merchandise and its normal value, engage in and control all aspects of enrichment processing, a necessary and significant man ufacturing operation for the production of LEU, we find that, taken together, the facts and circumstances in this case indicates that the enrichers are the producers of LEU for purposes of establishing the U.S. price of the subject merchandise and its normal value. By contrast, because the utility companies do not sell LEU, but in stead are consumers and industrial users of such mer chandise, engage in no manufacturing operations of any kind related to the production of LEU, nor control the production of LEU, we find that, taken together, the facts and circumstances of this case indicate that utility companies are not the producers of LEU for purposes of establishing the U.S. price of subject merchandise and its normal value.
Comments From Urenco/Eurodif and AHUG
Urenco/Eurodif assert that unlike in the industry support section of the determination, where the Depart ment analyzes the statutory requirements in close de tail, in the antidumping duty portion of the Draft Re mand Determination, the Department runs from the statute as if it were the plague. They argue that the statute is the centerpiece of this case, as it is the driver of the Department's entire tolling practice, including its tolling regulation.
The respondents argue that, as the USEC Court de scribed in detail, the Department has explicitly stated in its prior tolling determinations that the statute requires the Department to focus on a sale that captures all of the essential components of the subject merchandise. Urenco/Eurodif point out that, as the Court made clear, the Department recognized in Polyvinyl Alcohol from Taiwan that "the statute requires that we base compari sons on the price of the subject merchandise sold in the U.S. to the price of the subject merchandise sold to the home or third country markets, not the price of some processing of the subject merchandise." Urenco/Eurodif further contend that the Court also noted that the De partment has uniformly taken the same position in every case since the adoption of its tolling regulation. In short, as the Court explained, "Commerce has recog nized that where the price paid for the subject merchan dise does not include the entire value of such merchan dise, but instead only that portion of the value added by the services performed, there is no cognizable sale un der the antidumping duty law."
Given the foregoing, Urenco/Eurodif state that the Department's assertion that the statute is "silent as to how the Department is to calculate the price of the sub ject merchandise," where the tollee does not sell the merchandise, and its claim that "once the merchandise enters the commerce of the United States, the Depart ment must then determine the appropriate basis for es tablishing the price of the subject merchandise and its normal value," are nothing short of disingenuous. Urenco/Eurodif contend that far from the principled decision-making sought by the Court, the Draft Remand Determination seeks stubbornly to justify the Depart ment's final determination by relying on a theory that has already been rejected by the Court as a justification for the treatment of SWU contracts as sales of subject merchandise and the recitation of differences that do not distinguish its tolling jurisprudence. In doing so, the respondents assert, the Department evades the essential point: how the Department should implement the princi ple behind its tolling practice, which is the statute's re quirement that a sale of subject merchandise must cap ture all "essential components" of the price. These par ties state that "[a]s the USEC Court recognized, be cause the sale of enrichment services does not capture the cost or price of the uranium input-a substantial portion of the value of the LEU-the Department can not treat the sale of enrichment services as a cognizable sale under the law."
Urenco/Eurodif further point out in particular that the Department's attempt to distinguish its prior tolling cases as irrelevant because they involved the choice of respondent, not the scope of the antidumping duty law, contradicts the USEC Court's directive to consider that the fundamental principles underlying the tolling regu lation cannot be confined to the choice of respondent.
Urenco/Eurodif point out that, "as the USEC Court has noted the requirement that there be a sale of subject merchandise applies not only to the choice of the pro ducer, but also to the determination of the basis of the export price used to calculate dumping margins." Urenco/Eurodif state that regardless of the context, the statutory requirements mandate that the relevant sale under the antidumping duty law be made by "the com pany that is in a position . . . to sell at less than fair value in or to the U.S. market," USEC Inc., Slip Op. 03- 34 at 15 n.9. Therefore, Urenco/Eurodif contend, the sale of the enricher's "subcontractor's services" cannot be equated to the sale of the subject merchandise, LEU.
Urenco/Eurodif also assert that the Department re invents history by claiming that in the prior cases it merely "stated its preference to select the respondent whose price covers the full cost of production (i.e., the full value of the subject merchandise)." Urenco/Eurodif contend that, as the Department explicitly recognized at the time, its determination was not an administrative "preference," but rather was required as a matter of law because, as noted above, the "statute requires that we base comparisons on the price of the subject merchan dise sold in the U.S. to the price of the subject merchan dise sold to the home or third country markets, not the price of some processing of the subject merchandise."
Moreover, Urenco/Eurodif contend that the Depart ment's remand determination in SRAMs from Taiwan, which the Department now tries to offer in support of its argument, in fact explains why a processor cannot prop erly be chosen as a respondent: "because a subcontrac tor does not sell 'subject merchandise,' but rather only sells services and/or inputs, the export (or constructed export) price cannot be derived from the subcontractor's sales. Urenco/Eurodif assert that there is no principled basis for the Department to claim here that it can "de rive" the price of the subject merchandise where it pre viously said that such an approach was forbidden.
AHUG has separately addressed these same issues in its comments. AHUG first contends that the Depart ment has not established that sales of enrichment ser vices constitute relevant sales. Specifically, AHUG ar gues that the Department has failed to provide legiti mate factual and legal bases for not applying the tolling regulation and its own precedents to the LEU investiga tions. AHUG divides its arguments into six main points.
First, AHUG asserts that the Department has no authority to disavow its tolling regulation when the Court has instructed it to reconsider the manner in which it applied the tolling regulation. Specifically, AHUG argues that the Department's assertion that in promulgating the tolling regulation, the Department only anticipated the situation in which the toller and tollee would make sales that could be construed as sales of subject merchandise and that the tolling regulation cannot be applied to the facts and circumstances of this case is not supported by the regulation nor its preamble. AHUG maintains that the regulation focuses on whether the toller owns the subject merchandise, controls its production, and makes the relevant sale and does not refer to the activities of the tollee. For these reasons, AHUG asserts that the Department lacks the authority to ignore the tolling regulation.
Moreover, AHUG argues that despite the Depart ment's claim that Polyvinyl Alcohol from Taiwan pro vides justification for its position that the tolling regula tion does not intend to address all facets of an analysis of tolling arrangements, the case does not provide a pre cedent for the Department's departure from the regula tion. Instead, argues AHUG, the Court has already held that Polyvinyl Alcohol from Taiwan is not an applicable precedent because in this case the utility purchases the feedstock from a party unrelated to the enricher, and, therefore, the purchase of the feedstock confers no eco nomic benefit on the enricher. AHUG maintains that the instant case involves a genuine tolling arrangement, unlike Polyvinyl Alcohol from Taiwan, and, therefore, Polyvinyl Alcohol from Taiwan is not applicable.
AHUG also argues that whether or not the enrichers engage in substantial manufacturing operations is irrel evant. AHUG states that it has explained why the De partment's argument that the enrichers control the en richment process is irrelevant under the tolling regula tions in its Letter from AHUG to Norman Y. Mineta Regarding Industry Support, December 19, 2000 at 8, AHUG Common Issues Brief at 17-18, and AHUG Open ing Brief at 23.
Next, AHUG refutes the Department's assertion that the enrichers own, and hold title to, all the LEU they produce. AHUG maintains that the Court dismissed the Department's prior attempt to use NSK v. United States, 115 F.3d 965, 973 (Fed. Cir. 1997) ("NSK") as a precedent, stating that it was inapplicable because "there is no finding that the enrichers' rights rise to the level of ownership . . ." . AHUG asserts that the Court's remand recognized that (1) utilities have title to the uranium feed provided to enrichers; (2) enrichers may not sell a utility's feed to a third party; and (3) title to the feed remains with the utilities until the moment it is replaced by title to the delivered LEU.
AHUG refutes the Department's ownership argu ments, stating that, in fact, there is no moment in which enrichers own the LEU enriched under enrichment ser vices contracts because the enrichers do not own the uranium feed they use to fulfill enrichment services con tracts. That feed, argues AHUG, is held by the enricher as a bailee for its utility customers. Under enrichment services contracts, the simultaneous transfer of the LEU and feed results in the transfer of the enrichment service (for which the enricher is paid) and the feed com ponent (which the customer owns), in the form of LEU from the enricher as owner of the service and bailee of the feed component. Therefore, argues AHUG, the enricher must deliver LEU deemed to have been pro duced with the specific quantity of feed delivered to it by the customer and does not have the right, as claimed by the Department, to sell the LEU to any buyer. In addi tion, AHUG contends that, as a legal matter, the Court has already found that the enrichment process will be performed on the uranium provided by the customer.
Regarding the fact that the input is fungible, AHUG maintains that the draft remand determination does not offer any further justification for departing from the De partment's past practice in the treatment of fungible goods.
AHUG's next point is that the Department can base its determinations only on relevant sales, which must comprise all elements of the value of subject merchan dise. AHUG rejects the Department's claim that be cause the SWU transaction represents the final step in the purchase of LEU, it is a relevant sale in that it is the transaction by which merchandise enters the United States market. AHUG also dismisses the Department' s rejection of its own precedent in SRAMs from Taiwan. AHUG states that given that SRAMs was affirmed by the Court on the basis that it fulfilled a statutory re quirement, AHUG disagrees that the Department has the discretion to treat as relevant sales transactions that do not reflect all elements of the LEU value.
Moreover, AHUG maintains that NSK cannot be used to justify departing from the requirements of the statute. In NSK, the Federal Circuit ruled that the De partment could not include free bearing samples pro vided by the respondent to U.S. customers in its calcula tions because there had been no sale of that subject mer chandise. Therefore, AHUG argues that since there is no sale of LEU in enrichment services contracts, NSK supports AHUG's position that those contracts cannot be included in the calculations of export price or con structed export price. AHUG adds that in the circum stances of the instant case, it does not matter that the enrichers are exporters, since under enrichment ser vices contracts there is not a sale of the subject mer chandise at a price reflecting all elements of its value.
In its final point, AHUG argues that the Court has already made clear that the Department failed to focus on the critical distinction between EUP and SWU trans actions, i.e., what is purchased. declares that the De partment nevertheless uses imaginary transactions to construct a price by assigning a specific monetary value to the natural uranium component and that it estimated the market value using the average price the enrichers charged their customers for natural uranium for LEU contracts. However, AHUG argues, in enrichment ser vices transactions, the enrichers do not charge utilities for the uranium feed and enrichers do not know the value of the feed. Therefore, the values used by the De partment are not equivalent to what was purchased, AHUG maintains, and ignore the distinction between enrichment (SWU) and LEU (EUP) transactions.
Department Position:
As an initial matter, we disagree with Urenco/ Eurodif and AHUG's interpretations of the Court's deci sion and remand as expressed in their comments. As we noted in the body of this determination, the Court recog nized that the circumstances in this case appear to re semble in large part the tolling arrangements in earlier determinations, and could not reconcile the Depart ment's prior distinctions involving tolling with the De partment's statements in this case. The Court specifi cally cited the Department's own statements made in the context of SRAMs from Taiwan and Polyvinyl Al cohol from Taiwain [sic], but further noted that it is well-established that the Department is authorized to depart from its prior practice as long as the agency ar ticulates a reasoned analysis which demonstrates that the departure is supported by substantial evidence and in accordance with law.
On the issue of the Department's conclusion that nei ther the statute nor the regulation on tolling contem plates the particular facts and circumstances in this case, we make several points. First, respondents and AHUG's argument concerning the statute and regula tion seem to rest on the premise that the Department can only make determinations where precedents and agency practice have been previously established. Re spondents have noted that the Department has cited no administrative cases to support its position. In cases of first impression, however, where past practice does not address the facts and circumstances of a case, the De partment is required to exercise its authority and inter pret the statute in the manner intended by Congress.
Moreover, respondents do not cite any language in the statutory provisions governing U.S. price and its normal value to indicate that the price of the subject merchandise cannot be derived from the subcontractor's sales in any instance. We specifically recognized above that past tolling cases do not address the facts and cir cumstances in the instant case. In their comments, re spondents rely on the Court's statements that have properly focused the Department back upon its own statements made in the context of SRAMs from Taiwan and Polyvinyl Alcohol from Taiwan. Respondents, how ever, make no statutory argument as to why the Depart ment's statements in those cases should be considered the only reasonable interpretation of the statute. In stead, respondents assert that the Department has rein vented history by stating a preference to select the re spondent whose price covers the full cost of production. Respondents insist it was not an administrative prefer ence, but rather was required as a matter of law be cause, again using the Department's own words, "the statute requires that we base comparisons on the price of the subject merchandise sold in the U.S. to the price of the subject merchandise sold to the home or third country markets, not the price of some processing of the subject merchandise." This is incorrect. In the original investigation in polyvinyl alcohol from Taiwan, as cited by the parties, for example, the Department's memoran dum reflects a choice between four viable options pre sented to the decision-maker.42 Not only does the mem orandum reflect the Department's view that it was faced with a choice of respondents, but we note that none of the options included an exemption from the AD law for merchandise entering the commerce of the United States. Id. Further, we note that if the Department were not faced with a choice of respondents, then it would have been required, as a matter of law, to treat Perry as a producer in the later administrative review in Polyvinyl Alcohol From Taiwan, based upon the con tractual relationships, as discussed above.
More important, however, neither the tolling regula tion nor the statute contemplate the circumstances of this case. In examining the statute and regulation, to the extent we stated that the AD law requires the sale of subject merchandise and not the sale of processing, the broad implication of those statements would mean that merchandise entering the commerce of the United States would be considered outside the parameters of the AD law. We recognize that the statute does not di rectly address this circumstance, and we reject the im plication of those statements to the extent they may be interpreted to mean that the AD law does not apply to merchandise traded and entering the United States for consumption. In our view, the objective of the tolling regulation is to obtain the full price of the subject mer chandise. We also recognize, however, that there can be cognizable sales without 100 percent of the value of the subject merchandise reflected in the relevant sale.
With respect to AHUG and respondents' arguments that the facts in this case are consistent with the facts in NSK where there was no price for the sale of samples, we find such reliance upon NSK to be misplaced. In that case, the Federal Circuit found that because the sample merchandise in question lacked consideration, no sale existed, and thus "they should not be included in calcu lating United States price." Id. at 970. The Court held that a sale requires the transfer of ownership to an un related party for consideration. Unlike the case of NSK, in the case of LEU there are meaningful sales that can be used to calculate export and constructed export price, as discussed above. In light of the Federal Circuit deci sions in NSK and AK Steel, we find the sales at issue to be relevant sales as the utility customer obtains LEU through a transaction in which ownership in the LEU is transferred for consideration.
AHUG and respondents also dispute the Depart ment's finding as to the title and ownership of the LEU in question. The parties contend that the Court has al ready addressed this issue, and that the Department is attempting to evade the Court's holding on this issue. We disagree. The Court expressly stated why the Fed eral Circuit decisions in NSK and AK Steel were inappli cable, noting that "[a]s there is no finding that the enrichers' rights rise to the level of ownership, NSK is inapplicable." USEC, at 24, n.12. In the French Final Determination, we examined the overall arrangement and did not address the ownership of the LEU and the transfer of ownership under NSK. The Department has now addressed this issue in the determination.43
As to AHUG's allegation of imaginary transactions of feed uranium that formed the partial basis of the price of LEU, we disagree with AHUG's argument. As noted above, the Department seeks to obtain the full value of the subject merchandise. The Department specifically requested data from the respondents as to the value of the uranium feed. The Department has used the entry value of the feed as an estimate of the value of this com ponent in order to obtain the value of the LEU at issue. This approach is consistent with the statute and fully comports with the Department's practice where specific information or data are unavailable.
Finally, with respect to AHUG and respondents' ar gument that whether enrichers control the enrichment process is irrelevant, we disagree. While we recognize, as stated above, that the relevance of the manufacturing operations is limited, we note that AHUG has attempted to view in isolation the factors used by the Department in making its determination that utility companies are not producers of LEU. As we stated above, the facts taken together indicate that the utility companies are not producers of LEU. Utility companies do not sell LEU, as contemplated by the tolling regulation, but in stead are consumers and industrial users of such mer chandise; they engage in no manufacturing operations of any kind related to the production of LEU, and do not control the production of LEU. The Department's de termination is based upon these factors, taken together. While we recognize that a tollee is not required to en gage in manufacturing operations directly, or to have facilities for such manufacturing, we also recognize that where a company does not engage in any traditional manufacturing functions, and does not sell the subject merchandise, but rather acts in the capacity of a con sumer of such merchandise, the entity is not satisfying any important functions either in the traditional sense or consistent with the purpose of the Department's toll ing regulation-to calculate U.S. price of the subject merchandise and its normal value. Accordingly, if the Department were to treat U.S. utility companies as for eign producers, the purpose of the regulation would be defeated, and relevant sales would escape examination where such transactions may place the industry at risk from unfairly traded imports.
Urenco/Eurodif raise additional points. However, these points have been fully addressed in the body of this determination, and need not be repeated here.
C. APPLICABILITY OF THE COUNTERVAILING DUTY STATUTE
a. The Department's Analysis of Countervailing Duties
In the final affirmative countervailing duty determi nations, the Department addressed the general scope of the countervailing duty law, and in particular, the spe cific program in the case of France in which the Depart ment found that the Government of France provided a countervailable subsidy by purchasing goods for more than adequate remuneration, under section 771(5)(E)(iv) of the Act.
For the general scope issue, the Department stated that "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 provid ing, 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, into 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." Final French AD Determination, at 65879.
For the program specific analysis of the purchase of a good for more than adequate remuneration with re spect to LEU from France, the Department stated that "[b]ecause we have determined that SWU contracts in volve the purchase of LEU, we determine that these transactions constitute the purchase of goods." Id. at 65883, n.7.
b. The Court's Remand on the Countervailing Duty Investigation
In addressing the Department's determination as to the general applicability of the countervailing duty law, the Court noted that the Department relied on the same rationale it employed in applying the antidumping duty law that because the LEU was entering the United States for consumption, the merchandise was subject to the law. With respect to the specific program pertaining to "more than adequate remuneration" under section 771(5)(D)(iv) of the Act, the Court, noting that the De partment had relied on the same analysis as in the antidumping context concerning the SWU contracts in volving the purchase of LEU, stated:
We have already determined that Commerce's deter mination regarding "functional equivalency" of EUP and SWU contracts is not supported by the record. Accordingly, we cannot sustain the Department's determination that for the purposes of applying the countervailing duty statute, SWU contracts involve the purchase of LEU.
Id. at 41. On remand, the Court stated, the Department will have an opportunity to reconsider the application of its tolling regulation to the transactions at issue here. The Court instructed the Department that it "must re consider its countervailing duty determinations in that context." Id.
c. Analysis of the Countervailing Duty Determina tions
(1) General Applicability of CVD Law
With respect to the general applicability of the coun tervailing duty (CVD) statute, we find that the law is applicable to the LEU entering the United States pursu ant to SWU contracts. First, based upon the our analy sis on remand in the antidumping context, pertaining to sales made under the SWU contracts between foreign enrichers and U.S. utilities, we found that the enrichers own and hold title to the complete LEU product subject to these investigations, and transfer ownership and title to the utility customers for consideration. Based upon that analysis, these sales are also relevant for purposes of the CVD law.
Second, we also find that, unlike the antidumping law, where the statute refers to a class or kind of mer chandise being sold at the less than fair value, the scope of the CVD law is clearer in that the plain language of the statute provides that the law is applicable where the merchandise is either imported, or sold for importation, into the United States. Section 701(a)(1) requires the Department to impose countervailing duties upon the merchandise if it determines that "the government of a country or any public entity within the territory of a country is providing, directly or indirectly, a counter vailing subsidy with respect to the manufacture, produc tion, or export of a class or kind of merchandise im ported, or sold (or likely to be sold) for importation, into the United States." 19 U.S.C. § 1671(a)(1) (emphasis added).
Prior to the enactment of the Trade and Tariff Act of 1984 (1984 Act), section 701(a)(1) did not contain specific language pertaining to merchandise "sold (or likely to be sold) for importation." The legislative history of the 1984 Act indicates that Congress amended the provision to include sales of merchandise not yet imported into the United States.44 Based upon the language of the provi sion and the legislative history, we believe the law was amended, not for purposes of narrowing the scope of its application, but rather to broaden its application to in clude not only imports of subject merchandise, but also sales of such merchandise that occurred for importation. Accordingly, we interpret the CVD law to apply when ever a foreign government provides subsidies with re spect to a class or kind of merchandise that is imported into the United States. In the case of LEU, there is no dispute that the merchandise at issue was imported into the United States. Accordingly, we conclude that the law is applicable to all imports of LEU from the respec tive countries under investigation.
Finally, because the tolling regulation was adopted for the limited purpose of providing guidance on the se lection of the relevant sale for purposes of determining U.S. price and normal value under the AD law, it is not relevant for purposes of determining whether particular imports are subject to the CVD law. If a subsidy has been provided with respect to the production or impor tation of subject merchandise, countervailing duties may be imposed regardless of the characterization of the transaction (sale of goods or sale of services) pursuant to which such imports are made or the identity of the producer (toller or tollee) for purposes of the tolling reg ulation under the AD law. Accordingly, all of the sub sidy programs which formed the basis for the calculation of the net subsidy rate in the CVD investigations on LEU from Germany, the Netherlands, and the United Kingdom, and the subsidy relating to the exonera tion/reimbursement of taxes in the CVD investigation on LEU from France, would be unaffected by any determi nation as to whether enrichment transactions involve the sale of goods or services. For the reasons discussed be low, we also conclude that the specific program in the French CVD investigation concerning the adequacy of remuneration involves a "financial contribution" within the meaning of section 771(5)(D) without regard to how SWU transactions are characterized for other purposes.
(2) Program Specific Analysis
With respect to the specific subsidy program in the French LEU case concerning the adequacy of remuner ation, section 771(5) (D) lists financial contributions sub ject to the law as the following:
(i) the direct transfer of funds, such as grants, loans, and equity infusions, or the potential direct transfer of funds or liabilities, such as loan guaran tees,
(ii) foregoing or not collecting revenue that is otherwise due, such as granting tax credits or deduc tions from taxable income,
(iii) providing goods or services, other than gen eral infrastructure, or
(iv) purchasing goods.
19 U.S.C. § 1677(5)(D).
Section 771(5)(E)(iv) states that a benefit is con ferred "in the case where goods or services are pro vided, if such goods or services are provided for less than adequate remuneration, and in the case where goods are purchased, if such goods are purchased for more than adequate remuneration." 19 U.S.C. § 1677(5)(E)(iv). Thus, the statute establishes that a countervailable subsidy exists where a government pro vides goods or services for less than adequate remunera tion, but limits the application to goods, as compared to services, where a government makes a purchase for more than adequate remuneration. The legislative his tory does not explain the basis for the limitation to goods where the government makes a purchase under subsection 771(5)(D)(iv). We believe the provision is aimed at the producers of merchandise who obtain a benefit by selling their merchandise to the government for more than adequate remuneration.
In this case, we find that EdF purchased a good, LEU, for more than adequate remuneration. For the same reasons that the SWU contracts involve the sale of merchandise in the antidumping context, we find that they involve the purchase of merchandise with respect to section 771(5)(D)(iv) of the Act.
We note that even if the transactions between EdF and Eurodif were not sales of merchandise, nonetheless, for two reasons EdF's payments of more than adequate remuneration to Eurodif were made in connection with EdF's "purchasing goods" as that term is used in sec tion 771(5)(D)(iv). First, there is no question that EdF obtains LEU in a series of purchase transactions (i.e., the purchase of natural uranium, the purchase of con version, and the purchase of enrichment). Accordingly, EdF's payment of more than adequate remuneration to Eurodif is made in connection with the major step in the process by which EdF is "purchasing goods."
Second, in our view, the fundamental purpose of the provision is to address subsidization of manufacturing operations that produce subject merchandise. In this context, the purchase of manufacturing or processing is a necessary component of the good. As a practical mat ter, goods include any manufacturing or processing that is necessary to produce the article. Thus, the sale of manufacturing or processing, which is a necessary com ponent of the good, pertains to the purchase of goods, and does not constitute the purchase of a "service" in this context. The term "service" is not defined in the statute. Under its ordinary meaning, consistent with the purpose of section 771(5)(D), we interpret the term to mean "[t]he sector of the economy that supplies the needs of the consumer but produces no tangible goods, as banking and tourism."45 The New Shorter Oxford English Dictionary, 1993 ed., at 2789. This definition is also consistent with the U.S. government's negotiating position as to the distinction between goods and services in the international trade context. Section 2114(b)(5) of Title 19 of the U.S. Code, addressing international trade in services, states that the term "services" in this con text means "economic activities whose outputs are other than tangible goods. Such term includes, but is not lim ited to, banking, insurance, transportation, postal and delivery services, communications and data processing, retail and wholesale trade, advertising, accounting, con struction, design and engineering, management consult ing, real estate, professional services, entertainment, education, health care, and tourism." These definitions are relevant and useful for purposes of distinguishing between purchase transactions pertaining to goods and those pertaining to services. If a transaction is made that is directly related to the purchase of a good, such as the purchase of the manufacturing or processing compo nent, for more than adequate remuneration, we inter pret section 771(5)(D) to be applicable to the transac tion, as explained further below.
In the case of LEU, even if, contrary to our finding above, the sales between EdF and Eurodif were solely for contract manufacturing, and were not found to be a transfer of ownership in the complete LEU, section 771(5)(D)(iv) of the Act would continue to be applicable to this circumstance enrichment is not a service, but is instead a critical component of the LEU, just as any manufactured product has within it a manufacturing component. Moreover, one cannot purchase LEU with out purchasing the enrichment component. Thus, the sales of enrichment are directly related to the purchase of LEU. Where such sales are made at more than ade quate remuneration, the sales directly benefit the manu facturing operations leading to the production of LEU. Therefore, we believe the transactions at issue embody the very types of subsidies the law was intended to ad dress under section 771(5)(D)(iv) of the Act.
However, even if the subsidy in the French CVD in vestigation were characterized as the purchase at more than adequate remuneration of the "service" of produc ing the LEU, rather then the purchase of the LEU it self, the Department must look beyond the characteriza tion to effectively administer the law. A payment of more than adequate remuneration to a producer of an acquired product may constitute a countervailable sub sidy under section 771(5)(D) provided there is a nexus between the purchase transaction and the product ac quired.
For example, where a foreign government purchases a good from a manufacturer, but separately purchases freight services from a company unaffiliated with the manufacturer, the statute does not contemplate the im position of a countervailing duty on the provision of freight for more than adequate remuneration because any benefit provided to the freight provider by the gov ernment pertains to the purchase of a service, and does not benefit the production of merchandise.
If, on the other hand, the manufacturer of the mer chandise provided both the merchandise and the freight service, but pursuant to separate transactions, the De partment would need to examine closely the arrange ment between the manufacturer and the foreign govern ment. If the facts indicated that, on its face, the good appeared to be purchased at adequate remuneration, but that the remuneration for the freight service far ex ceeded the value of the service, the Department may reasonably infer that the remuneration pertaining to freight is so excessive that, as a practical matter, it is reasonably related to the purchase of the merchandise (i.e., a good that falls within the ambit of the provision). In such a case, the Department could reasonably con clude that the foreign government in this instance has provided a subsidy to the manufacturer in connection with the purchase of goods for more than adequate re muneration.
While the above example is not directly relevant to the facts and circumstances of the French CVD investi gation, the example is useful in that it recognizes that countervailable subsidies may occur by a payment of more than adequate remuneration to a producer of goods for an activity provided by the producer in con nection with the production and delivery of such goods. In the case of LEU, the purchase transactions are more directly related to the purchase of goods, as discussed above, than in the above example.
Comments From Urenco/Eurodif and AHUG
Urenco/Eurodif argue that the Department offers two justifications for its finding that the CVD law is applica ble to LEU entering the United States pursuant to SWU contracts: first, that the enrichment sale transaction is relevant "for purposes of the CVD law," and, second, that the CVD law is applicable to any merchandise im ported into the United States. Urenco/Eurodif assert that neither of these justifications supports the applica tion of the CVD law to enrichment transactions.
Urenco/Eurodif first contend that their discussion in the AD context as to why an enrichment transaction is not a sale of merchandise applies equally to the Depart ment's first justification in this context; and that no fur ther discussion in the CVD context is necessary. As for the second justification, Urenco/Eurodif assert that the Department's finding flatly ignores the statutory re quirement that countervailable subsidies be provided "with respect to the manufacture, production or export of a class or kind of merchandise." They argue that the fact that LEU is imported into the United States says nothing about whether the subsidies found by the De partment are with respect to the manufacture or produc tion of LEU. Since, as shown above and throughout this proceeding, the respondents are engaged in rendering enrichment services, they assert that any subsidies sup porting this activity cannot properly be treated as hav ing been bestowed with respect to the manufacture of LEU.
Urenco/Eurodif further point out that just as the antidumping duty statute is quintessentially concerned with evaluating sales of merchandise to determine whether there has been unfair price discrimination, the CVD law is concerned with whether countervailable sub sidies have benefited the manufacture or production of merchandise. Correspondingly, just as the antidumping duty law can be applied only to the sale of merchandise, these parties assert that the CVD law can be applied only to the subsidization of the manufacture or produc tion of merchandise. Respondents point out that the De partment does not refer to any case where the CVD law has been applied to the subsidization of a service, or where the reach of the CVD law has exceeded the reach of the antidumping law. Respondents conclude that there is no justification for the Department's finding that the CVD law is applicable to enrichment services transactions.
With regard to the French-specific program, respon dents contend that since the Department's analysis in the antidumping context is completely flawed, it falls equally as hard when incorporated by reference here. Respondents contend there is no validity to the Depart ment's alternative statement that "even if the sales be tween EdF and Eurodif do not involve sales of merchan dise," there nonetheless can exist a countervailable sub sidy because "under these transactions EdF has ac quired the LEU in purchase transactions in connection with the purchase of goods." Respondents contend that the Department's claim is faulty. The phrase "in con nection with" does not appear in the statute, and the utility company is not purchasing goods. Respondents state that enrichment transactions involve the purchase of services. Accordingly, respondents point out, the De partment inaccurately claims that the dictionary and section 2114b(5) of an unrelated portion of Title 19 es tablish that a true service is one that results in "no tan gible goods." Respondents argue that the attempted analogy does not work. Since the customer already owns the uranium at the start of the transaction, it is not contracting for the purchase of a "tangible good," but rather only separative work, which clearly is an "intan gible." In addition, section 2114b(5) explicitly states that "construction" (which certainly results in the deliv ery of tangible goods) is included within the definition of services, thereby demonstrating that the fact that the services result in the final delivery of something tangi ble is irrelevant.
AHUG has also addressed this issue. AHUG first argues that "the Department cannot justify its conclu sion that manufacturing services are not services." AHUG states that in the draft remand determination, the Department relies upon definitions of "services" that are neither consistent with the term's ordinary meaning nor the documented position of the U.S. government and foreign governments in international trade negotiations.
According to AHUG, Black's Law Dictionary defines "service" within the context of contracts to be "[d]uty or labor to be rendered by one person to another. . . . . . . [t]he act of serving the labor performed or the du ties required. . . . [p]erformance of labor for the bene fit of another, or at another's command. . . . ." AHUG states that Webster's New Universal Unabridged Dic tionary includes in its definition of "service" "work done or duty performed for another or others." AHUG con tends that neither of these definitions comports with the Department's suggestion that manufacturing services must be treated as sales of goods under the trade rem edy law. AHUG points out that both of its definitions encompass the provision of enrichment services.
AHUG also states that it previously established, con trary to the Department's argument, that the U.S. gov ernment considers uranium enrichment to be a service in the context of the General Agreement on Trade in Services (GATS) negotiations. In a submission to the WTO, the U.S. government defined energy services spe cifically to be "those services involved in the exploration, development, extraction, production, generation, trans portation, transmission, distribution, marketing, con sumption, management, and efficiency of energy, energy products, and fuels." Further, AHUG contends the United Nations Central Product Classification (CPC), which the WTO members have adopted for the purpose of identifying service sectors covered by the GATS, in cludes energy-related services with "Manufacturing Ser vices" (Division 88). Specifically, AHUG claims, Division 88 includes the "Manufacture of coke, refined petroleum products and nuclear fuel, on a fee or contract basis." According to AHUG, the explanatory notes to Divi- sion 88 provide that "Manufacturing Services" are "[s]ervices rendered on a fee or contract basis by units mainly engaged in the production of transportable goods, and services typically related to the production of such goods, and that "services incidental to manufactur ing" include "manufacturing on a fee or contract basis, i.e. manufacturing services rendered to others where the raw materials processed, treated or finished are not owned by the manufacturer . . ." According to AHUG, the fact that manufacturing services cover such activi ties on a contract basis, where the raw materials pro cessed are not owned by the toller (such as with enrich ment of feed owned by utilities), confirms that uranium enrichment is a service distinct from the sale of LEU under trade law.
AHUG further states that it has previously pointed out that a number of countries have included manufac turing services in their schedule of commitments in the GATS, for example, Austria, Canada, Iceland, South Africa, the Dominican Republic, Indonesia, Kuwait, Ma laysia, Nicaragua, Panama, Gambia and Lesotho, all of whom have undertaken to permit trade in manufactur ing services.
Department Position:
We disagree with respondents' and AHUG's argu ments on the application of the CVD law in general and the program-specific subsidy pertaining to the purchase of goods in the French CVD case.
AHUG argues that the Department "cannot justify its conclusion that manufacturing services are not ser vices." AHUG challenges the Department's interpreta tion as being neither consistent with the ordinary mean ing of the term nor the documented position of the U.S. government and foreign governments in international trade negotiations. AHUG Comments, at 18. AHUG points out that Black's Law Dictionary defines "service" within the context of contracts to be "[d]uty or labor to be rendered by one person to another . . . [t]he act of serving the labor performed or the duties required . . . [p]erformance of labor for the benefit of another, or at another's command . . ." Id. (citing Black's Law Dictionary, 6th ed. at 1368 (1990).
The broad definition offered by AHUG would, if ap plied, turn the production of goods into a series of ser vices composed of labor or work performed. As such, it does not provide a basis to distinguish between goods and services for purposes of the AD and CVD laws, or to distinguish between the General Agreement on Trade in Services (GATS) and the AD and CVD regimes estab lished under the GATT and now within the WTO. In defining the term "services," Black's Law Dictionary states at the outset that "[t]he term has a variety of meanings, depending upon the context or the sense in which it is used." 5th Ed., at 1227. AHUG has cited to the contracts context. Under this definition, however, the international regimes established for the imposition of antidumping and countervailing duties would be sub ject to the terms and conditions specified in the parties' contracts. This is not a circumvention issue as much as it is an issue of form over substance. In this case, the respondents and AHUG agree that where LEU is sold pursuant to EUP contracts, any subsidies pertaining to the manufacture of the LEU are subsidies that pertain to the manufacture of goods. However, where the same subsidies pertain to the same manufacture of LEU that is sold pursuant to SWU contracts, AHUG and respon dents propose that the subsidy no longer pertains to the manufacture of goods, but instead to services. Under such an interpretation, the contract alone would estab lish the parameters of the AD and CVD laws.
To administer these laws effectively and consistent with the intent of Congress, we recognize that where a purchaser obtains foreign goods, or where a government obtains goods, the aim of the law to address unfairly traded imports, or to address subsidies pertaining to the purchase of goods for more than adequate remunera tion. The object and purpose of these laws would be defeated if the Department were to adopt broad defini tions of the term "services" in the context of the trade laws.
Second, the Department's definition reflects the posi tion of the United States government with respect to its international obligations under the GATS. To be clear, the United States has made no commitment with respect to treating enrichment processing as a service within the meaning of the GATS. Nor has the United States made any commitment to treat LEU produced under contract manufacturing as an activity that is beyond the scope of the AD and CVD laws.
In making its arguments that enrichment processing is a service that falls within the ambit of the GATS, AHUG incorrectly assumes that the Provisional Central Product Classification of the United Nations (CPC) is controlling with respect to the commitments of the United States under the GATS. To the contrary, Article 1 of the GATS defines the services under GATS, not the CPC.46
Contrary to AHUG's presumption, the authoritative document relied upon by the WTO in its negotiations is a note from the Secretariat dated July 10, 1991, MTN.GNS/W/120. That document lists the services sec toral classifications. Under section 884 and 885, the doc ument specifically lists "[s]ervices incidental to manufac turing." Id. at 4. Enrichment of uranium is not listed. Moreover, the United States considers enrichment of uranium to be no more "incidental to manufacturing" than any other manufacturing activity that produces such merchandise as textiles, microchips, or steel.
To interpret the GATS as AHUG has proffered would mean that many manufacturing operations that produce merchandise currently subject to the AD and CVD would, sua sponte, be outside the purview of the AD and CVD law based upon its listing in the CPC. For example, the same CPC lists "manufacture of textiles" and "manufacture of basic metals"-manufacturing op erations that produce textiles and steel. See Provisional CPC, at 149-150. Pub. Doc. 85, Exhibit 1, at Fr. 30-31. Nothing in the AD and CVD laws, nor the GATS, sup ports a such a sweeping conclusion that anything listed in the CPC would be outside the scope of the unfair trade laws.
In addition, we note that the U.S. government docu ment relied upon by AHUG (i.e., a communication on energy services), dated December 18, 2000, was one of many proposals presented by the U.S. government in its negotiations on GATS. AHUG's Submission, Apr. 5, 2001, at Exhibit 3. As a proposal, the document demon strates that there is no commitment currently in place, nor was there any commitment in place at the time pe riod in which the agency conducted its AD and CVD in vestigations on LEU. Second, the document expressly states that the proposal is a "Draft-For Discussion Purposes Only" and that it is "intended to stimulate dis cussion." Exhibit 3, at Annex A, and Communication From The United States, at 1. The document also states that [t]his exercise does not prejudge the questions of whether all possible energy service activities are listed or which of these activities fall within the scope of the GATS." Id. at Annex A. Thus, AHUG's continued reli ance upon it as a reflection of the United States commit ments under GATS is misplaced. As a final point, AHUG notes that other countries have included manu facturing services in their schedule of commitments un der the GATS, and notes, in particular, that Canada has scheduled commitments for "toll refining services." However, commitments by other countries neither re flect the commitments of the United States, nor bind the United States to such commitments.
Finally, with respect to Urenco/Eurodif's argument that the Department does not refer to any case where the reach of the CVD law has exceeded the reach of the AD law or where the CVD law has been applied to the subsidization of a service, we need to clarify that the CVD law does not exceed the reach of the AD law. In the draft determination, we stated that, unlike the AD law, "the scope of the CVD law is clearer in that the plain language of the statute provides that the law is applicable where the merchandise is either imported, or sold for importation."
Based upon all of the above reasons and the analysis set forth in the body of this remand determination, we continue to find that the CVD law (and the AD Law) is applicable to the LEU at issue, and that the provision of subsidies through the French government's purchase of LEU for more than adequate remuneration is subject to the CVD law.
Final Remand Determination
This final redetermination is pursuant to the remand order of the Court of International Trade in USEC Inc. and United States Enrichment Corporation v. United States, Court Nos. 02-00112, 02-00113, 02-00114, and Consol. Court Nos. 02-00219, 02-0000221, 02-00227, 02- 00229, and 02-00233, Slip Op. 03-34, (March 25, 2003).
Joseph A. Spetrini
Acting Assistant Secretary for
Import Administration
1 Under the countervailing duty law, section 702(c)(4) of the Tariff Act of 1930 ("the Act"); and for the antidumping duty law, section 732(c)(4) of the Act.
2 SUBPART D - CALCULATION OF EXPORT PRICE, CON STRUCTED EXPORT PRICE, FAIR VALUE AND NORMAL VALUE
§ 351.401 In General
(a) Introduction. In general terms, an antidumping analysis involves a comparison of export price or constructed export price in the United States with normal value in the foreign market. This section establishes certain general rules that apply to the calculation of export price, constructed export price and normal value. (See section 772, section 773, and section 773A of the Act.)
* * *
(h) Treatment of subcontractors ("tolling" operations). The Secre tary will not consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire ownership, and does not control the relevant sale, of the subject merchandise or foreign like product.
19 C.F.R. § 351.401 (2000).
3 19 U.S.C. §§ 1671 and 1673a(c)(4)(A). For convenience, hereinafter we will refer to the statutory provisions under the antidumping law. Parallel provisions, however, in the countervailing duty law also apply.
4 19 U.S.C. § 1677(4)(A).
5 19 U.S.C. § 1673a(c)(5).
6 19 U.S.C. § 1673a(b)(1).
7 Notably, section 771(9)(A) also confers interested party status upon, inter alia, "a foreign manufacturer, producer, or exporter or the United States importer, of subject merchandise" but does not confer eligibility upon such entities to file antidumping or countervailing duty petitions.
8 See Sections 772(a) and (b), and 773(1)(B). 19 U.S.C. § 1677a[ ] and § 1677b.
9 Subsection (b)(1) expressly refers to an interested party described in subparagraph (C), (D), (E), (F), or (G) of section 1677(9).
10 See, e.g., Industrial Belts and Components and Parts Thereof, Whether Cured or Uncured, From Japan; Termination of Circumven tion Inquiry of Antidumping Duty Order, 59 Fed. Reg. 23693 (May 6, 1994). In that case, Commerce determined that the U.S. company's limited manufacturing operations were not sufficient to confer domestic producer status upon the company.
11 Citing S. Rep. No. 96-249, 96th Cong., 1st Sess. 63 (1979), the court in Brother has recognized that "[t]he statute grants petitioner status to an industry that is at risk of injury due to dumped imports." Brother, 801 F. Supp. at 756.
12 "The definition of domestic industry is important to the Commis sion's injury analysis and Commerce's initiation determination." SAA at 857.
13 "[W]orkers, as well as companies, may file and support petitions." Sen. Rep. 412, 103rd Cong., 2nd Sess., 35 (1994).
14 In implementing its regulation on industry support, Commerce discussed the position of workers in the preamble to its proposed regulation, stating that "[c]onsistent with the SAA at 862, an opinion expressed by workers will be considered to be of equal weight to an opinion expressed by management. Thus, for example, if a union ex pressed support for a petition, the Department would consider that support to be equal to the production of all of the firms that employ workers belonging to the union. On the other hand, if management and workers at a particular firm expressed opposite views with respect to the petition, the production of that firm would be treated as represent ing neither support for, nor opposition to, the petition." Antidumping Duties; Countervailing Duties; Proposed Rule, 61 FR 7307, 7314 (Feb. 27, 1996). See also 19 C.F.R. § 351.203(e)(3) (2000).
15 "LEU is purchased by U.S. utilities for fabrication and manufac ture into fuel subassemblies, which are used for nuclear reactors in the production of electricity." USEC Petition, Prop. Doc. 1, at I-9. The respondents have conceded this point as well. See Plaintiffs' Brief at 24, recognizing that "the utilities consume the nuclear fuel in their re actors."
16 19 U.S.C. § 1677a(a) (emphasis added).
17 See 19 U.S.C. § 1677a(b).
18 See 19 U.S.C. § 1677b(a)(1)(B).
19 19 C.F.R. § 351.401(h).
20 See, e.g., Notice of Preliminary Determination of Sales at Less Than Fair Value: Certain Durum Wheat and Hard Red Spring Wheat From Canada, 68 FR 24707, (May 8, 2003) (selecting the Canadian Wheat Board as the mandatory respondent based upon its status as exporter of the subject merchandise).
21 See, e.g., section 773(a)(1)(B) of the Act establishing normal value as "the price" at which the foreign like product is first sold. See also section 773(a)(3)(A), where producer knowledge "at the time of the sale that the merchandise was destined for exportation" is a factor in determining whether the producer's sale in the home market will be used to establish normal value. See also Notice of Final Determina tion of Sales at Less Than Fair Value: Stainless Steel Plate in Coils from Taiwan, 64 FR 15493, 15498 (Mar. 31, 1999).
22 USEC Inc., and United States Enrichment Corporation (collec tively USEC).
23 The Paper, Allied-Industrial, Chemical and Energy Workers Inter national Union, AFL-CIO and Local 5-689 (PACE).
24 AHUG dismisses the relevance of the court's decision in Brother because that decision predated the adoption of the Department's tolling regulation. AHUG, however, does not address the court's reliance upon the legislative history pertaining to the term "industry" in that case and its relevance to the Department's determinations.
25 Initiation of Antidumping Duty Investigations: Ferrovanadium From China and South Africa, 66 FR 66398 (Dec. 26, 2001) (Ferrova nadium).
26 Initiation of Antidumping Duty Investigations: Live Cattle from Canada and Mexico, 63 FR 71886 (Dec. 30, 1998) (Live Cattle).
27 Notice of Initiation of Antidumping Duty Investigations: Certain Color Television Receivers from Malaysia and the People's Republic of China, 68 FR 32013 (May 29, 2003).
28 The text of this determination can be found on the Department's Internet site at http://ia.ita.doc.gov/remands/00-48.htm.
29 Polyvinyl Alcohol from Taiwan; Final Results of Antidumping Duty Administrative Review, 63 FR 32810, 32813 (June 16, 1998) (Polyvinyl Alcohol from Taiwan); Taiwan Semiconductors Mfg Co. v. United States, 143 F. Supp. 2d 958, 966 (2001); Notice of Final Deter mination of Sales at Less Than Fair Value: Certain Forged Stainless Steel Flanges from India, 58 FR 68853 (Dec. 29, 1993) (Flanges from India); Certain Pasta from Italy: Preliminary Results of New Shipper Antidumping Duty Administrative Review, 63 FR 53641, 53642 (Oct. 6, 1998) (Pasta from Italy).
30 In the SRAMs Remand Determination, the Department also noted that "[w]e normally consider the producer to be the party that sets the price to the United States except in cases where the producer does not know that the subject merchandise is ultimately destined for the United States. In those cases, we find that a subsequent reseller controls the relevant sale, rather than the producer." SRAMs Remand Determina tion at n.4 (citation omitted) (emphasis added).
31 The Uruguay Round Agreements Act implements the international obligations made by the United States with respect to, inter alia, the Antidumping Agreement. In particular, Article 2.1 of that Agreement states that "a product is to be considered as being dumped, i.e., intro duced into the commerce of another country at less than its normal value, if the export price of the product exported from one country to another is less than the comparable price, in the ordinary course of trade, for the like product when destined for consumption in the ex porting country." As noted above, in this case it is beyond dispute that the LEU at issue is being introduced into the commerce of the United States.
32 For normal value, section 773(a)(4) states that "If the administering authority determines that the normal value of the subject merchandise cannot be determined under paragraph (1)(B)(1), then . . . the normal value of the subject merchandise may be the constructed value of that merchandise . . ." Section 773(e) states, in part, that the constructed value of imported merchandise shall be an amount equal to the sum of "the cost of materials and fabrication or other processing of any kind employed in producing the merchandise . . ." See section 773(e)(1). 19 U.S.C. § 1677b(e)(1).
33 See also Final Determination of Sales at Less Than Fair Value; Brass Sheet and Strip from Canada, 51 FR 44319 (1986); and Brass Sheet and Strip from Canada; Final Affirmative Determination of Circumvention of Antidumping Duty Order, 58 FR 33610 (1993).
34 We note that, in a meaningful sense, enrichment transactions do reflect the full value of the LEU since the things of value provided by the utility customer to the enricher (cash and natural uranium) account for the full value of the LEU received by the customer from the enricher.
35 See, e.g., Urenco Questionnaire Response, Vol. 1, Attachment B-1, [*]. See also Attachment B-3, between [*] and Urenco, at [*]; and Attachment B-2, between [*] and Urenco, at [*]
36 See, e.g., Urenco Questionnaire Response, Vol. 1, Attachment B-1, [*]. See also Attachment B-3, between [*] and Urenco, at [*]; and Attachment B-2, between [*] and Urenco, at [*]
37 See, e.g., Urenco Questionnaire Response, Vol. 1, Attachment B-1, [*]. See also Attachment B-3, between [*] and Urenco, at [*]; and Attachment B-2, between [*] and Urenco, at [*] (stating that [*]). For Cogema/Eurodif contracts, see, e.g., the [*], and [*]; and in the contract between [*] See also the contract with [*.] The above contracts demon strate that substantial evidence on the record reflects a standard approach in the industry with respect [*].
38 Further, the record shows that COGEMA, the parent company of respondent, Eurodif, is a major world supplier of natural uranium for the production of LEU.
39 We also note that, for the reasons set out at pages 86-88, below, in connection with the discussion of the applicability of the countervailing duty statute, that SWU transactions do not constitute the sale of a "service" under the ordinary meaning of that term or under other statutes addressing trade in services.
40 By contrast, the product specification for LEU is not a proprietary design of the utility, whether the LEU is acquired under a SWU or an EUP contract. Further, LEU of a given assay is fungible with any other LEU of the same assay, can be delivered to any utility desiring such assay, and can be procured from any enricher under SWU or EUP contracts. Thus, the specification of product assays in the LEU investi gations is not analogous to the tollee's provision of the design in SRAMs from Taiwan.
41 Similarly, the notice provision in the SWU contracts also does not establish how the enricher is to produce the LEU under the contract. The purpose of the notice provision is to allow the utility company to determine how much feed material or how much money she will provide in any given transaction, as discussed above.
42 Memorandum From Team to Barbara R. Stafford, Treatment of DuPont's Sales of Polyvinyl Alcohol Tolled by Chang Chun, (Aug. 8, 1995) at 5.
43 We note that nothing in the statute prohibits the Department from combining separate transactions to obtain the U.S. price of the subject merchandise. In such a case, the activities of the producer and seller of the input and the activities of the processor may reasonably be con sidered together for purposes of establishing U.S. price, as such activities are tied together by the transactions to the U.S. customer, as it relates to the entry of merchandise into the United States.
44 Trade and Tariff Act of 1984, 98th Cong., 2d Sess., 98-39, at 26. See also Conf. Rept., 98-1156, at 75 and 165-66. The legislative history states that the change "is intended to eliminate uncertainties about the authority of the Department of Commerce and the ITC to initiate countervailing duty cases and to render determinations in situations where actual importation has not yet occurred but a sale for importa tion has been completed or is imminent." H.R. Re. No. 98-725, at 11 (1984), reprinted in 1984 U.S.C.C.A.N 4910, 5137.
45 The New Shorter Oxford English Dictionary defines the term for economic purposes as "The sector of the economy that supplies the needs of the consumer but produces no tangible goods, as banking and tourism." (1993 ed.), at 2789. That source also indicates that a service is "The provision or system of supplying necessary utilities, such as gas, water, or electricity, to the public; the apparatus of pipes, wiring, etc., by which this is done." Also "Expert advice or assistance given by a because enrichment is a manufacturing operation leading to the pro duction of a good. In this context, manufacturer or dealer to a customer after the sale of goods; the provision of the necessary installation, maintenance, or repair work to ensure the efficient running of machine etc.; a periodic routine inspection and maintenance of a motor vehicle etc." The ordinary meaning of the term indicates that a manufacturing operation producing a tangible good does not constitute a service within the meaning of the term. In this case, no party disputes the underlying fact that LEU is a tangible product resulting from the enrichment process.
46 See General Agreement on Trade in Services. Further, the purpose of the CPC was to "provide a framework for international comparison of statistics dealing with goods, services and assets . . ." CPC at 5. The CPC itself recognizes that its function of providing such a frame work for comparison of statistics does not extend to distinguishing goods from services. The CPC states that "[t]he precise distinction between goods and services is interesting from a theoretical point of view and may be relevant for the compilation and analysis of certain economic statistics. However, there is no need to embody such a distinction into a classification such as the CPC, which is intended to be for general purpose and to cover both goods and services." Id. at 9. Thus, the CPC may be used as a starting point in negotiations, but the listing of services contained in the CPC does not represent an authori tative expression of the United States' commitments under the GATS.
APPENDIX F
UNITED STATES COURT OF
INTERNATIONAL TRADE
SLIP OP. 03-34
Court Nos. 02-00112, 02-00113,
02-00114, 02-00219, 02-00221,
02-00227, 02-00229, 02-00233
USEC INC. AND UNITED STATES
ENRICHMENT CORPORATION, PLAINTIFFS
v.
UNITED STATES, DEFENDANT
Mar. 25, 2003
OPINION
POGUE, Judge.
Plaintiffs Eurodif, S.A., COGEMA, COGEMA Inc. (collectively, "Cogema"), Urenco Limited, Urenco Deutschland GmbH, Urenco Nederland B.V., Urenco (Capenhurst) Ltd. and Urenco, Inc. (collectively, "Urenco"),1 challenge the final affirmative antidumping and countervailing duty determinations of the Depart ment of Commerce ("the Department" or "Commerce") with regard to low enriched uranium ("low enriched ura nium" or "LEU") from France, Germany, the Nether lands, and the United Kingdom.2 Plaintiffs assert that the antidumping and countervailing duty laws do not apply to certain uranium enrichment transactions be cause the contractual arrangements involve purchases of enrichment services, rather than purchases of LEU as merchandise, and services fall outside the scope of the antidumping and countervailing duty laws. The Ad Hoc Utilities Group ("AHUG"), an association of twenty-two United States utilities that are consumers of low enriched uranium, seeks to intervene as of right in this action. See Mem. Supp. AHUG Mot. Intervene at 1 ("AHUG Intervention Mem."). This Court exercises jurisdiction pursuant to 28 U.S.C. § 1581(c) (2000). For the reasons discussed below, we find that Commerce's determinations are neither supported by substantial evidence in the record nor in accordance with law.
Background
On December 7, 2000, USEC, Inc. and its wholly- owned subsidiary United States Enrichment Corpora tion (collectively, "USEC"), petitioned the Department of Commerce for initiation of antidumping and counter vailing duty investigations into imports of low enriched uranium from France, Germany, the Netherlands, and the United Kingdom. On December 21, 2001, Commerce issued its final affirmative determinations in the anti dumping and countervailing duty investigations of LEU from France and in the countervailing duty investiga tions of LEU from Germany, the Netherlands, and the United Kingdom. See LEU from France, 66 Fed. Reg. at 65,877; Low Enriched Uranium from France, 66 Fed. Reg. 65,901 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determination); Low Enriched Uranium from Germany, the Nether lands, and the United Kingdom, 66 Fed. Reg. 65,903 (Dep't Commerce Dec. 21, 2001) (notice of final affirma tive countervailing duty determinations).
The antidumping and countervailing duty investiga tions initiated upon the petition of USEC covered "all low enriched uranium (LEU). LEU is enriched uranium hexafluoride (UF6) with a U235 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." LEU from France, 66 Fed. Reg. at 65,877; see also Petition for the Imposition of Anti dumping and Countervailing Duties on Low Enriched Uranium from France, Germany, the Netherlands and the United Kingdom, Jt. App. Tab 2-A at JA-1011-12 (stating the scope of the petition) ("Petition"). Low en riched uranium is a good, classifiable under headings 2844.20.0020, 2844.20.0030, 2844.20.0050, and 2844.40.00 of the Harmonized Tariff System of the United States ("HTSUS"). See LEU from France, 66 Fed. Reg. at 65,877; Petition, Jt. App. Tab 2-A at JA-1012-13. All parties to this action acknowledge that LEU itself is a good, and that trade in LEU may be subject to the appli cation of the unfair trade laws. See, e.g., LEU from France, 66 Fed. Reg. at 65,878 ("[W]e found, and no party disputed, that LEU entering the United States constitutes a good, the tangible yield of a manufacturing operation."); Pls.' Opening Br. Supp. Mot. J. Agency R. at 14 ("Pls.' Opening Br.").3
Low enriched uranium is used to produce nuclear fuel rods, which are used in nuclear reactors to produce electricity. See LEU from France, 66 Fed. Reg. at 65,879; Def.'s Resp. Opp'n Pls.' Mot. J. Agency R. at 5 ("Def.'s Resp."). Enrichment is the process by which the percentage of the fissionable isotope U235 contained in uranium is increased. See, e.g., Pls.' Opening Br. at 9-10; Def.'s Resp. at 4. Natural uranium contains ap proximately 0.711 percent of U235; most nuclear utilities in operation require fuel with a U235 concentration or "assay" between three and five percent. Pls.' Opening Br. at 9; Def.'s Resp. at 4-5.
The production of nuclear fuel involves: (1) mining uranium ore; (2) milling and/or refining the ore into ura nium concentrate, referred to as natural uranium (U308); (3) converting the natural uranium into uranium hexafluoride (UF6), or "feed uranium;" (4) enriching uranium hexafluoride to create low enriched uranium; and (5) using the low enriched uranium to fabricate nu clear fuel rods for use in nuclear reactors. See Pls.' Opening Br. at 9; Def.'s Resp. at 3-5; LEU from France, 66 Fed. Reg. at 65,879. The process of enrichment re sults in the creation of LEU, with its higher concentra tion of U235, and depleted uranium or uranium "tails." Pls.' Opening Br. at 10; LEU from France, 66 Fed. Reg. at 65,879.
Nuclear utilities employ two types of contracts for procuring LEU from uranium enrichers. One is a con tract for enriched uranium product ("EUP contract"), in which the utility simply purchases LEU from the enricher. See LEU from France, 66 Fed. Reg. at 65,878, 65,885; Pls.' Opening Br. at 13; Def.'s Resp. at 5. In an EUP contract, the price paid for the LEU covers all elements of the LEU's value, including the feed uranium and the effort expended to enrich it. Transcript of Dep't of Commerce Hearing (Oct. 31, 2001), Jt. App. Tab 6-A at 46 ("Hrg. Trans."); Pls.' Opening Br. at 13. All par ties to this action agree that sales of enriched uranium product are sales of merchandise subject to the anti dumping and countervailing duty laws. See, e.g., Pls.' Opening Br. at 14 ("Movants do not question the applica tion of the antidumping and countervailing duty laws to the sale of LEU.").
The second type of contract provides for the pur chase of "separative work units" ("SWU") and also pro vides for the delivery by the utility of a quantity of feed uranium to the enricher. LEU from France, 66 Fed. Reg. at 65,878, 65,884-85; Pls.' Opening Br. at 11-12; Def.'s Resp. at 5. A "separative work unit" is a measure ment of the amount of energy or effort required to sepa rate a given quantity of feed uranium into LEU and de pleted uranium, or uranium "tails," at specified assays. See LEU from France, 66 Fed. Reg. at 65,884; Pls.' Opening Br. at 10 & n.15; Def.'s Resp. at 5. In an SWU contract, the precise quantity of LEU purchased is not initially specified. Rather, the contract specifies the gen eral terms of the transaction. Notices given during the contract term specify the quantity of SWUs, the product assay, and the tails assay. These specifications deter mine the material characteristics of the resultant LEU. LEU from France, 66 Fed. Reg. at 65,884; Pls.' Opening Br. at 11-12; Resp. Br. of USEC, Inc. Opp'n Cogema/ Urenco Mot. J. Agency R. at 18 ("USEC Resp."). Speci fication of the product and tails assays by means of the notices given during the contract term permits the util ity to determine how many SWUs it will pay for and how much feed uranium it will provide to the enricher. See Pls.' Opening Br. at 12 & n.20; USEC Resp. at 18; Hrg. Trans., Jt. App. Tab 6-A at 45-46. This allows the utility to "optimize the relative amounts of money and uranium it must provide for the LEU it will receive." USEC Resp. at 18; see also id. at 7 ("[T]he utility customer, by specifying the product assay and transactional tails as say . . . can control the total price it will pay and the amount of natural uranium it will provide."); Hrg. Trans., Jt. App. Tab 6-A at 45-46.
Feed uranium is fungible. See, e.g., USEC Resp. at 17. Therefore, the specific feed uranium provided by a utility customer need not be used to produce LEU for that customer. See id. at 16 & n.21. Rather, enrichers maintain inventories of feed uranium, which is not seg regated according to source or ownership. Any uranium held by the enricher may be used to produce LEU for any customer. Id. at 17; Def.'s Resp. at 5-6.
Utilities purchase feed uranium from third parties,4 and prior to delivering the feed uranium to the enricher, the utilities have title, risk of loss, power to alienate or sell, and use and possession of the feed uranium. Title to feed uranium supplied to the enricher remains with the utility customer until the LEU is delivered, at which time title to the LEU is transferred to the utility. One contract states, for example, that "[t]itle to the Feed Material shall remain with [the utility] until the [LEU] Delivery associated with such Feed Material . . . at which time the Feed Material shall be deemed to have been enriched; whereupon [the utility] sha[ll] have title to such [LEU] associated with such Feed Material and title to such Feed Material will be extinguished." Ura nium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-F at JA-1364; see also Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-G at JA-1399. Pursuant to the SWU con tracts, risk of loss or damage to the feed uranium, as well as use and possession, pass from the utility to the enricher upon delivery of the feed uranium to the enricher. Uranium Enrichment Services Contract be tween [ ] and Urenco, Jt. App. Tab 3-F at JA-1364; see also Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-G at JA-1399; Transcript of Oral Argument at 35 (Feb. 11, 2003) ("Oral Arg. Trans."). However, the enricher does not obtain title to the feedstock; rather, actual title is at all times with the utility. See, e.g., Oral Arg. Trans. at 34. Nor does the enricher have the power to sell a utility's feedstock to a third party. Id. at 35. Moreover, it appears clear on this record that at the moment when the LEU is delivered to the utility by the enricher, the utility has title to and ownership of the LEU. See Uranium Enrichment Ser vices Contract between [ ] and Urenco, Jt. App. Tab 3-F at JA-1361 (indicating that title to the LEU and all risk of loss or damage to pass from the enricher to the utility customer upon delivery of the LEU by the enricher); see also Uranium Enrichment Services Contract between [] and Urenco, Jt. App. Tab 3-G at JA-1401. The feed ura nium does not become an asset of the enricher, nor is it ever reflected as such on the enricher's books and re cords.5 See, e.g., Oral Arg. Trans. at 38. The contractual arrangement described above, in which utilities supply feed uranium and pay for the separative work performed as measured in SWUs, long predates the initiation of the challenged investigations. See, e.g., Hrg. Trans., Jt. App. Tab 6-A at 43-45. During the 1960s and 1970s, the U.S. Department of Energy had a monopoly on enrich ment services, but offered no other services relating to the production of nuclear fuel. See id. at 43. Conse quently, utilities purchased enrichment services from the Department of Energy, but purchased feedstock from third parties. Id. at 43-45. In summary, utilities contract for each step of the nuclear fuel production pro cess, including for enrichment. Id.
Commerce found during its investigations that enrichers were producers of LEU for purposes of the less-than-fair-value determination. In reaching its affir mative antidumping and countervailing duty determina tions, Commerce concluded that EUP and SWU con tracts were "functionally equivalent," in that "the over all arrangement under both types of contracts is, in ef fect, an arrangement for the purchase and sale of LEU." LEU from France, 66 Fed. Reg. at 65,884-85. The agency found that (1) the enrichment process is the "most significant manufacturing operation involved in the production of LEU" and that "it is the enricher who creates the essential character of LEU," LEU from France, 66 Fed. Reg. at 65,884; (2) the enrichers fully control the enrichment process, including the "level of usage of the natural uranium provided by the utility company," and therefore "cannot be considered tollers [or subcontractors] in the traditional sense under the regulation," id.; and (3) U.S. utility companies do not maintain production facilities for the enrichment of ura nium. Id.
Plaintiffs argue that SWU contracts are transactions in services and therefore not subject to the antidumping and countervailing duty laws. See, e.g., Pls.' Opening Br. at 7-9. Plaintiffs further assert that the petitions were not filed on behalf of the United States industry. Id. at 9. AHUG joins the plaintiffs in these assertions. See AHUG Intervention Mem. at 5-6; AHUG Opening Br. Supp. Mot. J. Agency R. at 7-8 ("AHUG Opening Br."). AHUG also claims that it is entitled to intervene as of right because its members are producers of LEU. AHUG Intervention Mem. at 5.
Standard of Review
This Court will sustain Commerce's determinations unless they are "unsupported by substantial evidence on the record, or otherwise not in accordance with law." 19 U.S.C. § 1516a(b)(1)(B)(i).
"Substantial evidence" is "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." Universal Camera Corp. v. NLRB, 340 U.S. 474, 477 (1951) (internal citation omitted); Micron Tech., Inc. v. United States, 117 F.3d 1386, 1393 (Fed. Cir.1997). "[T]he possibility of drawing two inconsistent conclusions from the evidence does not prevent an ad ministrative agency's finding from being supported by substantial evidence." Consolo v. Fed. Mar. Comm'n, 383 U.S. 607, 620 (1966). A decision will be reviewed on the grounds invoked by the agency, see SEC v. Chenery Corp., 332 U.S. 194, 196 (1947), and the Court may "up hold a decision of less than ideal clarity if the agency's path may reasonably be discerned." Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281, 286 (1974). The Court's function is not to re-weigh the evi dence, but to ascertain whether the agency's determina tion is supported by substantial evidence on the record. Matsushita Elec. Indus. Corp. v. United States, 750 F.2d 927, 936 (1984).
Discussion
I. The Tolling Regulation, 19 C.F.R. § 351.401(h), and Commerce's Prior Decisions Related Thereto6
Title 19 U.S.C. § 1673 provides that antidumping duties may be imposed on imported merchandise where "a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than fair value" and imports, sales, or likely sales of that mer chandise result in injury or the threat of injury to the domestic industry, or in the material retardation of the establishment of the domestic industry. 19 U.S.C. § 1673.7 In order to determine whether merchandise is being sold or is likely to be sold in the United States at less than fair value, Commerce compares the merchan dise's normal value, or the price at which the merchan dise is first sold for consumption in the exporting coun try, to the export price or constructed export price, which represent the price of the good when sold in or for export to the United States.8 See 19 U.S.C. § 1673; 19 U.S.C. § 1677a; 19 U.S.C. § 1677b(a). In order to deter mine export price or constructed export price, Com merce must determine which company is the producer or exporter of the merchandise. See Taiwan Semiconduc tor Mfg. Co. v. United States, 25 CIT ___ , ___, 143 F. Supp. 2d 958, 966 (2001) ("In order to make a less-than- fair-value determination, Commerce must first deter mine the exporter or producer of the subject merchan dise who controls the export price (or constructed ex port price) that Commerce compares to normal values to determine dumping margins.").
In determining who is the producer or exporter of subject merchandise, one factor Commerce considers is whether the merchandise is manufactured under a toll ing or subcontracting arrangement. Title 19 C.F.R. § 351.401(h) states that Commerce "will not consider a toller or subcontractor to be a manufacturer or producer where the toller or subcontractor does not acquire own ership, and does not control the relevant sale, of the sub ject merchandise or foreign like product."9 19 C.F.R. § 351.401(h). The regulation sets out "certain conditions under which [the agency] will not find that a toller or subcontractor is the producer of the subject merchan dise." Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. 32,810, 32,813 (Dep't Commerce June 16, 1998) (final results of antidumping duty administrative review). "[T]he purpose of the tolling regulation is to identify the seller of the subject merchandise for purposes of estab lishing export price, constructed export price, and nor mal value." LEU from France, 66 Fed. Reg. at 65,878. As observed by this Court, "Commerce's construction of 'producer,' as memorialized in [the regulation], empha sizes three factors: (1) ownership of the subject mer chandise; (2) control of the relevant sale . . . ; and (3) control of production of the subject merchandise." Tai wan Semiconductor Mfg. Co., 25 CIT at ___, 143 F. Supp. 2d at 966. Thus, under the regulation, Commerce will not find tollers or subcontractors to be producers where such toller or subcontractor does not acquire ownership and does not control the relevant sale of the subject merchandise or foreign like product. The regu lation "does not provide a basis to exclude merchandise from the scope of an investigation," LEU from France, 66 Fed. Reg. at 65,878, and "does not purport to address all aspects of an analysis of tolling arrangements." Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 32,813. In making its producer determination, Commerce is "not restricted to the four corners of the contract" and will "look at the totality of the circumstances presented." Id.
Commerce has noted that "[t]ypically, the subcon tracting, or tolling, addressed by this practice involves a contractor who owns and provides to the subcontractor a material input and receives from the subcontractor a product that is identifiable as subject merchandise." Response to Court Remand, Taiwan Semiconductor Mfg. Corp., Ltd. v. United States, Jt. App. Tab 7-A at JA-2604 (Dep't Commerce June 30, 2000) ("SRAMS Re mand Response"). The basis for treating the toller or subcontractor as a service provider and not the producer of the good is that the toller's price represents only the price for "some processing of the subject merchandise," not the "full cost of manufacturing."10 Polyvinyl Alcohol Mem., Jt. App. Tab 7-F at JA-2730 (stating that Com merce prefers not to use tollers as respondents where a toller's price for the good does not "capture all the costs of production for producing the subject merchandise, as required by the statute"). Rather, the producer of the merchandise must be the company that "bears all essen tial costs from the inception of production through the time of the sale to the first customer. Because its pric ing represents all elements of value, . . . this entity functions as the 'price setter' or potential price dis criminator." SRAMS Remand Response, Jt. App. Tab 7-A at JA-2604.
In Static Random Access Memory Semiconductors from Taiwan, 63 Fed. Reg. 8,909 (Dep't Commerce Feb. 23, 1998) (notice of final determination of sales at less than fair value) ("SRAMS from Taiwan"), a foundry manufactured SRAM wafers using a design and design mask supplied by a design house. The design house de veloped the design, which was the crucial element in the production of the SRAM wafer; retained ownership of the design as intellectual property; "arrange[d] and pa[id] for the production of" the design mask; and "[told] the foundry what and how much to make." SRAMS from Taiwan, 62 Fed. Reg. 51,442, 51,444 (no tice of preliminary determination of sales at less than fair value). Commerce concluded that the foundry, TSMC, was a toller, or subcontractor, rather than the producer of the SRAMS. Pursuant to this Court's in struction to explain why it treated the foundry in SRAMS from Taiwan as a service provider and not the producer of the merchandise, Commerce stated that
although a subcontractor may deliver to the contrac tor a product which, based on its characteristics, is subject merchandise, the price paid to the subcon tractor may not represent the entire value of the subject merchandise, but merely represents a por tion of that value. In fact, in most subcontracting arrangements, the contractor already owns an essen tial portion of the product, and thus the price paid is only for the work performed by the subcontractor; that is, the sale by the subcontractor is only a sale of the service it performed (and any inputs provided). Under these circumstances, we find that it is not ap propriate to equate the price of a subcontractor's services (and material inputs) with the price of sub ject merchandise in a dumping analysis. Indeed, we do not consider the "sale" between the subcontractor and such a contractor to be a sale of subject mer chandise at all. Rather, it is a sale of certain inputs and subcontracting services. It is the contractor's subsequent sale which is the relevant sale because that party owns the merchandise in its entirety and thus its sales price represents the full value of the subject merchandise.
SRAMS Remand Response, Jt. App. Tab 7-A at JA-2604. The agency noted that "the price from TSMC did not include an essential component of the product. Consequently, TSMC did not sell subject merchandise, but rather only sold inputs and fabrication services." Id. at JA-2605. The "essential component" not present in TSMC's pricing was the cost of the wafer design and design mask, which were provided to TSMC by the con tractor. Id. at JA-2604-05.
Commerce further stated in the SRAMS Remand Response that
we believe that the entity controlling the wafer de sign in effect controls production in the SRAMS in dustry. The design house performs all of the re search and development for the SRAM that is to be produced. It produces, or arranges and pays for the production of, the design mask. At all stages of pro duction, it retains ownership of the design and design mask. The design house then subcontracts the pro duction of processed wafers with a foundry and pro vides the foundry with the design mask. It tells the foundry what and how much to make. The foundry agrees to dedicate a certain amount of its production capacity to the production of the processed wafers for the design house. The foundry has no right to sell those wafers to any party other than the design house unless the design house fails to pay for the wafers. Once the design house takes possession of the processed wafers, it arranges for the subsequent steps in the production process. The design of the processed wafer is not only an important part of the finished product, it is a substantial element of pro duction and imparts the essential features of the product. The design defines the ultimate character istics and performance of the subject merchandise and delineates the purposes for which it can be used.
SRAMS Remand Response, Jt. App. Tab 7-A at JA-2603. Commerce stated that it considered the foundry to be a subcontractor because "it did not ac quire ownership of the SRAM design or the design mask, nor did it control the subsequent sale of the wa fers." Id.
In Polyvinyl Alcohol from Taiwan, Commerce deter mined that under one contractual arrangement, the manufacturer of the subject merchandise, Chang Chun, was engaged as a toller or subcontractor, and therefore was not the producer of the subject merchandise for purposes of calculating export or constructed export price. The contractor, DuPont, manufactured the pri mary input, shipped it to Taiwan for processing by Chang Chun according to specifications supplied by DuPont, and exported it from Taiwan back to the United States and to third countries. See Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. 6,526, 6,527 (Dep't Com merce Feb. 9, 1998) (preliminary results of antidumping duty administrative review); Polyvinyl Alcohol Mem., Jt. App. Tab 7-F at JA-2727. Commerce determined that under these circumstances, DuPont was the pro ducer of the subject merchandise. Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527. Like the design house in SRAMS from Taiwan, DuPont (1) coordinated all aspects of the production of the good and (2) supplied materials to the subcontractor to be used in the manu facturing process.11 See Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527 (preliminary results of anti dumping duty administrative review); Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 32,817 (final results of antidumping duty administrative review); Polyvinyl Alcohol Mem., Jt. App. Tab 7-F at JA-2727.
Finally, in Certain Forged Stainless Steel Flanges from India, 58 Fed. Reg. 68,853 (Dep't Commerce Dec. 29, 1993) (notice of final determination of sales at less than fair value), Commerce determined that Akai, a con tractor that did not engage in manufacturing operations, was the producer of the subject merchandise. Id. at 68,855. Akai "purchase[d] and maintaine[d] title (during the entire course of production) to the raw materials used for the production of the vast majority of the flanges," and also "direct[ed] and control[led] the manu facturing process" by providing specifications for the finished merchandise. 58 Fed. Reg. at 68,856. Com merce noted that "for the vast majority of the flanges produced . . . Akai controls the costs for all elements incorporated in the production of the flanges." Id.
The circumstances of the instant case largely resem ble the tolling or subcontracting arrangements seen in these earlier determinations. Like Akai in Certain Forged Stainless Steel Flanges from India, the utilities direct and control the process of producing the merchan dise, i.e. nuclear fuel. See, e.g., Hrg. Trans., Jt. App. Tab 6-A at 44-45. Using contractors at each step, they coordinate the production of uranium, LEU, and fuel rods. Id. As in Polyvinyl Alcohol from Taiwan, where the contracting company provided the material to be processed, the utilities provide the feed uranium to the enrichers and pay separately for the work performed, measured in SWUs. The utilities, by supplying the feed uranium, accept the risk of fluctuations in the price of UF6 and can make the decision as to how much UF6 ver sus how many SWUs to purchase in a given transaction. See Pls.' Opening Br. at 13 n.22 & sources cited therein. The contracts require the utility customer to provide the quantity of feed necessary to produce the desired quan tity and assays of LEU. See, e.g., French CVD Verifica tion Exhibit C-1 (Oct. 23, 2001), [ ], Jt. App. Tab 4-A at JA-1507. As noted above, the utility customer retains title to the feed uranium until it is enriched. See, e.g., Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-F at JA-1364; USEC Property Tax Letter, Jt. App. Tab 5-B at JA-1885-86 (noting that the utility customer is responsible for paying property taxes due on feed uranium stored by USEC on the util ity's behalf). Upon enrichment and delivery of LEU, the title to the feed is considered extinguished and the customer gains title to the LEU. Significantly, the con tracts for LEU state that once the separative work is performed and the LEU is delivered, "the Feed Mate rial shall be deemed to have been enriched; whereupon [the utility customer] sha[ll] have title to such [LEU] associated with such Feed Material and title to such Feed Material will be extinguished." Uranium Enrich ment Services Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-F at JA-1364; see also Uranium Enrichment Services Contract be tween [ ] and Urenco, Jt. App. Tab 3-G at JA-1399.12 These contractual provisions acknowledge the fungible nature of feed uranium while establishing a legal fiction that the enrichment process will be performed on the uranium provided by the customer. The SWU contracts indicate that the provision of feed uranium is not treated by the parties as a payment in kind, but the provision of specific material, owned by the customer, to be enriched. Accordingly, the contractual provisions, without more, do not support Commerce's interpretation that the pro vision of feed uranium is substantively a payment in kind. See LEU from France, 66 Fed. Reg. at 65,884-85 (indicating that while Commerce recognized that the provision of feed uranium under SWU contracts "may not be a payment-in-kind in the formal sense," it is sub stantively a payment in kind and is part of an "arrange ment between buyer and seller . . . dedicated to the delivery of LEU").
The designation by the utilities of particular assays for the LEU and for uranium tails is analogous to DuPont's provision of specifications to Chang Chun in Polyvinyl Alcohol from Taiwan, and to Akai's control of the specifications in Certain Forged Stainless Steel Flanges from India. The designation of quantities and assays is based on (1) the design of the core reactor, which determines the level of U235 needed by that reactor,13 and (2) the utility's needs at a particular time, de- pending on its operating cycle and the amount of fuel that has been spent. See, e.g., AHUG Intervention Mem. at 11. The utilities provide these specifications to the enricher, which then produces LEU in the required quantities and assays.
Commerce has previously indicated that control over the specifications of the final product was sufficient con trol to be considered a producer. Companies that did not engage in actual manufacturing processes have previ ously been held to be producers of subject merchandise. In SRAMS from Taiwan, discussed supra, the design house subcontracted the manufacturing of the wafer to a foundry. The design house created the design, re tained ownership of the design throughout the produc tion process, and provided manufacturing specifications to the foundry. SRAMS from Taiwan, 63 Fed. Reg. at 8,918 ("The design house . . . subcontracts the produc tion of processed wafers with a foundry and provides the foundry with the design mask. It tells the foundry what and how much to make.") (quoting internal decision memorandum); see also text pp. 18-20, supra. Com merce found that the design house was the producer of the wafers. Id. at 8,918-19.
In Certain Forged Stainless Steel Flanges from In dia, the petitioners claimed that Akai, a company that did not engage in manufacturing operations, could not be the producer of the subject merchandise. 58 Fed. Reg. at 68,855. Commerce disagreed, stating that Akai was the producer of the subject merchandise because in addition to purchasing and retaining title to the raw ma terials used to produce the "vast majority" of the flanges, Akai also "direct[ed] and control[led] the manu facturing process insofar as it determines the quantity, size, and type of flanges to be produced." 58 Fed. Reg. at 68,856. Commerce noted that "for the vast majority of the flanges produced . . . Akai controls the costs for all elements incorporated in the production of the flanges." Id. Similarly, in Certain Pasta from Italy, 63 Fed. Reg. 53,641, 53,642 (Dep't Commerce Oct. 6, 1998) (preliminary results of new shipper antidumping duty administrative review), Commerce determined that the producer was a company that purchased all inputs, paid the subcontractor a processing fee, and maintained own ership of both the inputs and the final product at all times, as well as marketed the product and conducted product testing and marketing research.
Accordingly, if the text of 19 C.F.R. § 351.401(h) and Commerce's prior decisions were applied to the evidence on this record, the SWU contracts would be treated as contracts for the performance of services, and the enrichers would be treated as tollers and the utilities as the producers of LEU. Here, however, Commerce de termined that the enrichers were the producers, offering three primary reasons for distinguishing this case from its prior decisions in cases involving tolling services. First, the agency asserted that "the enrichment process is such a significant operation that it establishes the fun damental character of LEU." LEU from France, 66 Fed. Reg. at 65,884. Yet in earlier cases involving toll ing, it has also been the toller that created the "essential character" of the finished good by transforming the raw materials or inputs into the subject merchandise. In Polyvinyl Alcohol from Taiwan, the subcontractor Chang Chun transformed the material provided by DuPont into the final good, polyvinyl alcohol. See 63 Fed. Reg. at 6,527 ("DuPont . . . produces the main input, vinyl acetate monomer ('VAM'), which it then ships to Taiwan. Under contract with Chang Chun, the VAM is then converted into subject merchandise."). In Certain Pasta from Italy, the toller manufactured the subject pasta from the inputs supplied by the producer. See 63 Fed. Reg. at 53,642 ("Corex reports that it: (1) purchases all of the inputs, (2) pays the subcontractor a processing fee, and (3) maintains ownership at all times of the inputs as well as the final product."). Here, the enricher transforms feed uranium into LEU. Yet, as in the earlier cases, while its operations do create the "es sential character" of LEU, the enricher does not acquire ownership over either the feed or the final product, and neither its operations nor its pricing account for the full value of the finished LEU.
Second, Commerce distinguished the instant case from prior cases on the ground that "the enrichers con trol the production process to such an extent that they cannot be considered tollers in the traditional sense un der the regulation."14 LEU from France, 66 Fed. Reg. at 65,884. However, tollers normally, and in prior cases, control the operational process by which they perform the tolling services. Like the contractor Akai in Certain Forged Stainless Steel Flanges from India, the utility controls the specifications of the final product. See 58 Fed. Reg. at 68,856 ("[W]e have determined that Akai is the producer of this merchandise. . . . Akai purchases and maintains title . . . to the raw materials used for the production of the vast majority of the flanges, and . . . directs and controls the manufacturing process insofar as it determines the quantity, size, and type of flanges to be produced."). As in Certain Forged Stain less Steel Flanges from India, the actual processes of creating the product are left within the control of the toller. See id.
Third, Commerce stated that "utility companies do not maintain production facilities for the purpose of manufacturing subject merchandise." LEU from France, 66 Fed. Reg. at 65,884. Yet under the circum stances of this case, the fact that the utilities do not maintain enrichment facilities does not appear to be sig nificant. Commerce itself acknowledged the expense and technological sophistication involved in building and maintaining enrichment facilities. See id. (noting that each of the two technologies for enriching uranium feedstock, gaseous diffusion and centrifuge, "requires a huge financial investment in facilities and a technically skilled workforce. 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 gov ernments combined their resources to develop the tech nology and create Urenco."). Moreover, we note that the producers in SRAMS from Taiwan, Certain Pasta from Italy, and Certain Forged Stainless Steel Flanges from India did not maintain manufacturing facilities, and this fact did not prohibit the application of the toll ing regulation. See SRAMS Remand Response, Jt. App. Tab 7-A at JA-2603; Certain Pasta from Italy, 63 Fed. Reg. at 53,642; Certain Forged Stainless Steel Flanges from India, 58 Fed. Reg. at 68,855. Finally, while the enricher invests in the research and development neces sary to develop and maintain separation facilities, we note that the foundry in SRAMS from Taiwan "con duct[ed] research and development related to process technology," but that this fact was not "controlling to [Commerce's] analysis." SRAMS Remand Response, Jt. App. Tab 7-A at JA-2606 n.3.
Commerce asserted in its final determination that "the overall arrangement, even under the SWU con tracts, is an arrangement for the purchase and sale of LEU." LEU from France, 66 Fed. Reg. at 65,884. How ever, under any tolling arrangement, the "overall ar rangement" is one for acquisition of a good, usually man ufactured by the toller. Yet Commerce has previously distinguished toll-produced goods on the grounds that the toller does not acquire ownership, and the toller's price for its work does not represent the full value of the good. See, e.g., SRAMS Remand Response, Jt. App. Tab 7-A at JA-2603-04.
We cannot reconcile Commerce's prior distinctions between tolling services and sale of goods with the agency's statements in this case that EUP and SWU contracts are "functionally equivalent," and that "[i]t 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." LEU from France, 66 Fed. Reg. at 65,879, 65,885. Commerce's claim that the sole difference be tween enrichment transactions and sales of LEU under EUP contracts is the way such transactions are struc tured fails to take into account a critical difference be tween the two transactions: what is purchased.
Under EUP contracts, enrichers purchase their own uranium feed and enrich it for sale to the utilities as a complete product. Utilities pay the seller a price that reflects all elements of the value of the LEU: the value of the natural uranium and the amount of enrichment services, or SWU, performed.
Under SWU contracts, by contrast, the purchase price does not include the full value of the merchandise involved. Most significantly, such contracts do not in clude the cost or responsibility for providing the ura nium feed, and no payment for the uranium is recog nized on the enricher's financial statements, as would be the case if the enricher merely bought the uranium.15 These types of transaction thus do not contemplate the sale of a complete product. Instead, enrichment con tracts specify that the only payment to be made by the utility is for the enrichment services to be provided, on a price-per-SWU basis.16 While the SWU prices may include certain incidental costs, they do not include the significant cost of the natural uranium, which is approxi mately 35 percent of enriched uranium's total value. See Petition, Jt. App. Tab 2-A at JA-1016. Commerce has recognized that where the price paid for subject mer chandise does not include the entire value of such mer chandise, but instead only that portion of the value added by the services performed, there is no cognizable sale under the antidumping duty law.17 Commerce's Decision in the SRAMS Remand Response confirms this position. The statute requires a comparison of "the price of the subject merchandise sold in the U.S. to the price of the subject merchandise sold to the home or third country markets, not the price of some processing of the subject merchandise." Polyvinyl Alcohol Mem., Jt. App. Tab 7-F at JA-2730.
While Commerce correctly states that 19 C.F.R. § 351.401(h) does not "exempt merchandise from [anti dumping] proceedings," LEU from France, 66 Fed. Reg. at 65,880, the regulation is applicable in determining who is the producer in order to determine export price or constructed export price. Thus, a determination that the enricher provides a tolling service would mean that the price charged by the enricher to the utility for the enrichment cannot form the basis of the export price for the purpose of determining dumping margins.
It is well established that Commerce is authorized to depart from its prior practice as long as the agency ar ticulates a "reasoned analysis" which demonstrates that the departure is supported by substantial evidence and in accordance with law. Allegheny Ludlum Corp. v. United States, 24 CIT ___, ___, 112 F. Supp. 2d 1141, 1147 (2000) (quoting Motor Vehicles Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983)); see also Asociacion Colombiana de Exportadores de Flores v. United States, 22 CIT 173, 184-85, 6 F. Supp. 2d 865, 879-80 (1998) ("Commerce has the flexibility to change its position providing that it explain the basis for its change and providing that the explanation is in accor dance with law and supported by substantial evidence."). Here, Commerce's decision not to apply the tolling regu lation to a case that appears similar to earlier tolling cases, including SRAMS from Taiwan and Polyvinyl Alcohol from Taiwan, represents a departure from the practice authorized by a regulation "having the force and effect of law." Allied-Signal Aerospace Co. v. United States, 28 F.3d 1188, 1191 (Fed. Cir. 1994). As such, Commerce's decision requires a more persuasive explanation than provided in the agency's determina tions.
In summary, Commerce's determination that en richers are producers and not tollers is against the weight of the evidence on the record and inconsistent with both the agency's regulations and its prior deci sions involving tolling services. Commerce's reasons for distinguishing the instant case, and consequently for declining to apply the tolling regulation, are not persua sive. Thus, Commerce's decision to treat these contracts as contracts for sales of a good is neither supported by substantial evidence nor in accordance with law.
II. Industry Support
In determining that the antidumping and counter vailing duty petitions regarding low enriched uranium had the requisite industry support, Commerce deter mined that enrichers, but not utilities, were producers of the subject merchandise.18 See Low Enriched Uranium from France, Germany, the Netherlands, and the United Kingdom, 66 Fed. Reg. 1,080, 1,081 (Dep't Com merce Jan. 5, 2001) (notice of initiation of antidumping duty investigations) ("Antidumping Initiation Notice"). Consequently, Commerce determined that petitioner USEC, as the sole domestic producer of LEU, "estab lished industry support representing over 50 percent of total production of the domestic like product," and therefore the industry support requirement was ful filled. Id.
Commerce employed a six-factor test used by the International Trade Commission to determine whether a company may be considered a "member of the domes tic industry." Dep't Commerce Mem. from Melissa G. Skinner to Holly A. Kuga, Determination of Industry Support for the Antidumping and Countervailing Duty Petitions on Low Enriched Uranium from France, Ger many, the Netherlands, and the United Kingdom, Jt. App. Tab 1-A at JA-0007-08 (Dec. 27, 2000) ("LEU In dustry Support Mem." ). The test "focuses upon 'the overall nature' of production-related activities in the United States, to determine whether production opera tions are sufficient for a company to be considered a member of the domestic industry." Id. at JA-0008.
Commerce determined that the utilities were not producers of LEU because
[t]hese companies do not engage in any type of man ufacturing activities related to the production of LEU: they make no claim to have any LEU manufac turing operations; no capital investment in produc tion facilities; they add no value to the product through the performance of any manufacturing oper ations; and have no employees dedicated to manufac turing.
Id. (citing Brother Industries, Ltd. v. United States, 16 CIT 1106 (1992) aff'd, 1 F.3d 1253 (Fed. Cir. 1993)). Rather, Commerce determined that the utility compa nies are "purchasers and industrial users of LEU." Id.
Commerce further asserted that the tolling regula tion, 19 C.F.R. § 351.401(h), does not apply to determine who is a producer for the purposes of industry support. See LEU Industry Support Mem., Jt. App. Tab 1-A at JA-0006. Commerce stated that
we do not interpret section 351.401(h) . . . to be applicable to our determinations on industry support. Instead, . . . we find that 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 industry support. . . . Our interpretation that the tolling regulation is intended for purposes of calculating antidumping margins is further supported by the absence of any parallel provision on tolling in the CVD regulations.
Id. (internal footnotes omitted).
Commerce further noted that
In practice, moreover, the Department has never applied, nor relied upon, section 351.401(h) to deter mine industry support, with good reason. The pur pose of the tolling regulation is to identify the party responsible for setting the price of subject merchan dise sold to the United States. . . . By contrast, to determine industry support, the Department seeks to identify the entity or entities (or workers) that are engaged in the production or manufacture of the identical merchandise set forth in the petition. Thus, identifying the seller for purposes of respondent se lection and identifying the domestic producers for purposes of industry support are separate questions that require different examinations for different pur poses.
Id. at JA-0007.
Commerce's decision not to apply the tolling regula tion to determine who is a producer in connection with its industry support determination is based on the agency's assessment of the purpose and context of the regulation. The Court acknowledges that the purpose of the tolling regulation is accurate calculation of export or constructed export price, and that the regulation does not arise in connection with the industry support deter mination. However, it is unclear from Commerce's ex planation why the definition of "producer," a term that is not statutorily defined, should differ between one sub section of the statute and another. Furthermore, it ap pears incongruous that Commerce may determine that the utility companies are not producers of LEU for the purpose of the industry support determination, but sub sequently may determine, as a result of applying the tolling regulation, that the same companies are produc ers for the purpose of determining export price or con structed export price.19 Where a term appears in multi ple subsections within a statute, we "presume that Con gress intended that the term have the same meaning in each of the pertinent sections or subsections of the stat ute, and we presume that Congress intended that Com merce, in defining the term, would define it consis tently." SKF USA Inc. v. United States, 263 F.3d 1369, 1382 (Fed. Cir. 2001). Commerce is permitted to apply different definitions of such a statutory term only if it provides "an explanation sufficient to rebut this pre sumption." Id.
Consequently, as the Court is remanding the Depart ment's determination for reconsideration of its decision not to apply the tolling regulation, Commerce also will have the opportunity to reconsider the effect of the toll ing regulation on its industry support determination. If Commerce finds that the tolling regulation applies here, the agency must consider whether those entities deter mined to be "producers" under the tolling regulation are also "producers" for purposes of the industry support determination. Should Commerce determine that this is not the case, and that, in effect, a different definition of "producer" applies in the industry support context than in the context of the export price calculation, the agency is directed to articulate an appropriate basis for such a conclusion.
III. Applicability of the Countervailing Duty Statute
In deciding to apply the countervailing duty law to the subsidies it found to have benefitted Plaintiffs dur ing the period of investigation, Commerce, relying on the same rationale it employed in applying the anti dumping duty law, determined that because LEU was entering the United States for consumption, that mer chandise was subject to countervailing duties:
Similarly, in conducting countervailing duty investi gations, [19 U.S.C. § 1671(a)(1)] requires the Depart ment to impose duties if, inter alia, "the administer ing authority determines that the government of a country or any public entity within the territory of a country is providing, directly or indirectly, a counter vailable subsidy with respect to the manufacture, production, or export of a class or kind of merchan dise imported, or sold (or likely to be sold) for impor tation, in the United States." We believe the statute is clear that, where merchandise from an investi gated country enters the commerce of the United States, the law is applicable to such imports.
LEU from France, 66 Fed. Reg. at 65,879. Commerce went on to note that "under the countervailing duty law, [19 U.S.C. § 1677(5)(E)(iv)] defines as a benefit the pur chase of goods for more than adequate remuneration. Because we have determined that SWU contracts in volve the purchase of LEU, we determine that these transactions constitute the purchase of goods." Id. at 65,883 n.7; see also 19 U.S.C. § 1677(5)(E)(iv).
We have already determined that Commerce's deter mination regarding the "functional equivalency" of EUP and SWU contracts is not supported by the record. Ac cordingly, we cannot sustain the Department's determi nation that for the purposes of applying the countervail ing duty statute, SWU contracts involve the purchase of LEU. Upon remand, the Department will have the op portunity to reconsider the application of its tolling reg ulations to the transactions at issue here. The Depart ment therefore must reconsider its countervailing duty determinations in that context.
IV. Intervention of the Ad Hoc Utilities Group
Intervention in antidumping and countervailing duty actions "is governed by Rule 24 of the Rules of this Court subject to the limitations in 28 U.S.C. § 2631(j)."20 Rhone Poulenc, Inc. v. United States, 14 CIT 364, 365, 738 F. Supp. 541, 542 (1990) (citing Manuli Autoadesivi, S.p.A. v. United States, 9 CIT 24, 25, 602 F. Supp. 96, 97-98 (1985)). Title 28 U.S.C. § 2631(j)(1) provides that "[a]ny person who would be adversely affected or aggrieved by a decision in a civil action pending in the Court of International Trade may, by leave of court, intervene in such action." However, subsequent subparagraphs limit this right. Title 28 U.S.C. § 2631(j)(1)(B) provides that, "in a civil action under section 516A of the Tariff Act of 1930, only an interested party who was a party to the proceeding in connection with which the matter arose may intervene, and such person may intervene as a matter of right." Addition ally, under section 2631, "'interested party' has the meaning given such term in section 771(9) of the Tariff Act of 1930." 28 U.S.C. § 2631(k)(1). That section de fines "interested party" as, inter alia, "a trade or busi ness association a majority of whose members manufac ture, produce, or wholesale a domestic like product in the United States." 19 U.S.C. § 1677(9)(E).
Intervention in an action before this Court implicates the Court's jurisdiction and authority. Consequently, it is the Court that determines who is an "interested party" for the purpose of intervention. As noted in Ze nith Radio Corp. v. United States, "[t]here is no pre sumption of standing in an area where Congress has provided explicit instructions on the subject." 5 CIT 155, 156 (1983) (internal citation omitted). Further more, as the Court observed, Commerce's decision to permit a party to participate in its investigative process, "even if done in terms of recognizing them as 'interested parties,' cannot control the Court's understanding of a matter primarily related to the invocation of its powers of judicial review." Id. "The agenc[y's] receptiveness to participation by various parties does not generate stand ing for judicial review." Id. (internal citation omitted). This Court's decision as to whether AHUG's members are "interested parties" for purposes of intervention in the instant action does not depend upon the administra tive determination as to the same question.21
AHUG participated in the administrative proceed ings at issue here pursuant to 19 C.F.R. § 351.312, which permits "industrial users" of subject merchandise to submit "relevant factual information and written argu ment" to Commerce. 19 C.F.R. § 351.312(b).22 However, no provision of the statutes or regulations indicates that participation in the administrative proceeding as an "industrial user" is sufficient to meet the requirement of "party" to the proceeding under 28 U.S.C. § 2631.
Furthermore, we note that even if AHUG is consid ered to have been a "party" to the administrative pro ceeding within the meaning of 28 U.S.C. § 2631(j)(1)(B), the association still must meet the definition of "inter ested party," as required by 28 U.S.C. §§ 2631(j)(1)(B), 2631(k)(1). As noted earlier, "interested party" in this context is defined as, inter alia, "a trade or business as sociation a majority of whose members manufacture, produce, or wholesale a domestic like product in the United States." 19 U.S.C. § 1677(9)(E); see also 28 U.S.C. § 2631(k)(1).
Although Commerce acknowledged that the utility companies were "purchasers and industrial users of LEU," the agency determined they were not producers of LEU for purposes of industry support. LEU Indus try Support Mem., Jt. App. Tab 1-A at JA-0008. Yet as we are remanding to Commerce the question of the ap plicability of the tolling regulation, the question whether AHUG's members are "producers" of LEU within the meaning of the statute remains unresolved. Moreover, as discussed earlier in this opinion, application of the tolling regulation would result in a finding that the utili ties are producers of LEU. See supra text at 26-35; 19 C.F.R. § 351.401(h). Accordingly, AHUG's members may be "producers" within the meaning of 19 U.S.C. § 1677(9) and 28 U.S.C. § 2631(k)(1).
Significantly, AHUG members, as purchasers and users of LEU, could be adversely affected by a decision in the instant case. 28 U.S.C. § 2631(j). The association has actively participated, to the extent permitted, throughout the administrative investigation, and the views and concerns of AHUG's members may offer valu able insights in this litigation. Finally, AHUG's claims raise questions of law and fact common to those raised by the plaintiffs, who are mandatory parties here.
As noted above, a decision by Commerce regarding a party's status for purposes of participation in the agency's investigative process "cannot control the Court's understanding of a matter primarily related to the invocation of its powers of judicial review." Zenith Radio Corp., 5 CIT at 156. Under the facts presented in this case, because AHUG's members may be "produc ers" of LEU within the meaning of 19 U.S.C. § 1677(9) and 28 U.S.C. § 2631(k)(1), and therefore entitled to in tervene as of right, we will grant AHUG's motion to in tervene as an "interested party who was a party to the proceeding in connection with which the matter arose." 28 U.S.C. § 2631(j)(1)(B).
Conclusion
In summary, we find that Commerce's decision not to apply the tolling regulation to the SWU contracts be tween enrichers and utilities, as well as its industry sup port determination, were neither supported by substan tial evidence nor in accordance with law. The Court re mands these matters to Commerce for further proceed ings consistent with this opinion. Remand results are due seventy-five days from the date of this decision. All parties may file responses thereto within twenty days after the filing thereof. All parties may reply to any responses within seven days after the filing thereof. Finally, AHUG's motion to intervene in the instant ac tion is granted.
1 Plaintiffs appear alternatively as Defendant-Intervenors in actions brought by USEC Inc. and the United States Enrichment Corporation challenging these final determinations. These actions have been consolidated as Court Numbers 02-00221, 02-00227, 02-00229, and 02-00233, and the parties have submitted cross-motions for judgment on the agency record. The motions raise certain "general issues" which are addressed here. Pursuant to this Court's Scheduling Order of August 5, 2002, the parties have initially submitted opening briefs on these "general issues."
2 The challenged determinations are Low Enriched Uranium from France, 67 Fed. Reg. 6680 (Dep't Commerce Feb. 13, 2002) (notice of amended final determination of sales at less than fair value and anti dumping duty order); Low Enriched Uranium from France, 66 Fed. Reg. 65,877 (Dep't Commerce Dec. 21, 2001) (final determination of sales at less than fair value) ("LEU from France" ); Low Enriched Uranium from France, 67 Fed.Reg. 6689 (Dep't Commerce Feb. 13, 2002) (notice of amended final determination and notice of countervail ing duty order); Low Enriched Uranium from France, 66 Fed. Reg. 65,901 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determination); Low Enriched Uranium from Germany, the Netherlands, and the United Kingdom, 67 Fed. Reg. 6688 (Dep't Commerce Feb. 13, 2002) (notice of amended final determi nations and notice of countervailing duty orders); Low Enriched Uranium from Germany, the Netherlands and the United Kingdom, 66 Fed.Reg. 65,903 (Dep't Commerce Dec. 21, 2001) (notice of final affirmative countervailing duty determinations).
3 Title 19 U.S.C. § 1673 authorizes Commerce to impose antidumping duties where it "determines that a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value." 1 9 U.S.C. § 1673 (2000). The language of the statute requires that there be a sale or likely sale at less than fair value in order for there to be a final determination. See 19 U.S.C. § 1673d(a)(1) ("[T]he 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 its fair value."). The Department interprets the statute to apply also to investigations of merchandise entered into the United States for "consumption." LEU from France, 66 Fed. Reg. at 65,878. We will assume, arguendo, that Commerce's interpretation is a rea sonable one.
4 Nothing in the record suggests that the parties from whom utilities purchase the feed uranium are in any manner related to the enrichers.
5 Commerce verified the foreign enrichers' records, which did not reflect payments for customer-provided uranium. Oral Arg. Trans. at 38. Furthermore, even though USEC has represented that, as an en richer, it receives feed uranium as consideration or "payment-in-kind" for the supply of LEU, USEC has required its utility customers to pay all property tax on what it views, correctly, as the "customer's feed." See Letter from Weil, Gotshal & Manges LLP to Hon. Norman Y. Mineta (Dec. 20, 2000) at Ex. 2, Letter from USEC to Enrichment Customers (Nov. 19, 1998), Jt. App. Tab 5-B at JA-1885 ("USEC Property Tax Letter") ("USEC will report all the property that it owns at the two [gaseous diffusion plants] and will pay property tax accord ingly. USEC does not intend to report any UF6 to which it does not hold legal title."). The record does not indicate that the enrichers depreciated the customer-owned feed uranium or otherwise treated it as an asset.
6 Commerce argues that the issue of the applicability of the Depart ment's tolling regulation is not a "general issue" and should therefore be postponed to a later stage in the proceeding. As we made clear in the Scheduling Order for this matter, issues which are not general include "challenges to the Department of Commerce's calculation results and methods." Scheduling Order at 5. While the initial applic ability of the tolling regulation also has implications for the Depart ment's calculation results and methods, it is more appropriately ad dressed as a general issue affecting the Department's threshold deter minations. Accordingly, we address it here.
7 The statute states that antidumping duties shall be imposed where
(1) . . . a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than fair value, and
(2) the Commission determines that-
(A) an industry in the United States-
(i) is materially injured, or
(ii) is threatened with material injury, or
(B) the establishment of an industry in the United States is materially retarded,
by reason of imports of that merchandise or by reason of sales (or the likelihood of sales) of that merchandise for importation.
19 U.S.C. § 1673. "The purpose underlying the antidumping laws is to prevent foreign manufacturers from injuring domestic industries by selling their products in the United States at less than 'fair value,' i.e., at prices below the prices the foreign manufacturers charge for the same products in their home markets." Torrington Co. v. United States, 68 F.3d 1347, 1352 (Fed. Cir. 1995).
8 "Export price" is defined as
the price at which the subject merchandise is first sold (or agreed to be sold) before the date of importation by the producer or exporter of the subject merchandise outside of the United States to an unaffiliated purchaser in the United States or to an unaffili ated purchaser for exportation to the United States.
19 U.S.C. § 1677a(a). "Constructed export price" is defined as
the price at which the subject merchandise is first sold (or agreed to be sold) in the United States before or after the date of importation by or for the account of the producer or exporter of such merchandise or by a seller affiliated with the producer or exporter, to a purchaser not affiliated with the producer or exporter.
19 U.S.C. § 1677a(b)
9 "Relevant sale" is "the first sale in the distribution chain by the company that is in a position to set the price of the product, and by doing so, to sell at less than fair value in or to the U.S. market." Taiwan Semiconductor, 143 F. Supp. 2d at 966 (quoting Response to Court Remand, Taiwan Semiconductor Mfg. Corp., Ltd. v. United States (Dep't Commerce June 30, 2000)).
10 Commerce stated that
Continuing to base the margin methodology on a toller's prices and/or costs for tolling only raises the issue as to whether such comparisons are consistent with the statute in determining the appropriate bases for normal value and export price, the definition of subject merchandise, and how we calculate dumping margins. The statute requires that we base comparisons on the price of the subject merchandise sold in the U.S. to the price of the subject merchandise sold to the home or third country markets, not the price of some processing of the subject merchandise. Where cost of production and/or constructed value analysis is necessary, the statute requires that we calculate the full cost of manufacturing, not part of the cost of manufacture of the subject merchandise.
Dep't of Commerce Mem. from Team to Barbara R. Stafford, Treat ment of DuPont's Sales of Polyvinyl Alcohol Tolled by Chang Chun Jt. App. Tab 7-F at JA-2730 (Aug. 8, 1995) ("Polyvinyl Alcohol Mem.").
11 Notably, in a second contractual setting in Polyvinyl Alcohol from Taiwan, Commerce determined that the same manufacturer, Chang Chun, was the producer of the subject merchandise, while the other company, Perry, was determined to be an importer and reseller. See Polyvinyl Alcohol from Taiwan, 63 Fed. Reg. at 6,527. The contractual arrangement under which Perry purchased and supplied input materials to Chang Chun was altered only after a finding of sales at less-than-fair-value by Chang Chun. Id. Perry purchased the inputs from a Chang Chun affiliate and arranged for their delivery to Chang Chun. Id. Perry did not and had never manufactured any chemicals or chemical inputs; it was merely an importer and reseller. Id. The crucial finding in Polyvinyl Alcohol from Taiwan was that, under the cir cumstances, Perry had simply restructured its payments to Chang Chun in an effort to circumvent the antidumping duties. This is dis tinguishable from the instant case because here the utility purchases the feedstock from a party unrelated to the enricher, and therefore the purchase of the feedstock confers no economic benefit on the enricher. The contract here is not simply a restructured purchase contract.
12 Defendant United States cites NSK Ltd. v. United States, 115 F.3d 965, 975 (Fed. Cir. 1997), for the proposition that a sale exists when there is "a transfer of ownership to an unrelated party and consider ation." NSK Ltd., 115 F.3d at 975; Def.'s Resp. at 58-59. As there is no finding that the enrichers' rights rise to the level of ownership, NSK is inapplicable.
13 AHUG states that "'[t]he specific level of U235 needed is determined by each utility, based on the reactor core design it develops for its own reactors. In developing this design, the utility determines the number of fresh fuel assemblies and corresponding enrichment level necessary to produce the energy it needs until the next scheduled refueling date." AHUG Intervention Mem. at 11.
14 Commerce based this distinction in part on its conclusion that "[t]he 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." LEU from France, 66 Fed. Reg. at 65,884. In fact, the substantive provisions of the contracts are fulfilled by the purchase of the designated quantities of SWU, the enrichment of the uranium to the specified assay, and delivery of the LEU. See, e.g., Contract for Uranium Conversion and Enrichment Services between [ ] and Cogema, Inc., Jt. App. Tab 3-C at JA-1255-58; Contract for Uranium Enrichment Services between [ ] and Cogema, Inc., Jt. App. Tab 3-E at JA-1297, JA-1299, JA-1301, JA-1303-05; Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-F at JA -1356.
15 The apparent reason for this structure is to allow a utility to control costs by determining how much feedstock it supplies, versus how many SWUs it pays for. See, e.g., Pls.' Opening Br. at 10-12; AHUG Opening Br. at 11-12; Oral Arg. Trans. at 50, 57-58. No benefit flows to the enricher from the utility's supplying the feedstock.
16 For example, the Uranium Enrichment Services Contract between [ ] and Urenco specifies as follows:
[ ]
Uranium Enrichment Services Contract between [ ] and Urenco, Jt. App. Tab 3-F at 1366. Further, the [ ] under a Cogema en richment contract provides as follows:
12.3 [ ]
Uranium Enrichment Services Contract between [ ] and Cogema, Inc., Jt. App. Tab 3-E at JA-1308.
17 The record does not indicate that Commerce analyzed the pricing provisions of the SWU contracts, or the structure of SWU transactions, in order to distinguish them from the pricing or transactional patterns found in the earlier cases involving subcontracting or tolling arrange ments and in which 19 C.F.R. § 351.401(h) was found to apply.
18 19 U.S.C. § 1673a(b)(1) provides that
[a]n antidumping proceeding shall be initiated whenever an inter ested party described in subparagraph (C), (D), (E), (F), or (G) of section 1677(9) of this title files a petition with the administering authority, on behalf of an industry, which alleges the elements necessary for the imposition of the duty imposed by section 1673 of this title. . . .
19 U.S.C. § 1673a(b)(1).
19 U.S.C. § 1677(9) defines "interested party" as:
(A) a foreign manufacturer, producer, or exporter, or the United States importer, of subject merchandise or a trade or business association a majority of the members of which are producers, exporters, or importers of such merchandise,
. . . . .
(C) a manufacturer, producer, or wholesaler in the United States of a domestic like product,
(D) a certified union or recognized union or group of workers which is representative of an industry engaged in the manufacture, production, or wholesale in the United States of a domestic like product,
. . . . .
(F) an association, a majority of whose members is composed of interested parties described in subparagraph (C), (D), or (E) with respect to a domestic like product. . . .
19 U.S.C. § 1677(9).
In order to determine that a petition has the requisite industry support, Commerce must find that
(i) the domestic producers or workers who support the petition account for at least 25 percent of the total production of the domestic like product, and
(ii) the domestic producers or workers who support the petition account for more than 50 percent of the production of the domestic like product produced by that portion of the industry expressing support for or opposition to the petition.
19 U.S.C. § 1673a(c)(4)(A).
19 When making an industry support determination, Commerce identifies the producers that make up the domestic industry. 19 U.S.C. § 1673a(c)(4); 19 U.S.C. § 1677(4)(A) ("The term 'industry' means the producers as a whole of a domestic like product, or those producers whose collective output of a domestic like product constitutes a major proportion of the total domestic production of the product."). When Commerce identifies the producer of subject merchandise for the purpose of determining export price or constructed export price and calculating the dumping margin, the agency is identifying a seller in the ordinary course of trade. See 19 U.S.C. § 1677b. Although we do not reach this issue, it would seem that if the word "producer" were to have a different definition in the context of the industry support determina tion than in the context of the export price determination, the industry support definition should be the more inclusive, not the more exclusive, because the purpose of the provision is to identify the industry as a whole.
20 USCIT Rule 24 provides, inter alia, that a party may intervene as of right in an action when it "claims an interest relating to the property or transaction which is the subject of the action and . . . the disposi tion of the action may as a practical matter impair or impede the applicant's ability to protect that interest, unless the applicant's interest is adequately represented by existing parties." USCIT R. 24(a).
21 The government directs the Court's attention to Rhone Poulenc, Inc. v. United States, 14 CIT 364, 738 F. Supp. 541 (1990) in support of the proposition that this Court "is divided with respect to the question whether the agencies or the Court determines who is an 'interested party who was a party to the proceeding.'" Def.'s Resp. Opp'n AHUG Mot. Intervene at 11. In Rhone Poulenc, the Court determined whe ther a party was "an interested party who was a party to the proceed ing," as required by 28 U.S.C. § 2631(j)(1)(B), by referring to Com merce's regulations governing who was a "party to the proceeding." Rhone Poulenc, 14 CIT at 365, 738 F. Supp. at 542. In Zenith Radio Corp., the Court denied a motion for intervention after determining that the applicants did not meet the statutory and regulatory definitions of interested parties. 5 CIT at 157, 1983 WL 4982. The applicants claimed that because the administrative agency had accepted their participation in its proceeding, they had standing to intervene in the action before the Court. The Court's decision in Zenith clarifies that, while the Court will look to the relevant statutes and regulations in determining who is eligible to bring or intervene in an action, the actions of the agency cannot bind the Court in connection with its determination of standing and the exercise of its jurisdiction. Conse quently, there is no conflict between the Court's decisions in Rhone Poulenc and in Zenith Radio Corp.
22 Section 351.312 permits industrial users to "submit relevant factual information and written argument" under §§ 351.218(d)(3)(ii), (d)(3)(vi), and (d)(4), addressing sunset reviews, §§ 351.301(b), (c)(1), and (c)(3), addressing time limits; §§ 351.309(c) and (d), which permit "any interested party or U.S. Government agency" (emphasis supplied) to submit written argument in antidupming and countervailing duty proceedings; and § 351.309(e), which permits comments in connection with expedited sunset reviews. 19 C.F.R. § 351.312(b). The most pertinent section here is § 351.309, but it appears from the language of the regulation that AHUG would have to be an "interested party" within the meaning of the antidumping and countervailing duty statutes in order to make a submission. However, it is unclear why § 351.312 would grant the right to participate to "industrial users," who presum ably are not "interested parties," and yet cross-reference another subsection requiring interested party status.
As USEC points out in its brief, USEC did not object to AHUG's participation in the administrative proceeding as an industrial user. See Resp. Br. of USEC Opp'n AHUG Mot. Intervene at 5. Additionally, the briefs submitted by both USEC and the Department of Justice in connection with AHUG's motion to intervene appear to assume that AHUG properly appeared in the administrative proceeding below. As the regulation is unclear, the Court will assume that AHUG properly participated in the administrative proceeding under 19 C.F.R. § 351.312.
APPENDIX G
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.
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 stat ute 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 (De partment) 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 pro vided in section 735 of the Act. The estimated margins of sales at LTFV are shown in the Continuation of Sus pension of Liquidation section of this notice.
Case History
The preliminary determination in this investigation was published on July 13, 2001. (See Notice of Prelimi nary Determination of Sales at Less Than Fair Value and Postponement of Final Determination: Low En riched Uranium from France, 66 FR 36743 (July 13, 2001) (Preliminary Determination)). The petitioners1 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 Util ities Group (Ad Hoc Utilities Group or AHUG).2 A pub- lic hearing on the antidumping methodological issues was held on October 23, 2001.
On October 22 and 23, 2001, the petitioners, respon dent, and the Ad Hoc Utilities Group filed briefs on com mon 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 anti dumping duty (AD) and countervailing duty (CVD) in vestigations of LEU from France, Germany, the Neth erlands, and the United Kingdom, and Mr. Aldonas' No vember 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 correspon dence.
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 veri fication and briefing and hearing schedule in the com panion countervailing duty investigation, due to the events of September 11, 2001.
Amended Scope of Investigation
For purposes of this investigation, the product cov ered is all low enriched uranium (LEU). LEU is en riched uranium hexafluoride (UF6) with a U235 product assay of less than 20 percent that has not been con verted into another chemical form, such as UO2, or fabri cated 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 in vestigation. Specifically, this investigation does not cover enriched uranium hexafluoride with a U235 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 in vestigation, fabricated uranium is defined as enriched uranium dioxide (UO2), whether or not contained in nu clear fuel rods or assemblies. Natural uranium concen trates (U3O8) with a U235 concentration of no greater than 0.711 percent and natural uranium concentrates converted into uranium hexafluoride with a U235 concen tration 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 pur poses 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 consump tion 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 clas sified 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 sub headings are provided for convenience and customs pur poses, the written description of the merchandise sub ject 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 for Import Administration, to Faryar Shirzad, Assistant Secretary for Import Ad ministration, dated concurrently with this notice.
Goods Versus Services
Applicability of AD/CVD Law
The Preliminary Determination
In the preliminary determinations in the LEU inves tigations, 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. More over, under the U.S. Customs regulations, we recognized that any item within a tariff category for the Harmo nized Tariff System constitutes merchandise for cus toms 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 de scribed as enriched uranium compounds, enriched ura nium, and radioactive elements, isotopes, and com pounds.
Second, in our preliminary determinations we found it to be a well-established fact that the enrichment pro cess is a major manufacturing operation for the produc tion of LEU, and that enrichment is a required opera tion in order to produce LEU. We found that no party disputes that the enrichment process constitutes sub stantial transformation of the uranium feedstock. We, therefore, preliminarily concluded that the LEU en riched and exported from Germany, the Netherlands, the United Kingdom and France are products of those respective countries, and are subject to these investiga tions.
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 mer chandise. Rather, it is only those transactions in which utility companies obtain LEU through separate pur chases of SWU and feedstock from separate entities that the Ad Hoc Utilities Group (AHUG) contends cannot be subject to the antidumping law. We preliminarily deter mined that there was little substantive commercial dif ference between the two types of transactions. We found that, simply because an unaffiliated customer pur chases 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 sub ject 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 ura nium feedstock. We preliminarily determined that re gardless of whether the utility company pays in cash or in kind for the natural uranium content, the LEU is de livered under essentially the same contract terms, in cluding warranties and guarantees pertaining to the complete LEU product. Second, enrichers do not use the uranium feedstock provided by the utility compa nies. Instead, the natural uranium is typically delivered shortly before, or even after, delivery of the LEU, mak ing 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 re ceives. Rather, the enricher controls the manufacture of LEU, as demonstrated by the fact that the product as say 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 prelimi narily determined that, taken together, these facts indi cate 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 com ments received on this issue in response to our prelimi nary 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 enrich ment. Respondents and AHUG contend that, under such contracts, LEU is not sold to, or in, the importing country. Respondents contend that, for these transac tions, 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 appli cable because respondents are not selling subject mer chandise and because there is no sale of subject mer chandise 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 com merce 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 merchan dise 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 coun try, 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 ren dered 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 par ties to the import transaction).
Similarly, in conducting countervailing duty investi gations, section 701(a)(1) of the Act requires the Depart ment 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 sub sidy 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 mer chandise from an investigated country enters the com merce 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 merchan dise. 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 dis putes, that the enrichment process is a major manufac turing 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 consti tutes substantial transformation of the uranium feedstock. We continue to find, therefore, that the LEU enriched in and exported from Germany, the Nether lands, 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, re spondents and AHUG assert that the enrichment of ura nium 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.
We agree that a cleaner merely provides a service for which one is paid. However, we disagree with the appro priateness of the analogy used for purposes of under standing what is occurring in these cases. In the case of cleaning services, the cleaner merely returns to its cus tomer a cleaned suit; no substantial transformation takes place, and no merchandise is being produced. En richment 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 dis tinct product is produced at each stage. Milled uranium is converted into uranium hexafluoride. Uranium hexa fluoride 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 electric ity. 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 na ture of the enrichment operations, and attempts to place a major manufacturing operation which produces mer chandise 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 ques tion result in the introduction of LEU into the commerce of the United States. Accordingly, the Department de termines that all LEU produced in the investigated countries and entering the United States for consump tion 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. con sumers. 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 pro ducer/exporter sold subject merchandise as subject mer chandise, or whether the producer/exporter sold some input or manufacturing process that produced subject merchandise, as long as the result of the producer/ex porter's activities is subject merchandise entering the commerce of the United States. The first, and thresh old, 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 trans action 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 transac tion 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 in tent 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 provi sions that require the Department to determine whether there are dumping margins and to apply duties, as ap propriate, to such merchandise. See section 772(b) of Act. Even where the first sale to an unaffiliated pur chaser is far removed from the subject merchandise that enters the commerce of the United States, such mer chandise is covered under the law, and Congress en acted a specific provision establishing a basis for calcu lating export price. For example, where rollerchain con stitutes the subject merchandise and enters the United States, but the first sale to an 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 circum stances 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 en ters 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 be fore 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 ques tion are sales of services, to be consistent, the Depart ment cannot apply the AD or CVD law to these transac tions.
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 'procure ment' 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 rele vant, 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 con tracts at issue because the UCC does not apply to gov ernment contracts.5 Moreover, the UCC addresses the rights and obligations of the parties to a specific con tract, 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 enti tled 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.
Tolling
Respondents and AHUG also seek to obtain an ex emption 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 interpreta tion for several reasons. First, we do not interpret sec tion 351.401(h) of the Department's regulations to be relevant or applicable in determining whether merchan dise 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 cer tain 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 provi sion 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 pro vision 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 du ties 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 investiga tions. Further analysis of the tolling regulation in these antidumping investigations for purposes of determining EP, CEP and NV is provided below.
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 ex amples 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 im pose duties on subject merchandise unless there is a sale of such merchandise. However, these provisions cited by respondents are not instances in which the merchan dise enters the United States for consumption without the imposition of AD and countervailing duties. By op eration 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 De partment'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 com merce 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.
Substantial Transformation and Country of Origin
Respondents also argue that the Department's coun try-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 Depart ment's conclusion as to the country of origin of the en richment cannot be used to establish the country of ori gin 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 au thority to determine the scope of its investigations and AD/CVD orders. In contrast, the federal and interna tional regulation of transactions in uranium referred to by respondents reflect requirements adopted for pur poses of non-proliferation. Thus, the Nuclear Regula tory 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 in ternational commercial transactions and assessing du ties. The NRC has no role in determining the country of origin for customs duty purposes. Moreover, the De partment 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 Depart ment has in the past determined in other proceedings covering uranium that the process of enrichment consti tutes substantial transformation of the uranium, and therefore, that enrichment confers country of origin upon the product entering the United States for AD pur poses.
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 enrich ment processing adds substantial value to the natural uranium and creates a new and different article of com merce 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 ap plicable to merchandise produced through contract man ufacturing, 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 de signed 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 in jury 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, semi conductors, 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 dif ferent manufactured product. We simply do not con sider a major manufacturing process to be a "service" in the same sense that activities such as accounting, bank ing, insurance, transportation and legal counsel are con sidered 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 appro priate 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 mer chandise 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 Depart ment must base its evaluation of dumping upon sales of the subject merchandise, which should reflect all ele ments 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 mer chandise 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 pur poses of the AD law. These parties assert that the De partment 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 prece dent 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 inves tigations. 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 respon dents 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 desig nating 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 cus tomers supply the uranium feedstock as they do when they produce LEU from their own uranium feedstock.
Respondents reject petitioners' assertion that en richers are actually sellers of LEU based upon the util ity's delivery of uranium feed material as a pay ment-in-kind of uranium for the natural uranium compo nent 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 impossi ble 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 as sert does not occur, as the Department verified. Finally, respondents note that, by adopting the payment-in-kind theory, the Department would create a contractual ar rangement between parties that completely differs from the contract itself.
Respondents further dispute the petitioners' conclu sion 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. Respon dents 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 pur chase, not what material is given back to the utility com pany. Furthermore, they state, because uranium is fun gible, 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 en riched uranium or have enriched uranium delivered by other utility companies.
In addition, respondents contend that the Depart ment 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. Respon dents 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 unilater ally, 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 meth odology 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 Deter minations 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 surro gate 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 cal culating 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 cus tomers, 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 fungibil ity 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 prelimi nary determination that there is little commercial differ ence between EUP and enrichment contracts. AHUG contends that enrichment contracts require payment for enrichment services, and therefore, the contract does not reflect all elements of the value of the LEU deliv ered, 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 cumu lated to derive an unfair price even in the absence of a sale of that LEU in the U.S. market that reflects all ele ments of its value. AHUG argues that this theory seems to state that when utility companies arrange for the pro duction 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 re ceive 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 prod uct, i.e, LEU from the enricher.
Petitioners note that, in the preliminary determina tions, the Department identified three factors that peti tioners 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 com panies, 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 con tracts 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 en richment companies are the only producers and export ers of the subject merchandise in these cases and, there fore, 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 na ture and substance of the sales contracts at issue.94
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.95 The purpose of the regulation is to enable the Department to identify the appropriate seller of subject merchandise and for eign 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 De partment will not consider a toller or subcontractor to be a manufacturer or producer where the toller or sub contractor (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).
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 exam ined the role played by the foundries and design houses in the production of subject SRAMs, as well as the na ture 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. Be cause 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 identi fying the appropriate party as the producer of the sub ject merchandise.
In addition, since the enactment of the tolling regula tion, the Department has also recognized that the regu lation "does not purport to address all aspects of an analysis of tolling arrangements." Polyvinyl Alcohol from Taiwan: Final Results of Antidumping Duty Ad ministrative 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 Tai wan, 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 in directly in some aspect of production is an important consideration in identifying the appropriate party as the producer. Id. at 32814.
Enrichment Companies Are Producers/Exporters of LEU
In this case, we have determined that the enrichment companies are the producers and exporters of the sub ject merchandise for purposes of establishing EP, CEP and NV for several reasons. First, the enrichment pro cess 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 manu facturing 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 sin gle 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 pro cess is not merely a finishing or completion operation, but is instead the most significant manufacturing opera tion 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 enrich ment process, one would not be able to separate the mol ecules necessary to produce LEU. Like the design mask in SRAMs, the enrichment process establishes the es sential features of the LEU, creating a clearly distinct product from uranium feedstock. Moreover, the enrich ment 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 pro duced.
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 centri fuge technology has been years in the making and has required millions of dollars in research. So highly spe cialized is it, and so expensive to develop, that three ma jor 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 technologi cal sophistication and expense required to enrich ura nium 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 con stitutes 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 oper ate. Just as the design imparts the essential character istics of a microchip, enrichment imparts the essential characteristics of LEU.
Second, we find that enrichers not only have com plete control over the enrichment process, but in fact control the level of usage of the natural uranium pro vided by the utility company. We are aware that SWU is universally defined as the standard measure of enrich ment 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 en riched uranium at a specified product assay and a speci fied 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 spec ified. 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 impor tant factor in determining whether the contract is ful filled 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 pre cise amount of LEU delivered over the life of the con tract) that forms the fundamental nature of the agree ment between buyer and seller in a SWU contract. With this understanding in mind, the enricher then has ex traordinary leeway in determining the precise combina tion of SWU and feedstock to be used in the production of the LEU required by the SWU contract. The en richer'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, en richers 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 con tract (and by the utility customer). The enricher has complete control over these important production deci sions. 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 equa tion. Thus, the utility company obtains no more control over the production process than any customer who or ders custom-made merchandise would obtain. In our view, the enricher has extensive control over the produc tion 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 manu facturing subject merchandise. Unlike the U.S. design house in SRAMs from Taiwan, but like the U.S. im porter in Polyvinyl Alcohol from Taiwan, the U.S. util ity companies perform no manufacturing function what soever 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 con tracts 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 rec ognize that the provision of uranium feedstock may not be a payment-in-kind in the formal sense under these contracts, we maintain that the arrangement between buyer and seller in a SWU contract nonetheless is dedi cated to the delivery of LEU, and critical to the trade in LEU. In reaching this conclusion, we have looked be yond the four corners of the contract and have examined the totality of the circumstances surrounding the trans actions 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 indus try produces and sells LEU, we find that the overall arrangement between the parties indicates that enrich ment companies are engaged in selling, and utility com panies are engaged in purchasing, LEU. These transac tions may be construed differently in other contexts, such as for purposes of taxation, or for purposes of es tablishing 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 fundamen tal 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. Sec ond, 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 inter ested 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 com pany 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 con tract.
In addition, there are provisions in SWU contracts that further demonstrate that the underlying arrange ment 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 trans ferred to the utility customer upon delivery of the LEU. Consistent with this provision, for both types of transac tions, 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 com panies engage in the most significant portion of the pro duction of LEU, and thus the value of enrichment is be yond 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 determina tion 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 Depart ment's determination and because the arrangement be tween the utility company and the enricher under a SWU contract is functionally equivalent to the arrange ment under an EUP contract for purposes of determin ing 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 us ing the average price the enrichers charged their cus tomers for natural uranium for LEU contracts. For SWU contracts, when comparing U.S. Price with Nor mal 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 pur suant 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 con structed 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 orig inal 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 Memo randum 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 Memoran dum 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 dis cussed 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 deliveries to correct the respon dent's clerical errors.
(3) We revised the inventory carrying costs for vari ous U.S. deliveries to account for the respondent's cleri cal errors.
(4) We adjusted the total cost of manufacturing re ported 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 calcu lated 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 in cluded in CV based on the tails produced during the POI.
(8) We excluded purchased LEU from the calcula tion 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 adminis trative expenses to include certain research and devel opment expenses.
Final Determination of Investigation
We determine that the following weighted-average percentage dumping margins exist for the period Octo ber 1, 1999, through September 30, 2000:
Manufactuer/exporter
Margin (Percent)
Cogema/Eurodif
All Others
19.57
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 sus pend liquidation of all entries of LEU from France that are entered, or withdrawn from warehouse, for con sumption on or after July 13, 2001 (the date of publica tion of the Preliminary Determination in the Federal Register). The Customs Service shall continue to re quire 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 liqui dation 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 affir mative, 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 in jury or threat of injury does not exist, the proceedings will be terminated and all securities posted will be re funded or canceled. If the ITC determines that such injury does exist, the Department will issue an anti dumping 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 suspen sion of liquidation.
This determination is issued and published in accor dance 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) ex penses
14. Financial expenses
15. Purchased product
16. Constructed value (CV) profit
APPENDIX H
19 U.S.C. 1673 provides:
Imposition of Antidumping Duties
If-
(1) the administering authority determines that a class or kind of foreign merchandise is being, or is likely to be, sold in the United States at less than its fair value, and
(2) the Commission determines that-
(A) an industry in the United States-
(i) is materially injured, or
(ii) is threatened with material injury, or
(B) the establishment of an industry in the United States is materially retarded,
by reason of imports of that merchandise or by rea son of sales (or the likelihood of sales) of that mer chandise for importation,
then there shall be imposed upon such merchandise an antidumping duty, in addition to any other duty im posed, in an amount equal to the amount by which the normal value exceeds the export price (or the con structed export price) for the merchandise. For pur poses of this section and section 1673d(b)(1) of this title, a reference to the sale of foreign merchandise includes the entering into of any leasing arrangement regarding the merchandise that is equivalent to the sale of the merchandise.
8 In this regard, we rejected the argument that we should ignore the analysis and reasoning of Florida Power because that case involved a different statutory scheme. We chose not to ignore Florida Power, but instead to recognize its persuasive power, because the nearly identical
circumstances in that case were those surrounding SWU contracts. See Eurodif, 411 F.3d at 1363.
2 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 Corpora tion, 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.
3 See Respondents' Joint Case Brief, at 38, 39; see also Petitioners' Rebuttal Brief at 26.
4 49 Fed. Cl. 656 (2001) (No. 96-644C).
5 36 Fed. Cl. 691 (1996), aff'd 121 F.3d 1475 (Fed. Cir. 1997).
6 Static Random Access Memory Semiconductors From Taiwan: Redetermination on Remand, (May 2, 2000). The text of this determi nation can be found on the Department's Internet site at http://ia.ita. doc.gov/remands/00-48.htm.
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.
8 Antidumping Duties; Countervailing Duties; Final Rule, 62 FR 27295, 27411 (May 19, 1997).