United States v. Angeles

• Decision Date: 26 January 2009
• Docket Number: 07–1078.,Nos. 07–1059,s. 07–1059
• Citation: 77 USLW 4087,555 U.S. 305,172 L.Ed.2d 679,129 S.Ct. 878
• Parties: UNITED STATES, Petitioner, v. EURODIF S. A. et al. USEC Inc., et al., Petitioners, v. Eurodif S. A. et al.
• Court: U.S. Supreme Court

555 U.S. 305

129 S.Ct. 878

172 L.Ed.2d 679

77 USLW 4087

UNITED STATES, Petitioner,

v.EURODIF S. A. et al.

USEC Inc., et al., Petitioners,

v.Eurodif S. A. et al.

Nos. 07–1059, 07–1078.

Supreme Court of the United States

Argued Nov. 4, 2008.

Decided Jan. 26, 2009.

Syllabus^*

Nuclear utilities generally procure their fuel, “low enriched uranium” (LEU), through one of two types of contracts. Under an “enriched uranium product” (EUP) contract, the utility simply pays the enricher cash for LEU of a desired quantity and “assay,” i.e., its percentage of the isotope necessary for a nuclear reaction. The amount of energy required to enrich a quantity of “feed uranium” to a given assay is described in terms of an industry standard called a “separative work unit” (SWU). Under a “SWU contract,” the utility provides a quantity of feed uranium and pays the enricher for the SWUs to produce the required LEU quantity and assay. SWU contracts do not require that the required number of SWUs actually be applied to the utility's uranium. Because feed uranium is fungible and essentially trades like a commodity, and because profitable operation of an enrichment plant requires the constant processing of feed uranium from the enricher's undifferentiated stock, the LEU provided to a utility under a SWU contract cannot be traced to the particular unenriched uranium the utility provided.

Petitioners (collectively, USEC), who run the only uranium enrichment factory in the United States, petitioned the Commerce Department for relief under the Tariff Act of 1930, which calls for “antidumping” duties on “foreign merchandise” sold in this country at “less than its fair value,” 19 U.S.C. § 1673, but does not touch international sales of services. USEC alleged that LEU imported from European countries under both EUP and SWU contracts was being sold in the United States at less than fair value and was materially harming domestic industry. In its final determination, the Department concluded that LEU from France, including LEU acquired under SWU contracts, was being sold here at less than fair value. Among other things, the Department rejected the claim that such transactions were sales of enrichment services, as provided in SWU contracts. The Court of International Trade (CIT) ultimately reversed, noting the “legal fiction” expressed in SWU contracts that the very feed uranium delivered by a utility to an enricheris enriched and then returned as LEU to the utility. Finding that the record did not support a determination that the enricher has any ownership rights, the CIT reasoned that the Department's decision was unsupported by substantial evidence and not in accordance with law. The Federal Circuit affirmed, approaching the issues much as the CIT had.

Held: The Department's take on the transactions at issue as sales of goods rather than services reflects a permissible interpretation and application of § 1673. Because § 1677(1) gives this determination to the Department in the first instance, the Department's interpretation governs in the absence of unambiguous statutory language to the contrary or an unreasonable resolution of ambiguous language. See, e.g.,Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 104 S.Ct. 2778, 81 L.Ed.2d 694. Two threshold propositions must be accepted. First, the Department reasonably concluded that § 1673 is not limited by its terms to cash-only sales. If that were the case, any sale of a manufactured product could be exempted from the section's operation by a contractual term stating part of the purchase price in terms of a commodity. Second, since public law is not constrained by private fiction, see, e.g.,Tcherepnin v. Knight, 389 U.S. 332, 336, 88 S.Ct. 548, 19 L.Ed.2d 564, the Department is not bound by the legal fiction created by SWU contracts that the very feed uranium delivered by a utility to an enricher is enriched and then returned as LEU to the utility. Thus, the test of the Department's position turns first on whether the statute clearly excludes a transaction involving mixed payment for LEU that may and almost certainly will be produced from uranium feed distinct from what the utility provides. Although it is undisputed that § 1673 applies to the sale of goods, not services, the section simply does not speak with the precision necessary to say definitively whether it applies to the LEU and the agreement giving the utility a right to get it. This is the very situation in which the Court looks to an authoritative agency for a decision about a statute's scope. Once the choice is made, the Court asks only whether the Department's application of the statute was reasonable. Where, as here, cash plus an untracked fungible commodity are exchanged for a substantially transformed version of the same commodity, the Department may reasonably treat the transaction as the sale of a good under § 1673. Cf. Powder Co. v. Burkhardt, 97 U.S. 110, 116, 24 L.Ed. 973. The Department's position is reinforced by practical reasons aimed at preserving antidumping duties' effectiveness. It is undisputed that such duties apply to LEU sold to a domestic utility by foreign enrichers under an EUP contract calling for a single cash price that is less than fair value. Such a transaction obviously opens the domestic enrichment industry to material injury, the very threat that § 1673 was meant to counter. But the same injury will occur if a SWU contract is untouchable. Under a SWU contract, the domestic utility pays cash to a third party for unenriched uranium and provides this along with additional cash in exchange for LEU; any EUP contract could be structured as a SWU contract simply by splitting the transaction in two, one contract to buy unenriched uranium and another to enrich it. And the restructuring would not stop with uranium; contracts for many types of goods would be replaced by separate contracts for the goods and for processing services, and antidumping duties would primarily chastise the uncreative. The Department's attempt to foreclose this absurd result by treating such transactions as sales of goods is eminently reasonable. Pp. 886 – 890.

506 F.3d 1051, reversed and remanded.

SOUTER, J., delivered the opinion for a unanimous Court.

Malcolm L. Stewart for the petitioner in No. 07–1059.

H. Bartow Farr, Washington, DC, for the petitioners in No. 07–1078.

Caitlin J. Halligan, New York, NY, for the respondents.

Gregory G. Garre, Solicitor General, Counsel of Record, Department of Justice, Washington, D.C., for the United States.

Peter B. Saba, General Counsel, James A. Schoettler, Jr., Assistant General Counsel, USEC Inc., of Counsel, H. Bartow Farr III, Farr & Taranto, Washington, D.C. 20036, Sheldon E. Hochberg, Counsel of Record, Eric C. Emerson, Charles G. Cole, Michael A. Vatis, John P. Nolan, Steptoe & Johnson LLP, Washington, D.C., for Petitioners USEC Inc. and United States Enrichment Corporation.

Nancy A. Fischer, Counsel of Record, Stephan E. Becker, David J. Cynamon, Joshua D. Fitzhugh, Christine J. Sohar, Pillsbury Winthrop Shaw Pittman LLP, Washington, D.C., for Respondent the Ad Hoc Utilities Group.

Lisa R. Eskow, Arthur C. D'Andrea, Weil, Gotshal & Manges LLP, Austin, TX, Stuart M. Rosen, Caitlin J. Halligan, Counsel of Record, Gregory Silbert, W. Andrew Ryu, Weil, Gotshal & Manges LLP, New York, NY, for Respondents Eurodif S.A., Areva NC S.A., and Areva NC Inc.

John B. Bellinger, III, Legal Adviser, Department of State, Washington, D.C., Daniel J. Dell'Orto, Acting General Counsel, Department of Defense, Washington, D.C., Lily Fu Claffee, General Counsel, John D. McInerney, Chief Counsel for Import Administration, David R. Mason, Jr., Senior Counsel, Quentin M. Baird, Attorney, Department of Commerce, Washington, D.C., David R. Hill, General Counsel, Department of Energy, Washington, D.C., Gregory G. Garre, Acting Solicitor General, Counsel of Record, Gregory G. Katsas, Assistant Attorney General, Edwin S. Kneedler, 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., for the United States.

Justice SOUTER delivered the opinion of the Court.

Section 731 of the Tariff Act of 1930 calls for “antidumping” duties on “foreign merchandise” sold in the United States at “less than its fair value,” 19 U.S.C. § 1673, but does not touch international sales of services. These cases test the application of this antidumping provision to imports of low enriched uranium (LEU), a highly processed derivative of natural uranium used as nuclear fuel, when domestic utilities contract to obtain LEU for cash plus unenriched uranium delivered to a foreign enricher. Although the parties' contracts call these transactions sales of uranium enrichment services, the Commerce Department treats them as sales of “foreign merchandise” subject to the antidumping provision. The issue is whether the Commerce Department's way of seeing the transactions as sales of goods rather than services reflects a permissible interpretation and application of § 1673. We hold that it does.

I

There are five steps in transforming elemental uranium into fuel rods for nuclear powerplants. After uranium ore is mined, it is milled into uranium concentrate called “yellowcake,” which is next converted into uranium hexafluoride gas or “feed uranium.” The fissionable isotope in unenriched feed uranium is then concentrated, producing LEU in pellet form, which is in turn made into uranium fuel rods. These cases are about the fourth step: enriching uranium feedstock into LEU.

The uranium isotope needed for a nuclear reaction, U–235, amounts only to .711 percent by weight of natural uranium. Uranium whose concentration or “assay,” of U–235 has been enhanced to 20 percent or more is weapons-grade, highly enriched uranium (HEU), whereas LEU has a U–235 assay of 3 to 5 percent, making it useful as...