Usec Inc. v. U.S.
| Decision Date | 16 September 2003 |
| Docket Number | Court No. 02-00112.,Court No. 02-00221.,SLIP OP. 3-121.,Court No. 02-00229.,Court No. 02-00227.,Court No. 02-00233.,Court No. 02-00219.,Court No. 02-00114.,Court No. 02-00113. |
| Citation | 281 F.Supp.2d 1334 |
| Parties | USEC INC. and United States Enrichment corporation, Plaintiffs, v. UNITED STATES, Defendant. |
| Court | U.S. Court of International Trade |
Fried, Frank, Harris, Shriver & Jacobson, Washington, DC (David E. Birenbaum, Jay R. Kraemer, Mark Fajfar) for Plaintiffs and Defendant-Intervenors Urenco Limited, Urenco Deutschland GmbH, Urenco Nederland B.V., Urenco (Capenhurst) Ltd., and Urenco, Inc., Weil, Gotshal & Manges, LLP, New York City (Stuart M. Rosen, Gregory Husisian, Jennifer J. Rhodes) for Plaintiffs and Defendant-Intervenors Eurodif S.A., COGEMA, and COGEMA, Inc.
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Stephen C. Tosini, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, David R. Mason, Senior Attorney, Office of Chief Counsel for Import Administration, U.S. Department of Commerce, for Defendant United States, of counsel.
Steptoe & Johnson LLP, Washington, DC (Sheldon E. Hochberg, Richard O. Cunningham, Eric C. Emerson) for Defendant-Intervenors and Plaintiffs USEC Inc. and United States Enrichment Corporation.
Shaw Pittman LLP, Washington, DC (Stephan E. Becker, Nancy A. Fischer, Sanjay J. Mullick, Joshua D. Fitzhugh) for Plaintiff-Intervenors Ad Hoc Utilities Group.
Before: POGUE, WALLACH, and EATON, Judges.
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 countervailing duty determinations of the Department of Commerce ("the Department" or "Commerce") with regard 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 intervenors (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 tolling regulation applicable, the agency should also (1) reconsider whether application of the regulation affects the determination as to which companies are "producers" for the purpose of the industry support determination, 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 Determination, 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).
The antidumping and countervailing duty investigations 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 reactors. 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 companies that enrich the uranium feedstock (the "enrichers") constitute subcontracting arrangements involving the purchase of services or sales of enriched uranium.
As we more fully explained in USEC I, nuclear utilities 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. Transcript 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 enriched 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 required to separate a given quantity of feed uranium into LEU and depleted uranium, or uranium "tails," at specified assays. See LEU from France, 66 Fed.Reg. at 65,884. Under a SWU contract, a utility purchases separative work units and delivers a quantity of feed uranium 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 ). Enrichers maintain inventories 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 enricher 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; whereupon [the utility] sha[ll] have title to such [LEU] associated 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 Enrichment 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 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. 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 utility'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 enricher, 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 circumstances 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 subcontractor, was the producer of the subject merchandise. The Court therefore directed Commerce to assess the applicability 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 support 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 enrichers 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 production 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.
This Court will uphold an agency determination unless it is "unsupported by substantial evidence on the...
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