[Federal Register Volume 66, Number 93 (Monday, May 14, 2001)]
[Notices]
[Pages 24329-24339]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-12064]


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DEPARTMENT OF COMMERCE

International Trade Administration

[C-428-829; C-421-809; C-412-821]


Notice of Preliminary Affirmative Countervailing Duty 
Determinations and Alignment With Final Antidumping Duty 
Determinations: Low Enriched Uranium From Germany, the Netherlands, and 
the United Kingdom

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

ACTION: Notice of Preliminary Affirmative Countervailing Duty 
Determination.

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EFFECTIVE DATE: May 14, 2001.

FOR FURTHER INFORMATION CONTACT: Robert Copyak (Germany) at (202) 482-
2209, Stephanie Moore (the Netherlands) at (202) 482-3692, and Eric B. 
Greynolds (United Kingdom) at (202) 482-6071, Office of AD/CVD 
Enforcement VI, Group II, Import Administration, International Trade 
Administration, U.S. Department of Commerce, Room 4012, 14th Street and 
Constitution Avenue, NW., Washington, DC 20230.

Preliminary Determination

    The Department of Commerce (the Department) preliminarily 
determines that countervailable subsidies are being provided to 
producers and exporters of low enriched uranium (subject merchandise) 
from Germany, the Netherlands, and the United Kingdom. For information 
on the estimated countervailing duty rates, please see the ``Suspension 
of Liquidation'' section of this notice.

SUPPLEMENTARY INFORMATION:

Petitioners

    The petition in this investigation was filed by USEC Inc., its 
wholly-owned subsidiary, United States Enrichment Corporation (USEC), 
and Paper, Allied-Industrial, Chemical and Energy Workers International 
Union, AFL-CIO, CLC, and Local 5-550 and Local 5-689 (collectively 
PACE) (the petitioners).

Case History

    Since the publication of the notice of initiation in the Federal 
Register (see Notice of Initiation of Countervailing Duty 
Investigations: Low Enriched Uranium from France, Germany, the 
Netherlands, and the United Kingdom, 66 FR 1085 (January 5, 2001) 
(Initiation Notice)), the following events have occurred: Beginning on 
January 16, 2001, we issued countervailing duty questionnaires to the 
Government of Germany (GOG), the Government of the Netherlands (GON), 
and the Government of the United Kingdom (UKG).\1\ Beginning on March 
22, 2001, we received questionnaire responses from Urenco Deutschland 
GmbH of Germany (Urenco Deutschland), Urenco Nederland BV of the 
Netherlands (UNL), and Urenco (Capenhurst) Limited (UCL), the GOG, the 
GON, and the UKG (collectively referred to as respondents). Beginning 
on April 9, 2001, we issued supplemental questionnaires to respondents. 
Beginning on April 23, 2001, we received supplemental questionnaire 
responses from respondents.
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    \1\ Upon the issuance of the questionnaire, we informed the GOG, 
GON, and the UKG that it was their governments' responsibility to 
forward the questionnaires to all producers/exporters that shipped 
subject merchandise to the United States during the period of 
investigation.
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    On February 21, 2001, we issued an extension of the due date for 
this preliminary determination from March 2, 2001 to May 7, 2001. See 
Low Enriched Uranium from France, Germany, the Netherlands, and the 
United Kingdom: Extension of Time Limit for Preliminary Determinations 
in Countervailing Duty Investigations, 66 FR 11000 (February 21, 2001) 
(Extension Notice).
    On May 3, 2001, consultations in accordance with Article 13.2 of 
the Agreement on Subsidies and Countervailing Measures were held in 
Geneva, Switzerland with the Governments of Germany, the Netherlands, 
the United Kingdom, and the Delegation of the European Commission.
    In our Initiation Notice, we invited interested parties to comment 
on the scope of these investigations. We received comments from 
respondents on January 17, 2001, and from petitioners on January 23, 
2001. In addition, we received comments from the Ad Hoc Utilities 
Group, an industrial user/consumer, on April 5, 2001. Our analysis of 
these comments can be found in the May 7, 2001 Public Memorandum to 
Bernard Carreau, entitled Low Enriched Uranium from France, Germany, 
the Netherlands and the United Kingdom; Comments on the Scope of the 
Investigations, on file in the Central Records Unit, room B-099, of the 
Main Commerce Building.

Petitioners' New Subsidy Allegations

    On April 23, 2001, petitioners submitted a new subsidy allegation 
involving Urenco Deutschland, UNL, and UCL (collectively referred to as 
the Urenco Group). In their submission, they alleged that the one-third 
ownership obtained by British Nuclear Fuels Limited (BNFL) and Ultra-
Centrifuge Nederland (UCN) along with the shareholder loans made by the 
two government-owned companies constituted equity infusions into the 
Urenco Group, which they assert was unequityworthy at the time the 
alleged infusions were made. In support of their allegation, 
petitioners cite to various annual reports of BNFL, UCN, and 
Uranitisotopentrennungsgeselleschaft mbH (Uranit) (the privately-held 
German arm of the Urenco Group) as well as several corporate studies 
which they claim indicated a bleak outlook for the LEU industry in the 
years preceding the impending merger. In addition, petitioners claim 
that, prior to the merger there was no objective evidence before BNFL 
or UCN indicating that the planned restructuring and merger would do 
anything to improve the efficiency and financial prospects of the 
companies involved. On this basis, petitioners request that the 
Department investigate whether the investments constituted 
countervailable equity infusions into an unequityworthy company.
    We have determined not to initiate an investigation of this 
allegation. As discussed in further detail below in the ``Urenco Group 
Corporate History'' section, immediately preceding the creation of the 
Urenco Group, the enrichment operations were controlled by BNFL in the 
United Kingdom, UCN in the Netherlands, and Uranit in Germany. Both 
BNFL and UCN were owned and controlled by their respective governments 
while Uranit was privately-held. On September 1, 1993, pursuant to the 
terms of the merger agreement, BNFL, UCN, and Uranit transferred their 
enrichment operations to the Urenco Group. In return, BNFL, UCN, and 
Uranit each received a one-third ownership interest in the Urenco 
Group. Thus, based on the information submitted by respondents, we find 
that this aspect of the merger did not constitute an equity infusion 
but rather represented a restructuring of the Urenco Group in which the 
three companies, BNFL, UCN, and Uranit,

[[Page 24330]]

contributed their respective assets in return for one-third ownership 
of the Group.
    In addition to the allegation involving the E23 asset write down, 
which we are addressing in this preliminary determination, on April 27 
and 30, 2001, petitioners made an allegation with respect to the 
Netherlands and the United Kingdom involving an additional asset write 
down. We are not addressing this allegation in this determination due 
to the lateness of the allegation. We will address it after this 
determination. If we decide to initiate on this allegation then prior 
to making our final determination, we will issue a preliminary analysis 
memorandum regarding this allegation and allow the parties to comment.

Scope of the Investigation

    For purposes of these investigations, the product covered is low 
enriched uranium (LEU). LEU is enriched uranium hexafluoride 
(UF<INF>6</INF>) with a U<SUP>235</SUP> product assay of less than 20 
percent that has not been converted into another chemical form, such as 
UO<INF>2</INF>, or fabricated into nuclear fuel assemblies, regardless 
of the means by which the LEU is produced (including LEU produced 
through the down-blending of highly enriched uranium).
    Certain merchandise is outside the scope of the investigation. 
Specifically, this investigation does not cover enriched uranium 
hexafluoride with a U<SUP>235</SUP> assay of 20 percent or greater, 
also known as highly enriched uranium. In addition, fabricated LEU is 
not covered by the scope of these investigations. For purposes of this 
investigation, fabricated uranium is defined as enriched uranium 
dioxide (UO<INF>2</INF>), whether or not contained in nuclear fuel rods 
or assemblies. Natural uranium concentrates 
(U<INF>3</INF>O<INF>8</INF>) with a U<SUP>235</SUP> concentration of no 
greater than 0.711 percent and natural uranium concentrates converted 
into uranium hexafluoride with a U<SUP>235</SUP> concentration of no 
greater than 0.711 percent are not covered by the scope of the 
investigation.
    The merchandise subject to these investigations is classified in 
the Harmonized Tariff Schedule of the United States (HTSUS) at 
subheading 2844.20.0020. Subject merchandise may also enter under 
2844.20.0030, 2844.20.0050, and 2844.40.00. Although the HTSUS 
subheadings are provided for convenience and U.S. Customs purposes, the 
written description of the merchandise under investigation is 
dispositive.
    In our notice of initiation we invited parties to comment on scope 
issues raised by these investigations. These comments are addressed in 
a scope memo dated May 7, 2001. However, to the extent that some of the 
comments on scope issues re-argue the determination of industry support 
for the petition, we draw parties attention to section 702(c)(4)(E) and 
732(c)(4)(E) which states in pertinent part: ``after the administering 
authority makes a determination with respect to initiating an 
investigation, the determination regarding industry support shall not 
be reconsidered.''

The Applicable Statute and Regulations

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

Injury Test

    Because Germany, the Netherlands, and the United Kingdom are 
``Subsidy Agreement Countries'' within the meaning of section 701(b) of 
the Act, the International Trade Commission (ITC) is required to 
determine whether imports of the subject merchandise from these 
countries materially injure or threaten material injury to a U.S. 
industry. On January 31, 2001, the ITC published its preliminary 
determination finding that there is a reasonable indication that an 
industry in the United States is being materially injured, or is 
threatened with material injury, by reason of imports from Germany, the 
Netherlands, and the United Kingdom of subject merchandise. See Low 
Enriched Uranium from France, Germany, the Netherlands, and the United 
Kingdom, 66 FR 8424 (January 31, 2001).

Alignment With Final Antidumping Duty Determination

    On May 4, 2001, petitioners submitted a letter requesting alignment 
of the final determination in these investigations with the final 
determinations in the companion antidumping duty investigations. 
Therefore, in accordance with section 705(a)(1) of the Act, we are 
aligning the final determination in these investigations with the final 
determinations in the antidumping duty investigations of low enriched 
uranium from Germany, the Netherlands, and the United Kingdom.

Period of Investigation

    The period of investigation (POI) for which we are measuring 
subsidies is January 1, 1999, through December 31, 1999.

Urenco Group: Corporate History

Pre-Merger

    Prior to the Treaty of Almelo, the production group of the U.K. 
Atomic Energy Authority (UKAEA) was responsible for the U.K. enrichment 
program. BNFL was created from the existing assets of UKAEA. The 
Capenhurst site assets and all of the British centrifuge enrichment 
development work were transferred to BNFL. In the Netherlands, UCN was 
incorporated in November 1969, as a limited company, with the Dutch 
government holding 55 percent and the remaining 45 percent held by 
various industrial interests. UCN was designated by the Dutch 
government to develop ultracentrifuge technology for uranium enrichment 
in the Netherlands. By the time the Treaty of Almelo (the Treaty) came 
into effect in 1971, Germany already had two centrifuge companies 
dedicated to the enriched uranium industry: Gesellschaft fur 
Nuklearverfahrestechnik mbH (GnV), which was involved in centrifuge 
development and manufacturing and plant design; and Uranit, which took 
over earlier R&D and cascade work. Both companies were owned by private 
industrial shareholders.

Treaty of Almelo

    In March 1970, the GOG, the GON, and the UKG signed the Treaty, 
which became effective in July 1971. The purpose of the Treaty was for 
the three governments to collaborate in the development and 
exploitation of the gas centrifuge process for producing enriched 
uranium. Prior to 1971, the centrifuge R&D programs in each country 
were independent.
    Pursuant to Article 1(2) of the Treaty, the three governments 
agreed that there should be two ``joint industrial enterprises'' to 
carry out the centrifuge collaboration: one to conduct R&D and to 
design and build centrifuge equipment, and the other, an enrichment 
organization to own and operate the enrichment plants and market the 
output. Centec GmbH was established in Germany, its shareholders being 
BNFL, UCN and GnV, to conduct R&D and plant design work. Urenco Ltd., 
located in the U.K., gained responsibility for the marketing. Urenco 
Ltd. was incorporated in September 1971, and its shareholders were 
BNFL, UCN and Uranit.
    In addition, in 1971, the production organization had two 
established partnerships. The first was Urenco

[[Page 24331]]

(U.K.), a partnership under English Law, between BNFL (75 percent), UCN 
(12.5 percent) Uranit (12.5 percent), and Urenco Ltd. with a nominal 
share. The second was the Dutch partnership, Urenco Nederland v.o.f., 
which then consisted of UCN (43.75 percent), Uranit (43.75 percent), 
BNFL (12.5 percent), and Urenco Ltd. with a nominal share. In the late 
1970s, a third partnership, Urenco Deutschland was established under 
German law. The partners were Uranit (96 percent), BNFL and UCN with 
two percent shares each, and Urenco Ltd. with a nominal share. In 1980, 
ownership in Urenco Nederland v.o.f. changed; UNC and Uranit increased 
their share in the company to 49 percent each, while BNFL reduced its 
participation to 2 percent. Likewise, for Urenco (U.K.), BNFL's share 
increased to 96 percent, while UCN and Uranit decreased their 
participation to two percent each.
    In preparation for the merger, each of the three operating 
partnerships was combined and their assets transferred into a limited 
company, owned in each case by the managing partner. Specifically, BNFL 
changed the name of its subsidiary BNFL Enrichment Ltd. to Urenco 
(Capenhurst) Ltd. (UCL), and transferred to UCL the relevant portion of 
the Capenhurst site, buildings and equipment related to the enrichment 
business. The activities of the former Urenco Nederland v.o.f. 
(enrichment) and of UCN (centrifuge manufacturing) were transferred 
into a new company, Urenco Nederland B.V. (UNL). At the request of 
Uranit, the German shareholder, the enrichment plant was initially 
leased to Urenco Deutschland on a basis comparable to UCL and UCN. Each 
of these limited companies became the sole owner of the relevant 
plants, including the sites, buildings, R&D facilities and centrifuge 
manufacturing.

1993 Merger

    Subsequently, in September 1993, the Urenco operations in the three 
countries were merged.\2\ This was accomplished by a two-step process 
whereby the partnerships in each country were collapsed and replaced by 
newly created limited companies, UCL of the United Kingdom managed by 
International Nuclear Fuels Limited (INFL), BNFL's wholly-owned 
subsidiary, Urenco Deutschland of Germany managed by Uranit, and UNL of 
the Netherlands managed by UCN and Uranit. The limited companies became 
the sole owners of the enrichment facilities. On September 1, 1993, the 
voting shares of the limited companies were transferred to Urenco Ltd. 
in exchange for one-third interest in Urenco. Therefore, Urenco Ltd., 
became the parent company and, indirectly, ultimate owner of the 
plants, R&D facilities, and centrifuge manufacturing facilities.
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    \2\ Respondents have argued that this merger constituted a 
``change in ownership'' under section 771(5)(F) of the Act. However, 
in both the Netherlands and the UK, the assets at the enrichment 
operations were directly owned by their respective governments 
before the merger and indirectly after the merger. We preliminarily 
determine that there was no change in ownership in 1993 but merely a 
merging and restructuring of assets by the three Urenco Group 
partners, i.e., the Government of the Netherlands, the Government of 
the United Kingdom, and the private German shareholders of the 
Group, each of whom remained as owners in Urenco Ltd.
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Joint Committee

    Pursuant to Article II 5(e) of the Treaty, a Joint Committee of 
government representatives was created to ensure that the terms of the 
Treaty were carried out. Through the Joint Committee and under the 
Treaty, each of the member countries had to give their consent and 
approval for the merger. Since the merger, Urenco Ltd. provides status 
reports to the Joint Committee twice a year. These reports include a 
description of operations, volume of production and secured service 
contracts as well as any health and safety issues, and capacity 
extension and major production milestones.

Post Merger

    Urenco Ltd. is a private limited company which wholly owns four 
subsidiary companies: UCL, Urenco Deutschland, UNL and Urenco Inc. 
(UI). Urenco Ltd. owns 100 percent of the voting shares and exercises 
control over the subsidiaries. Urenco Ltd. functions as the 
``headquarters'' for the Urenco Group and is also the worldwide 
marketing arm of the Urenco Group. The Board of Directors (Board) is 
made up of four Executive Directors, ten non-Executive Directors, nine 
of which are appointed by the shareholders of Urenco and one of which 
is elected by the board as an independent Director. The Board meets 
four times a year, during which it sets major policies, monitors 
financial performances, and monitors the performance of the executive 
directors. The Board is further divided into three sub-committees: The 
Executive Board, which is responsible for conducting day-to-day 
management, the Remuneration Committee, which decides the terms of 
employment and remuneration of the Executive Directors, and the Audit 
Committee.

UCL, Urenco Deutschland, UNL

    While Urenco Ltd. is responsible for the marketing and contracting 
of the Urenco Group, it is the responsibility of each of the 
subsidiaries to produce and deliver the product based upon the 
contractual terms. The day-to-day responsibilities of running the 
operations, meeting the agreed targets and implementing the group 
strategies lies with each of the companies. Each of the companies 
continues to provide the enrichment products sold by Urenco Ltd. While 
the enrichment facilities were transferred to the managing partnerships 
and then to Urenco's subsidiaries, local business activities were not 
transferred to Urenco Ltd. and are not shared across the group. Each 
company within the Urenco Group is a separate legal entity, with its 
own directors and senior management team; however, they work under the 
direction and in close co-operation with the Executive Board.

International Consortium

    As discussed above, the Treaty of Almelo was signed in 1970 by the 
Governments of Germany, the Netherlands, and the United Kingdom in 
order to collaborate in the development and exploitation of the gas 
centrifuge process for producing enriched uranium. Towards this end, 
the three governments provided subsidies for the research and 
development of gas centrifuge technology and for the construction and 
support of enrichment production operations. For example, the GOG 
provided grants specifically to help construct enrichment plants used 
by the Urenco Group in the Netherlands and the United Kingdom. Further, 
as a result of the 1993 merger, each of the respective participants in 
Germany, the Netherlands, and the United Kingdom owns a one-third 
interest in Urenco Ltd. Therefore, given that the Treaty of Almelo was 
specifically entered into by the three governments to produce and sell 
the subject merchandise and that each of these participating companies 
share R&D, as well as share in the production and marketing of the 
subject merchandise, we preliminarily determine that such an 
arrangement constitutes an international consortium.
    Under section 701(d) of the Act, if the members of an international 
consortium engaged in the production of the subject merchandise receive 
countervailable subsidies from their respective home countries to 
assist, permit, or otherwise enable their participation through 
production or manufacturing operations in their respective home 
countries, then

[[Page 24332]]

the Department will cumulate all such countervailable subsidies, as 
well as subsidies provided directly to the international consortium, in 
determining any countervailing duty upon such merchandise. Based upon 
the information on the record, section 701(d) of the Act is applicable 
to these investigations. As explicitly instructed by Congress in the 
legislative history of this provision, section 701(d) of the Act ``is 
applicable to cases in which foreign governments provide subsidized 
assistance for participation in international production and marketing 
ventures.'' \3\
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    \3\ H.R. No. 100-576, 100th Cong., 2d Sess. 589 (1988) 
(``Omnibus Trade and Competitiveness Act of 1988,'' Conference 
Report) (Conference Report).
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    Therefore, because we find the Urenco Group of companies to 
constitute an international consortium, pursuant to section 701(d) of 
the Act, we have cumulated all countervailable subsidies received by 
the member companies from the GOG, GON, and the UKG in order to 
calculate one countervailing duty rate applicable to the production and 
exportation of the subject merchandise from this consortium.

Subsidies Valuation Information

Allocation Period

    Under section 351.524(d)(2) of the Department's CVD Regulations, we 
will presume the allocation period for non-recurring subsidies to be 
the average useful life (AUL) of renewable physical assets for the 
industry concerned, as listed in the Internal Revenue Service's (IRS) 
1977 Class Life Asset Depreciation Range System (IRS Tables), as 
updated by the Department of Treasury. The presumption will apply 
unless a party claims and establishes that these tables do not 
reasonably reflect the AUL of the renewable physical assets for the 
company or industry under investigation, and the party can establish 
that the difference between the company-specific or country-wide AUL 
for the industry under investigation is significant. In this instance, 
however, the IRS Tables do not provide a specific asset guideline class 
for the uranium enrichment industry.
    In their questionnaire responses, the Urenco Group companies have 
calculated company-specific AULs by dividing their respective 
aggregate, annual, average gross book values of their depreciable 
productive fixed assets by their aggregated annual charge to 
accumulated depreciation for a ten-year period in the manner specified 
by section 351.524(d)(2)(iii) of the CVD Regulations. Based on this 
calculation, Urenco Deutschland reports an AUL of 13 years, UNL reports 
an AUL of 12 years, and UCL reports an AUL of 10 years. Based on 
information submitted by respondents, we have preliminarily used 
company-specific AUL data when calculating the AUL of the Urenco Group.
    As discussed above, we preliminarily determine that the companies 
of the Urenco Group operate as an international consortium within the 
meaning of section 701(d) of the Act. We note that our decision to 
apply the international consortium provision affects the manner in 
which we must calculate the AUL in this investigation. The legislative 
history clarifies the application of that provision. It points out that 
the amendment, i.e., section 701(d) of the Act, explicitly authorized 
the Department to ``* * * cumulate the amounts of subsidies from all 
{participating countries in an international consortium} in determining 
the relevant countervailing duty to be applied to the product subject 
to that investigation.'' See Conference Report at 589. Thus, consistent 
with the Congressional intent, which directed the Department to 
cumulate the subsidies received from countries in an international 
consortium, we have calculated a single AUL for the Urenco Group by 
weight-averaging the company-specific AULs of the Urenco Group 
companies by their respective total average gross book values. On this 
basis, we derived an AUL of 12 years for the Urenco Group.
    We note that at verification we will closely examine the AUL 
information submitted by the Urenco Group companies. In addition, we 
welcome any comments interested parties may have with regard to our 
approach on this issue.
    In the Initiation Notice, we stated that, with respect to 
petitioners' allegations regarding UNL's receipt of certain research 
and development (R&D) subsidies, we would determine during the course 
of this investigation whether the provisions of section 
351.524(d)(2)(iv) of the CVD Regulations should apply to this case. See 
page 14 of the December 27, 2000, Initiation Checklist, the public 
version of which is on file in room B-099 of the main Commerce Building 
(Initiation Checklist). Section 351.524(d)(2)(iv) of the CVD 
Regulations states that under certain ``extraordinary circumstances'' 
the Department may consider an allocation period other than the AUL or 
it may determine that the benefit stream of a non-recurring subsidy 
should begin at a date other than the date at which the subsidy was 
bestowed. In the Preamble to the CVD Regulations, we explain that when 
a government provides a subsidy to fund the development of certain new 
technologies, or to fund an extraordinarily large project for the 
development of new products that encompasses not only basic research 
and development, but also implementation and commercialization, the 
duration of the benefit may not necessarily be related to the AUL of 
assets for that industry. See the Preamble, 63 FR 65348, 65396 
(November 25, 1998). We further state in the Preamble that there could 
be a significant lead time between receipt of the subsidy and 
development of the product and the product's commercialization. We have 
explained that, in those instances, even if we were to rely on the AUL 
of assets, there is a question as to whether the benefit stream should 
begin at the time the grant is received or at the time the product 
reaches commercial production. Id. at 65396.
    As stated above, we have preliminarily determined that the AUL for 
the Urenco Group companies is 12 years. Thus, in using a 12-year AUL, 
1988 marks the last year in which one of the Urenco Group companies 
could have received a non-recurring grant and still have those 
subsidies be allocable to the POI. With respect to R&D subsidies 
received by the Urenco Group companies, namely those of UNL and Urenco 
Deutschland, in which the application of the ``extraordinary 
circumstances'' provision under section 351.524(d)(2)(iv) of the CVD 
Regulations might have been an issue, we note that all of the 
production plants for which the R&D subsidies were received began 
commercial production prior to 1988. In other words, even if the 
Department were to apply the ``extraordinary circumstances'' provision 
under section 351.524(d)(2)(iv) of the CVD Regulations to the R&D 
subsidies received by the Urenco Group companies, the use of a 12-year 
AUL would result in the benefit streams of the respective subsidies 
being fully allocated prior to the POI. Accordingly, we preliminarily 
determine that section 351.524(d)(2)(iv) of the CVD Regulations is not 
relevant to this case.

Benchmarks for Loans and Discount Rate

    In accordance with section 351.524(d)(3)(i)(A) of the CVD 
Regulations, we used, where available, discount rates that were based 
on the cost of long-term, fixed-rate financing for commercial loans 
received by the Urenco Group companies. Where the

[[Page 24333]]

Urenco Group companies had no comparable commercial loans, we used 
national average interest rates as provided by the companies' 
corresponding government as specified by section 351.505(a)(3)(ii) of 
the CVD Regulations. In addition, we note that one countervailable 
program used by the Urenco Group required the use of discount rate 
benchmarks denominated in several foreign currencies. In those 
instances where the Urenco Group did not report a comparable, 
commercial discount rate benchmark for a particular foreign currency, 
we used currency-specific ``Lending Rates'' from private creditors as 
published in the International Financial Statistics as the foreign 
currency denominated discount rate.

Treatment of the Denominator

    Based on our review of the responses, it appears as though 
respondents did not report a value for the natural uranium component of 
certain LEU sales. Therefore, in order to determine more accurately the 
level of subsidy applicable to the subject merchandise, we have 
estimated a value for this component. Based on petitioners' estimation 
that the enrichment component accounts for 60 percent of the value of 
LEU, we have increased the reported sales value to include an estimated 
value for the natural uranium component. We recognize that this is an 
estimate of the value of LEU sold by respondents. We intend to seek 
additional information from respondents prior to our final 
determination.

I. Programs Preliminarily Determined To Confer Subsidies From the 
Government of Germany

A. Enrichment Technology Research and Development Program

    Under this program, the Government of Germany promoted the research 
and development of uranium enrichment technologies. The Federal 
Ministry for Research and Technology provided Urenco Deutschland a 
series of grant disbursements for the funding of research and 
development projects. The funds were provided to encourage continuous 
improvements of centrifuge technologies and to fund the research of 
lasers and other advanced technologies. The grant disbursements under 
this program were made during the years 1980 through 1993. The total 
amount of grant disbursements made under both this program equaled DM 
244.3 million.
    Assistance under this program was provided for in two agreements 
entitled ``Financing Agreement'' and ``Terms and Conditions for 
Allocations on a Cost Basis to Companies in Industry for Research and 
Development Projects' (Laser R&D Agreement). According to Article 4, 
Section 6, of the Financing Agreement, the funds provided to Urenco 
Deutschland under this agreement had repayment obligations. The funds 
were repayable within five years of disbursement, contingent upon the 
company's earnings. If the funds were not repaid within five years, 
then the repayment obligation lapsed. The second agreement covered 
grants for laser enrichment R&D. Under the Laser R&D Agreement, the 
obligation to make repayment began three years after the project's 
completion, and repayment was to be made in five equal annual 
installments. However, the obligation for repayment would be terminated 
if the objective of the project was not achieved. According to the 
responses of both the company and the government, no portion of any of 
the disbursements received by Urenco Deutschland was repaid.
    We preliminarily determine that the assistance provided under this 
program constitutes countervailable subsidies within the meaning of 
section 771(5) of the Act. The grant disbursements constitute a 
financial contribution and confer a benefit, as described in sections 
771(5)(D)(i) and 771(5)(B) of the Act. Also, we preliminarily determine 
that this program is specific under section 771(5A)(D)(i) of the Act 
because provision of assistance under this program was limited to one 
company. In addition, we preliminarily determine that this program 
provided non-recurring benefits to Urenco Deutschland under section 
351.524(c)(2) of the CVD Regulations because the assistance provided to 
Urenco Deutschland was made pursuant to specific government agreements 
and was not provided under a program that would provide assistance on 
an ongoing basis from year to year.
    Under the Financing Agreement, there was a contingent repayment 
obligation attached to each of the grant disbursements. Within the 
first five years of receipt of the funds, Urenco Deutschland had an 
obligation to repay the government contingent upon the company's 
earnings. At the end of the five-year period, the repayment obligation 
expired. Because the company was no longer obligated to repay the 
assistance, the amount of the funds disbursed became a grant equal to 
the amount of the disbursement. Consistent with our treatment of 
``contingent liabilities,'' we determine the year of receipt of the 
grant to be the year in which the five-year time frame for repayment 
expired, that is, the fifth year from the day the funds were disbursed 
to the company. (See e.g., the treatment of the ``Export Promotion 
Capital Goods Scheme'' in the Final Affirmative Countervailing Duty 
Determination: Certain Cut-to-Length Carbon-Quality Steel Plate From 
India, 64 FR 73131 (December 29, 1999); and ``Government Debt 
Forgiveness in 1989'' in the Final Affirmative Countervailing Duty 
Determination: Certain Hot Rolled Lead and Bismuth Carbon Steel 
Products From Germany, 58 FR 6233 (January 27, 1993)). With respect to 
the grant disbursements made under the Laser R&D Agreement, we find 
that the obligation for repayment ended when the GOG terminated the 
project in 1993 because it was determined the project would not achieve 
commercial results. Therefore, consistent with our treatment of 
contingent liabilities, we determine that the R&D funds provided under 
this Agreement should be treated as grants having been received in 1993 
when the repayment obligation effectively ended.
    In order to calculate the benefits received under this program, we 
first determined the total amount of grants provided each year under 
both the Financing Agreement and the Laser R&D Agreement. We then 
applied the Department's standard grant methodology and allocated the 
grants over the AUL. See the allocation period discussion under the 
``Subsidies Valuation Information'' section, above. We used as our 
discount rates the long-term corporate bond rates in Germany because 
the grants were denominated in Deutschmarks. We then summed the 
benefits received by Urenco Deutschland during 1999, from each of the 
grant disbursements. We then divided the total benefit attributable to 
the POI by the Urenco Group's total sales for the POI.\4\ On this 
basis, we preliminarily determine the countervailable subsidy rate 
under this program to be 0.77 percent ad valorem for the Urenco Group.
---------------------------------------------------------------------------

    \4\ Because we have determined that the Urenco Group constitutes 
an international consortium as defined by section 701(d) of the Act, 
we have calculated the ad valorem rates by dividing the benefits 
received by the companies of the Urenco Group by the applicable 
sales denominator of the Urenco Group.
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B. Forgiveness of Centrifuge Enrichment Capacity Subsidies

    In accordance with the ``Risk Sharing Agreement'' and the ``Profit 
Sharing Agreement'' signed between the GOG and Urenco Deutschland, the 
GOG agreed to provide funds to Urenco Deutschland to support the 
promotion of an uranium enrichment industry.

[[Page 24334]]

These two Agreements were signed on July 18, 1975. Under the Risk 
Sharing Agreement and the Profit Sharing Agreement, the GOG provided 
contributions totaling DM 338.3 million to Urenco Deutschland in 
support of the Treaty of Almelo's goal of creating and promoting the 
enrichment industry. An amount of DM 158.8 million was provided during 
the years 1980 through 1993 with regard to expanding the enrichment 
capacity of the Urenco Group. Prior to 1980, the GOG provided Urenco 
Deutschland with a total amount of funds equal to DM 179.5 million, 
which was used for the construction of enrichment facilities in Almelo 
and Capenhurst.
    Under the terms of the assistance provided by the GOG under the 
Risk Sharing Agreement and Profit Sharing Agreement, the funds were 
conditional in that Urenco Deutschland was required to make repayments 
to the GOG based upon the financial performance of the company. 
However, in no case was the amount of the total repayments to exceed 
twice the amount of the funds provided to Urenco Deutschland by the GOG 
under these Agreements. Repayment obligations were of indefinite 
duration. During the years 1980 through 1992, Urenco Deutschland made 
repayments to the GOG equal to DM 5.6 million.
    In 1987, Urenco Deutschland and the GOG signed an Adjustment 
Agreement, under which the GOG would be relieved of providing further 
funding under the program and Urenco Deutshland's repayment obligations 
would be capped at MDM 370.
    According to the response of the company, with the 1993 merger of 
the Urenco Group enrichment operations, the German enrichment operation 
would be merged with its counterparts in the Netherlands and the United 
Kingdom. Prior to the merger, the GOG and Urenco Deutschland negotiated 
a basis to terminate the repayment obligations of the Risk Sharing 
Agreement and the Profit Sharing Agreement. Based upon the negotiations 
between the GOG and Urenco Deutschland, a ``Termination Agreement'' was 
signed on July 13, 1993, and amended on October 27, 1993. Under the 
terms of the Termination Agreement, Urenco Deutschland was to pay the 
government DM 101.1 million in final payment of the funds provided 
under the Risk Sharing and Profit Sharing Agreements. With this payment 
under the Termination Agreement, the repayment obligations under the 
Risk Sharing and Profit Sharing Agreements terminated. On July 1, 1994, 
the entire amount of the DM 101.1 million was repaid by the company to 
the GOG.
    We preliminarily determine that assistance provided under this 
program to Urenco Deutschland is specific under section 771(5A)(D)(i) 
of the Act because the program was limited to one company. In addition, 
we determine that a financial contribution was provided under section 
771(5)(D)(i) of the Act. A benefit was also provided to the company, 
within the meaning of section 771(5)(E) of the Act to the extent that 
the repayments made to the GOG were less than the amount of assistance 
provided to the company under this program.
    Under this program, the company was provided with a total of DM 
338.3 million in repayable funds and was obligated in a 1987 Agreement 
signed with the GOG to repay the GOG DM 370 million for this 
assistance. Prior to the Termination Agreement, the company had made 
repayments totaling DM 5.6 million. Under the Termination Agreement, 
which terminated the company's repayment obligations, Urenco 
Deutschland made a final repayment of DM 101.1 million to the 
government. However, Urenco Deutschland was obligated to make DM 370 
million in repayments for the assistance it received under this 
program, but only repaid DM 106.7 million by the time the repayment 
obligation was terminated in 1993. Therefore, we preliminarily 
determine that the difference, DM 263.3 million, constitutes a grant 
provided to Urenco Deutschland in 1993, the year in which the repayment 
obligation under the program was terminated. Therefore, we 
preliminarily determine that a countervailable benefit was provided to 
Urenco Deutschland under this program. Because the termination of the 
repayment obligation was a one-time government action, we preliminarily 
determine the resultant benefit arising from this program to be non-
recurring under section 351.524(c)(2) of the CVD Regulations.
    To determine the benefit conferred by this program during the POI, 
we applied the Department's standard grant methodology and allocated 
the grant amount of DM 263.3 million over the AUL. See the allocation 
period discussion under the ``Subsidies Valuation Information'' 
section, above. We used as our discount rate the long-term corporate 
bond rate in Germany for 1993. We then took the benefit attributable to 
Urenco Deutschland during the POI from the grant and divided that 
benefit by the Urenco Group's total sales for the POI. On this basis, 
we preliminarily determine the net countervailable subsidy under this 
program to be 1.98 percent ad valorem for the Urenco Group.

C. Investment Allowance Act

    Urenco Deutschland received grants from the GOG under the 
Investment Allowance Act. This program is administered by the Federal 
Ministry of Economics. Under this program, grants are provided by the 
GOG to companies located in identified regional development areas 
within the country. Urenco Deutschland received grants under this 
program for its enrichment plant in Gronau and for its R&D facility in 
Julich. Under the Investment Allowance Act, both Gronau and Julich 
qualified as regional development areas. A total of DM 51.403 million 
in grant disbursements was received by Urenco Deutschland during the 
years 1982 through 1990.
    We preliminarily determine this program to be specific under 
section 771(5A)(D)(iv) of the Act because grants provided under this 
program are limited to companies located in designated regions within 
Germany. A financial contribution is also provided by this program 
under section 771(5)(D)(i) of the Act. In addition, a benefit is 
provided to Urenco Deutschland within the meaning of section 771(5)(E) 
of the Act in the amount of grant disbursements it received under this 
program. Therefore, we preliminarily determine this program to be 
countervailable. We also preliminarily determine that this program 
provided non-recurring benefits to Urenco Deutschland under section 
351.524(c)(2) of the CVD Regulations because the assistance provided to 
Urenco Deutschland was tied to the capital assets of the company and 
assistance under this program was not provided on an ongoing basis from 
year to year.
    To determine the benefit during the POI, we applied the 
Department's standard grant methodology and allocated the grants it 
received over the AUL. See the allocation period discussion under the 
``Subsidies Valuation Information'' section, above. We used as our 
discount rate the long-term corporate bond rate in Germany at the time 
of the grant approval. We then took the benefit attributable to Urenco 
Deutschland during the POI from the grants and divided that amount by 
the Urenco Group's total sales for the POI. On this basis, we 
preliminary determine the net countervailable subsidy rate under this 
program to be 0.18 percent ad valorem for the Urenco Group.

[[Page 24335]]

II. Program Preliminarily Determined To Confer Subsidies From the 
Government of the Netherlands

A. Regional Investment Premium

    Under the Regional Investment Premium (IPR) program, the GON 
provided UCN grants for the expansion of its centrifuge manufacturing 
facilities. Grants under this program are only available to companies 
located in certain regions of the Netherlands. UCN received four grants 
under this program. Although grants under this program were first 
approved by the GON in 1982, the disbursement of the grants occurred 
during the years 1982 through 1993.
    We preliminarily determine that this program is specific under 
section 771(5A)(D)(iv) of the Act because grants provided under this 
program are limited to companies in designated regions of the country. 
A financial contribution is also provided by this program under section 
771(5)(D)(i) of the Act. In addition, a benefit is provided to UCN 
under section 771(5)(E) of the Act in the amount of grants it received 
under this program. Therefore, we preliminarily determine this program 
to be countervailable. We also preliminarily determine that this 
program provided non-recurring benefits to UCN under section 
351.524(c)(2) of the CVD Regulations because the assistance provided to 
UCN was tied to the capital assets of the company and the assistance 
under this program was not provided on an ongoing basis from year to 
year.
    To determine the benefit during the POI, we applied the 
Department's standard grant methodology and allocated the grants UCN 
received over the AUL. See the allocation period discussion under the 
``Subsidies Valuation Information'' section, above. We used as our 
discount rate the long-term government bond rate in the Netherlands at 
the time of the grant approval. The Department took the allocated 
benefits received during the POI for the two grant amounts and 
converted this amount to Pounds using the average Dutch Guilder to 
Pounds exchange rate for the POI. We then took this amount over the 
adjusted total sales of Urenco Group. Based on the information on the 
record, the Department preliminarily determines that the net 
countervailable subsidy rate under this program to be 0.06 percent ad 
valorem for the Urenco Group.

III. Program Preliminarily Determined To Confer Subsidies From the 
Government of the United Kingdom

A. Assumption of Debt: European Investment Bank Loans

    Beginning in 1978, BNFL received four long-term loans from the 
European Investment Bank that were guaranteed by the UKG under the 
Nuclear Industry (Finance) Act (NIFA). According to UCL's questionnaire 
response, the loans were extended to finance the construction of two 
enrichment plants at the Capenhurst facility.
    As explained above in the ``Urenco Group: Corporate History'' 
section of this notice, in preparation for the 1993 merger, BNFL 
changed the name of its subsidiary BNFL Enrichment Ltd. to UCL, and 
transferred to UCL the relevant portion of the Capenhurst site (the 
buildings and equipment related to the enrichment business), which 
included the buildings that were constructed with the EIB financing. 
Though BNFL transferred the enrichment operations to UCL, it retained 
the liabilities for the EIB loans that were tied to those facilities.
    Because BNFL is owned by the UKG, we find that BNFL's retention of 
the EIB liabilities constitutes a government assumption of debt. 
Therefore, we preliminarily determine that BNFL's failure to transfer 
those liabilities to UCL constituted a financial contribution and 
conferred a benefit within the meaning of sections 771(5)(D)(i) and 
771(5)(E) of the Act. Furthermore, because the benefit stemming from 
this event was limited to UCL, we preliminarily determine that it was 
specific to a particular enterprise within the meaning of section 
771(5A)(D)(i) of the Act. We note that this approach is consistent with 
the approach taken by the Department in past proceedings involving the 
assumption or retention of debts that resulted in the bestowal of 
countervailable subsidies. See, e.g., Final Affirmative Countervailing 
Duty Determination: Stainless Steel Sheet and Strip in Coils From 
Italy, 64 FR 30624, 30628 (June 8, 1999).
    Under section 351.508(a) of the CVD Regulations, in the case of an 
assumption or forgiveness of a firm's debt obligation, a benefit exists 
equal to the amount of the principal and/or interest (including 
accrued, unpaid interest) that the government has assumed or forgiven. 
Furthermore, section 351.508(c) states that the benefit from an 
assumption of debt will be treated as a non-recurring subsidy. 
Therefore, for purposes of this preliminary determination, we are 
treating the benefit attributable to UCL under this program as a non-
recurring subsidy that is equal to the principal payments made by BNFL 
after the merger.
    According to information in the questionnaire responses of the UKG 
and UCL, the transfer of the enrichment operations took place in 
September of 1993. Therefore, for purposes of this preliminarily 
determination, we are using September 1993 as the date of bestowal. In 
addition, in accordance with section 351.508(c) of the CVD Regulations, 
we are treating the principal outstanding retained by BNFL as a non-
recurring subsidy received as of the date of the merger.
    Because the subsidy amounts were denominated in foreign currencies, 
we allocated the subsidies over time in their original currency. We 
used as our discount rates the rates discussed in the ``Benchmarks for 
Loans and Discount Rate'' section of this notice. Once we allocated the 
foreign currency-denominated benefit to the POI, we converted the 
benefit amount into pounds using the average annual exchange in effect 
during the POI. We then divided the amounts of the benefits 
attributable to the POI by the Urenco Group's total sales during the 
POI. On this basis, we preliminarily determine the net countervailable 
subsidy under this program to be 0.73 percent ad valorem for the Urenco 
Group.

IV. Programs Preliminarily Determined Not To Confer a Benefit From 
the Government of Germany

    Based upon the information in the response, the programs listed 
below meet the requirements for specificity and provision of a 
financial contribution under the Act.\5\ However, based upon a 12 year 
AUL, we have preliminarily determined that no benefit was received 
under these programs during the POI.
---------------------------------------------------------------------------

    \5\ The Regional Government Provision of Industrial Site program 
is specific under section 771(5A)(D)(i) of the Act because the 
program was limited to one company. A financial contribution was 
also provided under section 771(5)(D)(iii) of the Act. The Regional 
Development Grant program is specific under section 771(5A)(D)(iv) 
of the Act because grants under this program are issued to companies 
located in designated regions. A financial contribution is also 
provided under section 771(5)(D)(i) of the Act.
---------------------------------------------------------------------------

A. Regional Government Provision of Industrial Site

B. Regional Development Grants

V. Programs Preliminarily Determined Not To Confer a Benefit From 
the Government of the Netherlands

    Based upon the information in the response, the programs listed 
below meet the requirements for specificity

[[Page 24336]]

and provision of a financial contribution under the Act.\6\ However, 
based upon a 12 year AUL, we have preliminarily determined that no 
benefits were received under these three programs during the POI.
---------------------------------------------------------------------------

    \6\ The Centrifuge Enrichment Technology Research and 
Development Programs (R&D Program), funding given from 1969 through 
1981, and the 1981 Equity Conversion are specific under section 771 
(5A)(D)(i) of the Act because these programs are limited to one 
company. The R&D program provided a financial contribution under 
section 771(5)(D)(i) and the 1981 Equity Conversion Program provided 
a financial contribution under section 771(5)(D)(i) of the Act 
because we determine that no objective studies of the company had 
been prepared prior to the GON's 1981 equity infusion as reuqired 
under section 351.5079(a)(4)(ii) of the CVD Regulations.
---------------------------------------------------------------------------

A. Centrifuge Enrichment Technology Research and Development

B. 1981 Equity Conversion

VI. Program Preliminarily Determined Not To Confer a Benefit From 
the Government of the United Kingdom

A. Regional Development Grants

    Based upon the information in the response, this program meets the 
requirements for specificity and provision of a financial contribution 
under the Act.\7\ However, based upon a 12 year AUL, we have 
preliminarily determined that no benefits were received under this 
program during the POI.
---------------------------------------------------------------------------

    \7\ The Department found this program countervailable in Certain 
Hot-Rolled Lead and Bismuth Carbon Steel Products from the United 
Kingdom: Preliminary Results of Countervailing Duty Administrative 
Review, 64 FR 16920, 16923 (April 7, 1999). Affirmed in Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products From the United 
Kingdom: Final Results of Countervailing Duty Administrative Review, 
64 FR 43673, 43675 (August 11, 1999).
---------------------------------------------------------------------------

B. Centrifuge Development Grant

    Petitioners alleged that BNFL/E received a grant of 
<brit-pound>47.8 million from the UKG to fund the development work and 
plant construction of a tripartite gas centrifuge project. According to 
UCL's questionnaire response, the Centrifuge Development Grant received 
by BNFL was repaid in 1987 as a lump sum. Supporting documentation 
confirms that in 1987 a payment of <brit-pound>47.5 million was made to 
the UKG in full and final settlement of the grant.
    We note that information submitted by UCL indicates that it paid 
back <brit-pound>47.5 million of the original grant amount of 
<brit-pound>47.8 million, leaving <brit-pound>300,000 unpaid. Although 
this <brit-pound>300,000 could be considered a subsidy to UCL, the 
amount is so small that, pursuant to section 351.524(b)(2) of the CVD 
Regulations, it would be expensed in the year of receipt, 1987. 
Therefore, we preliminarily determine that no benefits were provided 
under this program during the POI.

C. Fossil Fuel Levy

    Petitioners state that pursuant to the Electricity Act of 1989, the 
UKG established a governmental levy known as the Fossil Fuel Levy (FFL) 
that was in place from 1990 until the late 1990s. This tax was placed 
on electricity sales to make up the difference between the price of 
fossil-fuel fired electricity and the cost of nuclear-generated 
electricity. Petitioners allege that the portion of the levy received 
by the nuclear power companies was dedicated, in principle, to fund the 
future decommissioning of the United Kingdom's nuclear electrical power 
plants.
    UCL states in its questionnaire response that neither Urenco Ltd. 
nor UCL was eligible to receive benefits under the FFL. According to 
UCL's questionnaire response, the money for the levy was paid out to 
generators of electricity from non-fossil fuel sources, such as 
producers of nuclear power. UCL states that because Urenco and UCL are 
not nuclear generators, they were not eligible to receive monies under 
the FFL. They add that BNFL did receive such benefits from the FFL 
solely with respect to electricity generated by its Calder Hall 
Sellafield Power Station.
    We preliminarily determine that this program did not confer 
countervailable benefits on subject merchandise during the POI. 
According to information in its questionnaire response, BNFL received 
FFL levies with respect to a power-generating plant that was not 
related to the production or exportation of LEU. Therefore, we 
preliminarily determine that any assistance received by BNFL under this 
program was tied to non-subject merchandise, and, therefore, did not 
provide a benefit to subject merchandise.

D. Forgiveness of Decommissioning Debt

    Starting in 1983, the year after the facility ceased operations, 
and continuing to the present day, BNFL decommissioned its gaseous 
diffusion plant which was located at the Capenhurst enrichment plant. 
Petitioners allege that the retention by BNFL of responsibility for 
decommissioning the older gaseous diffusion enrichment plant was a 
liability that should have been borne by Urenco and UCL, and, 
therefore, constitutes, in effect, a financial contribution that 
bestowed a countervailable grant to Urenco in the form of debt 
forgiveness. According to UCL's questionnaire response, the 
decommissioning liabilities of BNFL relating to its gaseous diffusion 
plant were not transferred to UCL because that plant was built to 
produce high enriched uranium (HEU) for defense purposes, and, 
therefore, is not related to the business and asset base of the Urenco 
organization. According to UCL's questionnaire response, BNFL's gaseous 
diffusion plant was never used to produce subject merchandise, LEU, and 
neither Urenco nor any of the predecessor entities within BNFL had any 
involvement in its operation.
    Because the plant in question was never related to the production 
of LEU, we preliminarily determine that any benefits received by BNFL 
under this program are tied to non-subject merchandise, and, therefore, 
do not confer a benefit on the subject merchandise.

VII. Program Preliminarily Determined Not Countervailable From the 
Government of the Netherlands

A. Subordinated Shareholder Loan Provided to Urenco Ltd. by UCN

    Petitioners allege that the Dutch government directly subsidized 
the Urenco Group through a 1993 shareholder loan made by UCN on non-
commercial terms. As part of the 1993 restructuring arrangements a loan 
was made by the shareholders of Urenco Ltd. UCN, as one-third 
shareholder in Urenco Ltd., granted one-third of the loan.
    According to information in UCL's questionnaire response, the 
shareholders of the Urenco Ltd., (International Nuclear Fuels Limited 
(INFL),\8\ UCN, and Uranit), advanced subordinated shareholder loans to 
the company. Each shareholder contributed equal principal amounts and 
each charged the same interest rate. In its questionnaire response, UCN 
further explains that in the event of the liquidation of Urenco Ltd., 
the subordinated loans would be repaid only after all other creditors 
had been repaid, but before share capital would be returned to 
investors. Information in UCN's questionnaire response also indicates 
that the repayment terms (principal, interest rates charged, repayment 
periods) are set by reference to a number of factors, including likely 
period of the loans and the risks attached to the loans.
---------------------------------------------------------------------------

    \8\ INFL is a wholly-owned subsidiary of the UKG-owned BNFL.
---------------------------------------------------------------------------

    Section 771(5)(E)(ii) of the Act and section 351.505(a)(1) of the 
CVD Regulations stipulate that in the case of a loan, a benefit exists 
to the extent that the amount a firm pays on the

[[Page 24337]]

government-provided loan is less than the amount the firm would pay on 
a comparable commercial loan that the firm could actually obtain on the 
market. Under section 351.505(a)(2) of the CVD Regulations, a 
comparable commercial loan is defined as a loan that is comparable to 
the government-provided loan. The provision goes on to state that the 
Department will place primary emphasis on similarities in the structure 
of the loans.
    There are three shareholders of Urenco Ltd., with each shareholder 
owning one-third interest in the company. Two of the shareholders are 
government-owned, one by the UKG and one owned by the GON. The third 
shareholder, Uranit, is a privately-owned company in Germany. According 
to information on the record, this private shareholder also extended a 
loan to Urenco Ltd., in the same amount, at the same terms and on the 
same date as the UCN loan to Urenco Ltd. The Department finds that this 
loan from Uranit, a private source, constitutes a comparable commercial 
loan to use as the benchmark. See section 351.505(a)(2)(ii) of the CVD 
Regulations. Because the two government loans were on the same terms as 
the Uranit loans, we preliminarily determine that this loan was made on 
a commercial basis and is not countervailable. We note that for the 
final determination, we will examine the use of this benchmark closely, 
given the nature of the three governments' involvement in the 
consortium.

B. 1998 Shareholder Loan

    Petitioners alleged that a loan on Urenco Ltd.'s annual report may 
be a shareholders loan made by UCN. Petitioners further alleged that 
the loan may be non-commercial and not consistent with the usual 
practices of private investors. In UNL's questionnaire response, it 
stated that the 1998 loan is not a shareholder loan; it was provided 
from a commercial bank and did not carry a government guarantee. Based 
upon this information, we preliminarily determine that this loan does 
not constitute a countervailable subsidy under 701(a)(1) of the Act.

VIII. Programs Preliminary Determined Not Countervailable From the 
Government of the United Kingdom

A. Loan-Stock Debt Forgiveness Program

    Petitioners allege that UCL received countervailable benefits when 
its obligation to repay loan stock issued to BNFL was nullified in the 
1993 corporate restructuring of the Urenco Group.
    In its questionnaire response, UCL stated that all loans from BNFL 
to UCL were repaid with the exception of a <brit-pound>16.2 million 
``loan waiver.'' \9\ With respect to the <brit-pound>16.2 million 
``loan waiver,'' which is referred to in Urenco's 1994 Annual report, 
UCL explains that the figure reflects the loss incurred by BNFL in 
connection with the merger. Specifically, UCL explains that the 
<brit-pound>16.2 million represents the difference between the total 
sum owed to BNFL in the books of UCL on the merger date and the agreed 
merger valuation of UCL. UCL further states that the <brit-pound>16.2 
million appears on its financials as a ``loan waiver'' because, 
according to its accounting practices, the amount had to be accounted 
for either as a loss on a disposal of assets or a failure to recover 
money advanced.
---------------------------------------------------------------------------

    \9\ In the Initiation Notice, we also initiated an investigation 
of the 1993 Debt Forgiveness of <brit-pound>16.2 million as a 
separate program. See 66 FR at 1087. According to information in 
UCL's questionnaire response, this loan is the same loan that was 
involved in the Loan Stock Debt Forgiveness program.
---------------------------------------------------------------------------

    Based on information submitted by UCL, it appears that the 6.2 
million at issue is the result of a difference in the manner in which 
the assets that were transferred from BNFL to Urenco Ltd. were valued 
rather than the result of a loan waiver. Therefore, we preliminarily 
determine that there was no debt forgiveness under this program. 
However, we must also examine whether there was a potential 
countervailable subsidy provided in this transaction.
    We addressed a similar program in the Initiation Notice involving 
the transfer of assets from BNFL and whether the transfer provided a 
subsidy on enrichment production. In the Initiation Notice, we 
determined not to initiate on petitioners' allegation that the transfer 
of one of the enrichment plants from BNFL to Urenco Ltd. was at less 
than adequate remuneration. Specifically, in the Initiation Notice, we 
stated that ``{t}he mere fact that the A3 plant was allegedly sold at a 
price that was below its book value is not enough information to 
warrant initiating an investigation of less than adequate remuneration 
allegation without any reference to prevailing market conditions for 
the good in question.'' See, 66 FR at 1087.
    With respect to the program under investigation, the amount of 
<brit-pound>16.2 million is due to the transfer or sale of assets to 
Urenco at below the book value as recorded by BNFL. Similar to the 
situation with the sale of the A3 plant addressed in the Initiation 
Notice, there is no evidence on the record that indicates that these 
assets were sold for less than adequate remuneration. Therefore, based 
on the information on the record and on our approach in the Initiation 
Notice, we preliminarily determine that this program is not 
countervailable. We will, however, examine all aspects of the 
restructuring and subsequent merger of the Urenco Group during 
verification.

B. Subordinated Shareholder Loan Provided to Urenco Ltd. by INFL

    Petitioners allege that the UKG directly subsidized Urenco Ltd. 
through a 1993 shareholder loan made on non-commercial terms by INFL.
    According to information in UCL's questionnaire response, the 
shareholders of Urenco Ltd., INFL, UCN, and Uranit, advanced 
subordinated shareholder loans to the company. Each shareholder 
contributed equal principal amounts and each charged the same interest 
rate. In its questionnaire response, UCL further explains that in the 
event of the liquidation of Urenco Ltd., the subordinated loans would 
be repaid only after all other creditors had been repaid, but before 
share capital would be returned to investors. Information in UCL's 
questionnaire response also indicates that the repayment terms 
(principal interest rates charged, repayment periods) are set by 
reference to a number of factors, including duration of the loans and 
the risks attached to the loans.
    Section 771(5)(E)(ii) of the Act and section 351.505(a)(1) of the 
CVD Regulations stipulates that in the case of a loan, a benefit exists 
to the extent that the amount a firm pays on the government-provided 
loan is less than the amount the firm would pay on a comparable 
commercial loan that the firm could actually obtain on the market. 
Under section 351.505(a)(2) of the CVD Regulations, a comparable 
commercial loan is defined as a loan that is comparable to the 
government-provided loan. The provision goes on to state that the 
Department will place primary emphasis on similarities in the structure 
of the loans.
    There are three shareholders of Urenco Ltd., with each shareholder 
owning one-third interest in the company. Two of the shareholders are 
government-owned, one by the UKG and one owned by the GON. The third 
shareholder, Uranit, is a privately-owned company in Germany. According 
to information on the record, this private shareholder also extended a 
loan to Urenco Ltd., in the same amount, at

[[Page 24338]]

the same terms and on the same date as the INFL loan to Urenco Ltd. The 
Department finds that this loan from Uranit, a private source, 
constitutes a comparable commercial loan to use as the benchmark. See 
section 351.505(a)(2)(ii) of the CVD Regulations. Therefore, we 
preliminarily determine that the loan provided to Urenco Ltd. by INFL 
was made on a commercial basis and is not countervailable. We note that 
for the final determination, we will examine the use of this benchmark 
closely, given the nature of the three governments' involvement in the 
consortium.

C. Extraordinary Asset Write Downs Prior to Transfer of BNFL Enrichment 
Facilities

    Petitioners explain that the 1992-1993 Annual Report of UCL 
indicates that the value of the physical assets of the Capenhurst 
enrichment operations decreased to <brit-pound>196 million as of March 
31, 1993, due in large part to a extraordinary depreciation charge of 
<brit-pound>20 million. Petitioners allege that this extraordinary 
depreciation charge could have conferred a benefit upon UCL.
    In its questionnaire response, UCL states that the extraordinary 
depreciation relates to the value of a building known as the E23 
building, which was constructed in the mid-1980s for the purpose of 
housing centrifuge operations. UCL further explains in its response 
that due to a downturn in market conditions, the centrifuge machines 
were never installed in the E23 building. Because it was estimated 
during the merger that there was little chance that production of LEU 
would ever take place in the E23 building, the parties to the merger 
agreed to write down the value of the building.
    According to information provided in the response, the write down 
of the E23 plant was required by law. Under the Companies Act of 1985, 
Schedule 4 Paragraph 19(2), the government requires that:

    Provisions for diminution in value shall be made in respect of 
any fixed asset which has diminished in value if the reduction in 
its value is expected to be permanent. * * * and any such provisions 
which are not shown in the profit and loss account shall be 
disclosed (either separately or in aggregate) in a note to the 
accounts.

    Furthermore, UCL's questionnaire response indicates that the 
extraordinary write downs taken by BNFL on the E23 building did not 
give rise to any changes in the corporation tax computation or any 
benefits on the tax returns filed in fiscal years 1992-1993 or 1993-
1994 for UCL.
    According to information on the record of this investigation, 
pursuant to UKG corporate law, BNFL was apparently required to write 
down the value of the E23 building in order to more accurately reflect 
its true value. On this basis, we preliminarily determine that this 
program is not countervailable.

IX. Programs Preliminarily Determined Not To Be Not Used in the 
Netherlands

A. Wet Investeringsrekening Law (WIR)

B. Subsidized Loan Forgiveness

X. Program Preliminarily Determined Not To Be Not Used in the 
United Kingdom

A. Financial Assistance Under the Electricity Act of 1989

Verification

    In accordance with section 782(i) of the Act, we will verify the 
information submitted by respondents prior to making our final 
determination.

Suspension of Liquidation

    In accordance with 703(d)(1)(A)(i) of the Act, we have calculated 
an individual rate for the Urenco Group. The ``all others'' rate is the 
same as the rate for UCL. These rates are summarized in the table 
below:

------------------------------------------------------------------------
          Producer/exporter                     Net subsidy rate
------------------------------------------------------------------------
Urenco Group Ltd.....................  3.72% ad valorem.
All Others...........................  3.72% ad valorem.
------------------------------------------------------------------------

    In accordance with section 703(d) of the Act, we are directing the 
U.S. Customs Service to suspend liquidation of all entries of the 
subject merchandise from the UK, which are entered or withdrawn from 
warehouse, for consumption on or after the date of the publication of 
this notice in the Federal Register, and to require a cash deposit or 
bond for such entries of the merchandise in the amounts indicated 
above. This suspension will remain in effect until further notice.

ITC Notification

    In accordance with section 703(f) of the Act, we will notify the 
ITC of our determination. In addition, we are making available to the 
ITC all non-privileged and nonproprietary information relating to this 
investigation. We will allow the ITC access to all privileged and 
business proprietary information in our files, provided the ITC 
confirms that it will not disclose such information, either publicly or 
under an administrative protective order, without the written consent 
of the Assistant Secretary for Import Administration.
    In accordance with section 705(b)(2) of the Act, if our final 
determination is affirmative, the ITC will make its final determination 
within 45 days after the Department makes its final determination.

Public Comment

    In accordance with 19 CFR 351.310, we will hold a public hearing, 
if requested, to afford interested parties an opportunity to comment on 
this preliminary determination. Any requested hearing will be 
tentatively scheduled to be held 57 days from the date of publication 
of the preliminary determination at the U.S. Department of Commerce, 
14th Street and Constitution Avenue, NW., Washington, DC 20230. 
Individuals who wish to request a hearing must submit a written request 
within 30 days of the publication of this notice in the Federal 
Register to the Assistant Secretary for Import Administration, U.S. 
Department of Commerce, Room 1870, 14th Street and Constitution Avenue, 
NW., Washington, DC 20230. Parties should confirm by telephone the 
time, date, and place of the hearing 48 hours before the scheduled 
time.
    Requests for a public hearing should contain: (1) The party's name, 
address, and telephone number; (2) the number of participants; and, (3) 
to the extent practicable, an identification of the arguments to be 
raised at the hearing. In addition, six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the case briefs must be submitted to the Assistant Secretary no later 
than 50 days from the date of publication of the preliminary 
determination. As part of the case brief, parties are encouraged to 
provide a summary of the arguments not to exceed five pages and a table 
of statutes, regulations, and cases cited. Six copies of the business 
proprietary version and six copies of the non-proprietary version of 
the rebuttal briefs must be submitted to the Assistant Secretary no 
later than 5 days from the date of filing of the case briefs. An 
interested party may make an affirmative presentation only on arguments 
included in that party's case or rebuttal briefs. Written arguments 
should be submitted in accordance with 19 CFR 351.309 and will be 
considered if received within the time limits specified above.
    This determination is published pursuant to sections 703(f) and 
777(i) of the Act. Effective January 20, 2001, Bernard T. Carreau is 
fulfilling the

[[Page 24339]]

duties of the Assistant Secretary for Import Administration.

    Dated: May 7, 2001.
Bernard T. Carreau,
Deputy Assistant Secretary for Import Administration.
[FR Doc. 01-12064 Filed 5-11-01; 8:45 am]
BILLING CODE 3510-DS-P